An Upside-Down Industry: How Retailers Can Use Inventory Planning to Take Back Their Stores
Our industry is upside down.
For most retailers, it’s a simple equation: Buyers communicate with manufacturer reps to choose the products they can stand behind and sell to their customers. As the season progresses, customers choose to shop at the retailer because of their curated and intentional selection. The retailers and the manufacturers profit, everyone celebrates, and the industry evolves and escalates.
When it comes to the bike industry, the process has shifted into reverse. The manufacturers choose the products, the retailers are forced to offer a stale selection, and the customers choose not to shop. No one profits, no one celebrates, and the industry doesn’t evolve.
When the manufacturer controls the distribution, you have a marketplace that’s upside down. That’s the case in the bike industry, and it’s igniting a panic in cycling retailers across the country. There are whispers of the demise of bicycle retail and the small bike shop, and those whispers are accompanied by complaints about online retail, Amazon, the consumers, manufacturers—everything but the real culprit, which is the IBDs themselves. Trace the narrative back to its origin, and you’ll find that the surrender of power to the manufacturers occurred with the misstep of retailers of not having a disciplined, intentional inventory plan.
Specialty bike retailers must be disciplined retailers first. What that means is proper inventory management. When they don’t have a disciplined inventory planning cycle, then manufacturers have no choice but to control the distribution.
Retailers have lost control of their own inventory, but it does not signal the end of bicycle retail. It’s up to retailers and retailers alone to regain control of their own stores and provide their customers with the inventory they want, and the inventory they can stand behind, in order to revive the industry.
When it comes to the current unnerving trajectory of the bicycle industry, retailers tend to blame two factors: manufacturers and the evolution of retail. Although these are certainly impactful components, it’s not where the majority of the blame lies.
We cannot blame manufacturers for this inverted inventory plan that’s now normal among bicycle retailers. Manufacturers merely stepped into a void left by unprepared retailers. If you’re not good at inventory planning, naturally manufacturers will put products in your store to get it out of their warehouse. At first, it may have made retail easier, but as the balance of power has shifted totally into the hands of manufacturers, retailers are suffering. It’s time for retailers to regain control of their inventory planning and their businesses, but holding a grudge against manufacturers will only exacerbate the old, growing problem.
It’s not the fault of manufacturers, and it’s also certainly not the fault of retail or the consumer that bicycle retailers are floundering. We’ve heard many business owners blame the evolution of retail and all the woes that have come with it—the internet, big box stores, and the like—for their failing business. They point to other retail industries that are suffering in the 21st century in order to justify their own failings. But it’s not retail that’s the problem, and the proof is in the news. There are modern industries and businesses that suffered until they turned to retail, and it was retail with a strong inventory plan that saved them.
Modern retail could actually be the savior of the bicycle industry, rather than its demise. But in order to actualize that vision, we need to first build healthy retail cycles—and that means regaining control of inventory planning from manufacturers.
If your rep is sliding your purchase order across your desk, you’re making bad choices and intensifying the existing problematic situation. The path has to be instead that you are proactively selecting your product and bringing it into your store when you need it, at the quantities you want it.
A strong inventory plan, fueled by projections and analysis of your sales history and defined by calculated risks, will allow manufacturers to comfortably relax their grip on retailers. A calculated inventory plan should be flexible but intentional, plotting out the retailer’s plan for the year head and the role of products within their store. Manufacturers and brands may resist your retailer-led inventory plan at first, but once they recognize the shift it could have in the overall profitability of your business (and, therefore, their sales through your business), they’ll be more amenable. Most manufacturers love the retailers that are good at inventory planning because it makes their job easy.
For those of you who worry that retaking control of your inventory plan will frustrate or even end your relationship with a national manufacturer, then find a new partner. If they aren’t willing to adapt to your inventory plan, then they’re not right for your store. And don’t depend on big-box names to appeal to your native customers. Locally, your brand should be—and almost certainly is—stronger than the national one. Don’t underestimate your own brand.
Ultimately, this is simply a matter of simple retail science. Specialty retailers need to be consumer-facing, know their segments, and shape their inventory accordingly by selecting the best products, bringing it in at the right time, and managing it well. We know that this is a frightening proposal, and that many bike retailers are thoroughly entrenched in the dysfunction that’s the result of the lack of a disciplined inventory plan. Amending that dysfunction won’t be easy or quick, but in a year or even five, an independent retailer with a disciplined inventory plan and collaborative brand partners will reap the benefits of such a change.
Consider this your intervention. It’s time for the bicycle retail industry to take up responsibility for its flaws and its future and to carve a new, independent path.
SUBSCRIBE FOR MONTHLY TIPS AND TRICKS!
Great Mann Group content, right to your inbox.
We hate SPAM. We will never sell your information, for any reason.