Cycling Sports Group brands Cannondale and GT will “take a leadership position in changing a broken system that continually leads to inventory and cash flow issues for both suppliers and retailers,” the group has announced.
The statement refers to the contentious issue of model year cycles and how an annual inching forward of product releases in summer produces a range of strains on the supply chain, from gaps in availability, through to the greatest complaint among shops, discounting; in particular during seasonal highs in trade.
Bike shops in the markets served by CSG apparently prompted the change through feedback on how to effectively manage a product cycle that has, almost with every passing year, further strained the supplier shop relationship.
The revised model will now shift away from mid-summer changes in model year, with CSG’s commercial offering reset to offer a calendar year with dealers. Inventory will be ramped up in the Spring and reduced in the Autumn, which should ease disruption during a key sales period for shops.
The plan will will also see low and mid-priced products revolved on a two to three year cycle, which new colours introduced as stocks clear through in order to keep some variety in the chain. This, hopes CSG, will enable retailers to hold their margin on best-selling lines and resist discounting for much longer.
As explained by Russell Merry, General Manager of the UK market for Cycling Sports Group: “I am in favour of model years because it drives innovation and an opportunity to reset, but having either too much stock or too little stock in the middle of the peak selling season is madness and the whole industry has known it for ever.
“There is no time like the present to change how things are done. Our simple aim will be to have better availability for our dealers in the peak months of the selling season. We will aim to have less shortages, but also less obsolete stock that is discounted and causes business disruption and brand damage. Common sense, more of the right stock at the right time.
“Normally I would hope our competitors don’t follow our lead, but in this instance I think this is a common sense change that needs to happen for everyone’s profitability and ability to market and re-invest in cycling.”
With suppliers competing for floor space such a change has until now been largely elusive in the bike industry, however, having come in for its fair share of criticism, CSG will now look to break what it says is an “unhealthy pattern.”
Other brands have in the past alluded to making similar changes, but the practice of operating outside of traditional model years is not yet widespread, bar brands that have always operated outside, such as Ibis.
That pattern became easier to break with the disruption attached to Covid-19, alluded Merry.
“Clearly, it’s been too hard to be done and the whole industry has been operating a broken model for decades. This is a once in a lifetime event and we intend to help all the links in our business chain be more profitable by being the most progressive and responsive supplier.
“I think the biggest obstacle is the commercial bravery to try to lead and change the industry. We have had time to stop and think whilst meeting record demand. This is a global initiative that will require the support of our customers to see it succeed. Our commercial leadership team is me (UK) with Nick Hage (USA/Japan) and Eugene Fierkens (EU) who have worked with product development, marketing, distributor sales, finance and suppliers and ultimately customers to change the timeline of the whole company and maybe, one day, the industry for the better. Eugene is relatively new to the business, he is making great strides in EU and he has led this project globally as we aim to gain market share and be the best supplier to do business with in the industry.”
Model year identification will now cease on Cannondale’s website. A presentation shown to Cycling Sports Group customers simply says “consumers don’t care” in relation to this number. Dealers, meanwhile, will be invited to place orders on the back of the end of peak season, qualifying for any applicable discounts if orders are placed in the pre-season. An October ‘virtual sales meeting’ is now plotted for introductions on 2021 lines.
The next few years will now run on a schedule explained below:
Cycling Sports Group signed off its presentation by re-stating the gamble it is taking in disrupting the status quo, writing “We cannot plan to support you with the right inventory, at the right time, unless we are sure of your commitment.”