By Jonathon Nunan, Australia’s Bicycle Industry Consultant & Commentator
I love the bicycle industry. I’ve loved it since my first days working on the floor at Harry Hall Cycles in Manchester. It’s loved by most in much the same way we love our football team or our favourite Classics rider. Regularly let down, disappointed and in despair, but elated by those fleeting days of reflected glory. Annoyingly reminiscing about its ‘glory days’, which are apparently behind us now, yet every year exclaiming that, “this will be our year.” We proudly wear the jersey, while moaning about it endlessly with fellow supporters. We’ll immediately leap into action to defend it against outsiders, naysayers and interlopers. We hate it too. But we love it.
Just like our beloved club or cycling team, we’re sure that if we could just get a few things right, make a few smart changes, modernise, invest in cool new technologies, recruit the right people, bring in a new system – then we could turn it around. Take on the shifting paradigms of the game and the emerging challenges to our competitiveness and success. To stay profitable and to love what we do.
I’m like the pundit, who gets paid to proselytize, theorise and analyse from the sidelines, but also gets asked to occasionally join the back room staff or jump in the team car and help guide a team to improvement, opportunity or success. Every now and again, I get asked; “Jonathon, if you had the money and the resources, what would you do in the bike industry? What’s the big opportunity you’d go for?”
When I get asked that question, the answer isn’t probably what you’d expect. Not e-Bikes, IoT systems, predictive selling technologies, vertical integration, AI, social media programmes, drone deliveries, robotised warehouses, nor automated customer service; all of which are cool, worthy and coming or happening already. It’s data.
What Kind of ‘Data’?
Your data. Our data. The whole supply chain’s data. Shared. Anonymised. Unified. Categorised. Live and alive, readily available*, stock, purchasing, sales, product and returns data. Data which could in almost real time: report, guide and advise us on what’s really happening in the market and help us to make smarter, more real time, informed purchasing, pricing, investment, staffing and other business decisions. Key business decisions that could better respond to the market, improve customer experience, reduce wasteful spending, focus investment in the right areas of your business, increase sales, optimise supply, improve profitability and viability all along the industry food chain.
* In theory at least. I’ll cover the realities and challenges of data accessibility a little later.
Key Data Sets and What Would Happen If We Shared Them?
Retail Sales Data
This could help identify trends, consumer demand, sales opportunity, competitiveness and efficiency gains, all in real time.
From being able to see real-time uptick or downturn in particular categories, colours and sizes to optimised production, purchasing, design, pricing or promotional decisions; to being able to contextualise sales trends as a localised outlier, or as market-wide; to being able to identify your store’s or brand’s sales ranking in comparison to your competitors, territory or like businesses; or seeing what category business you might be missing out on – the potential benefits of shared sales data extend from improved efficiency in the direction of resources and cash flow; to the ability for bike businesses to be more proactive and less reactive.
Imagine accurate, real-time assessment of market size, performance and output
Yes, there are already lots of ‘global’ reports produced, which can be purchased online for a few thousand dollars a pop. And, yes, they’re produced by respected professional researchers, analysts and publishers. But so extrapolated and formulated is the data published that I typically find it at best a guide and at worst completely pointless, perilous or misleading. It’s not the publishers’ fault, or indeed their intention. But a simple reflection of the fact that the published data is either limited, insufficient, out of date or ineffectively broken down.
Regularly updated export and import data, compiled within the industry’s import/export networks, would offer a great snapshot of the industry’s health overall. More importantly, these numbers help to guide significant investment decisions all along the food chain. From raw material sourcing to production, purchasing, marketing, personnel, sponsorship, retail acquisition or planning and much more. Instead, as an industry, we largely have to make educated guesses, based on the least worst data or unhelpful or misleading numbers.
Which if combined with…
Could identify stock shortfalls or over-supply before they become a much bigger problem or conversely, a missed opportunity.
A recent European example neatly sums up the potential benefits for sharing inventory levels throughout the industry. Two years ago, the talk from European bike markets was of a major glut of bike stock throughout the distribution and retail networks. A year later and all the reports are about the dramatic downturn of bike imports into Europe and the effects on Taiwanese exports. Accessible inventory indicators would have helped manufacturers, brands, distributors and retailers identify overstock issues before they became a major problem; and reacted accordingly through adjustments in purchasing, production and shipping schedules.
For retailers, it could help them to focus their sales and marketing activities, when to hold margins and when to ‘special’ out stock, before it gets to the point of having to ‘burn’ it. The ability for the supply chain to avoid gluts and troughs would substantially help stabilise pricing and avoid constant clearance drives through discount channels, which only serve to drive down consumer pricing expectations, margin capture, held stock value and industry or territory wide sales totals. For example, if a £100 product’s retail sales value lifecycle could average £90, instead of £60.
Meeting my market’s unfulfilled demand while holding or improving margin
I have a bike shop in Melbourne and I can see that consumers have collectively back ordered 500 track-pumps in my territory. I happen to have 100 track pumps sitting in my storage shed right now, which I bought on special last year. I’m also hearing from the sales reps that for some reason, there’s an immediate shortage of track-pumps available at the major suppliers. What am I going to focus my digital advertising and in-store marketing on this week, do you wonder? At the same time, holding or extending my margin on my stock, when in fact I was just about to sell them off cheap because I was worried about the overstock.
What’s as good as knowing what’s happening in your market in real time: knowing what’s happening ahead of time
So many aspects of our industry would benefit from collectively knowing what was on forward order; from production to purchasing, pricing, marketing planning, market capacity assessment, market opportunity, retail strategy and more.
First of all, I would know if my market/category was going to be capably supplied next year. Secondly, that the market for a particular category is expected to grow or contract. Next, as a distributor, I could assess my market strength for that category in the coming season; which would affect my marketing decisions, planned dealer activities, or test fleets. Lastly, as a retailer, I could better assess my commitments to ranging or stock investment.
Social media, competitive analytics and customer intelligence
This is a whole other article. But if live industry data could be overlaid with social media tracking, competitive analytics and customer intelligence software: well, let’s just say we’re moving into the realm of the ‘dark arts’ here, folks. Imagine if consumers could effectively be telling designers and factories what to make without realising it. Imagine if productions could be adjusted from real time consumer feedback. What if retailers knew what colours, brands and categories consumers wanted in their area in real time. This has potential to make your head hurt. I know it hurts mine. It’s almost evil in its scope and potential. Very ‘Big Brother’. Very cool.
So, where would this data come from then?
That box on your counter, your mobile retail devices or that server in your back office: anything you do business with that connects to the Internet.
Most retailers, nearly all distributors and certainly every supplier/manufacturer use some version of RMS or business operating software. The fact that most of you don’t use your management systems fully or properly, or perhaps have the most suitable or capable software, is another discussion. For the most part, your systems will record, store and produce most, if not all of the vital core data that would be needed for a worthwhile industry data collection exercise.
Not only are you already producing valuable stock, sales and purchasing data every day you operate and not only are you capable of easily downloading and forwarding that data en mass with a few key strokes or automated reports, but you’re quite possibly already communicating that data back to your RMS operator and don’t even realise it.
But I don’t want my competitors knowing my sensitive commercial data…
No one would. And they wouldn’t or couldn’t.
Who would give up their data if they thought for a moment it could be used against them, or would give competitors an advantage, or suppliers a negotiation edge? No one.
So all the data would have to be anonymised and converted to generic categorisation unable to be connected to your specific business. For example using tags against category, descriptions 1, 2 and 3, brand, size, colour, SRP Range, territory and country. It may look like: Bike BMX Freestyle GT Med Black $0-$499 NY USA.
Why haven’t we been doing this already?
For some genuine practical, technical and commercial concerns. Also because we’re the bike industry, complete with its quirks, anxieties, politics, passions and shortfalls.
Unification of data categorisation and format and/or EDI interchange structures
I admit. This is a ‘biggy’. For industry-wide data sharing to be possible, even in concept, there would likely need to be some sort of industry symposium on the agreed definition of all categories and data sets and formats. Potentially using some form of EDI system as the central aggregator. This could be developed and updated category by category, territory by territory. Otherwise the task would be considered almost certainly too big to start, as well as prone to unmanageable obsolescence and expanding requirements.
Who runs it and who pays for it?
Most major bicycle markets have a stand alone, or dominant bicycle industry body. As it would be most likely that industry data sharing would have to be managed and produced, territory by territory; at least at a retail and domestic distribution level anyway; the national industry organisations would be the obvious bodies to run, manage and publish each territory’s data collection programme. They in turn would need to be funded by an annual subscription by all participating businesses. They may generate additional income by either selling bespoke or industry overview reports; or even by licensing out the production of such reports to data firms.
This is where I have to admit a lack of depth with regards technology capability and technical capacities. But I don’t think I would need to work for IBM, Microsoft, Salesforce or GfK to point out the fact that with the myriad of software packages, operating systems, formats, data update frequencies, information security protocols and so on, there would be numerous technical and technological issues that would need to be broached and addressed.
Modern hardware, the software that runs it and the support to install and maintain it, costs money. Quite a bit, depending on the size and ambition of your bike business, as well as copious amounts of both heartache and time.
Concerns Over ‘The Cloud’ & Data Security
Cloud storage might have been the single biggest development to happen to business capacity and capability growth since the launch of the Internet. But the idea of it still freaks out a lot of people, including business owners. They worry that all their vital information will either be lost in the ether, or stolen. Whilst the realities might be quite different, the concerns are still real. Tackling these concerns is important.
It’s not just bike trade folk who don’t like to share information
I already mentioned the understandable anxieties and concerns by bike retailers and distributors with regards to the sharing of their sensitive data. Which is why all the data would need to be converted to an anonymous format.
It may surprise you to hear that it’s not the concerns of bike retailers that I fear might be the major handbrake on such a venture. It would in fact be the major RMS and operating systems companies who I suggest would be the most belligerent roadblock, at least in the initial phase, and not unreasonably so, to a degree. As I hinted before, many of the major retail software companies are already collecting your data, which they would consider to be hugely valuable and commercially sensitive. It’s also important for their business model, to keep clients and their data within their own ring fence as much as possible. If they lose control of your data, they lose control of you and your business and their leverage for customer retention, growth and up-sell.
The Bike Industry
Our Passionate ‘Cottage’ Industry
Firstly, depending on the territory, there are still a significant number of bike retailers not operating with some sort of Retail Management System; either server or cloud based. Many are still relying on their accounting package and that’s if they have a computer in the first place. So there is certainly a capacity and capability shortfall in every territory. Whether it’s sufficient to affect statistical integrity would depend on the country or region.
Secondly and connected directly to this first issue, is the simple fact that a large proportion of business owners and operators in our industry either possess a ‘basic’ understanding of their RMS or OS, or are indeed practically computer illiterate. Add to that the large level of cynicism, suspicion or concern over global digital companies, their intentions and integrities, whether justified or not.
For the data to be truly representative and informative, it would ideally also include online retail (and perhaps even online ‘wholesale’) sales: as well as sales made by supermarkets, department stores, sporting chains and other large format retailers. While most industries wouldn’t blink at this, and indeed would see the need and value of such data, this is the bike industry. There’s still many among our ranks that are still not happy with the fact that a substantial portion of bicycle and bicycle product sales have been absorbed by online or large format, multi-category retailers. They may well choose not to be a part of a data sharing exercise if the likes of Wiggle, Walmart, Decathlon or Amazon are also involved.
Why could industry data sharing actually happen now? What’s different?
It’s (sort of) already happening
You only need to look at the likes of the BPSA or NBDA in the US bike trade, CONEBI in the European market or the developing efforts of global industry data leader GfK in both the UK and Australian bicycle retail industries, to see that not only is data sharing in the bike industry possible and valuable, it’s already happening to some degree in a number of key territories.
They might fall short of the admittedly ambitious suggestions I am making; with relation to live or high frequency update data streams, semi or even fully automated collection, conversion, collation and communication and the multi-channel data sets, but they certainly show that it’s a relatively short leap to a substantial industry participation on shared data.
Software technology and big data
Industry data collection and sharing is already a reality in numerous industries far bigger than the bike industry. This is very much aided by the capacity, capability and improving affordability of ‘big data’, AI and business intelligence software. In short, the technology required is available and it’s already proving its value to other industries.
Market maturation and evolution
I might have made a friendly jab or two at our beloved industry in this article, but in fairness it impresses me with the reality of just how much this industry, its retailers, distributors, brands and manufacturers have matured and evolved over the past ten years. Rather than howling at the moon, the majority of the bicycle industry’s contemporary businesses are reaching for the moon. They’re accepting of the shifting paradigms in distribution, consumer pathway and the function of retail. They’re observant of the learning and insight offered by today’s global leaders in brand, distribution, omni-channel retail and customer capture. The bike trade has had its ‘come to Jesus’ moment. To be honest it’s had a few and now it knows it needs to break free of its cultural shackles and move forward on multiple fronts.
Critically, our beloved bike industry also needs some serious help. It was never massively profitable, but it wasn’t bad. Over the past 15 years or so, the profitability and viability has been consistently eroded all along the supply chain. Thanks to multiple well-covered reasons I won’t venture into here, we sense we are witnessing an industry almost inevitably marching towards a vertically integrated and homogenised, B2C paradigm. Partially due to the need to control the consumer pathway, experience and product relationship, but largely due to the reality that the cake slices are simply getting too thin.
While I think that B2C channels are a growing and inevitable reality in the bike industry, I also don’t think it needs to become the whole industry. The expertise, immediacy and tangible advantages of the IBD; the online professionals who want to continue offering convenience, range and value; the value-add of the specialist local distributor and the attraction of a brand who just wants to focus on producing the best products it can; are all aspects of the industry I not only think we value, but will continue to do so in one form or another.
The truth is, we need to improve our business efficiencies, purchasing systems, investment decisions, product fulfilment, cash flow, sales and pricing strategies and above all, our profitability; as retailers, distributors, brands or manufacturers. I firmly believe the key to achieving this is shared live industry data and this is an achievable reality.