Thursday, December 15, 2005

Hard to believe it's that time of year...again...

Earlier this week, I stood in the office doorway of one of my co-workers chatting about something (of which the topic escapes me now), when I suddenly realized that next weekend was Christmas. "Next weekend is Christmas weekend, isn't it?" I demanded. He looked at me kind of funny and replied that it indeed was. Where did this year go? It's really hard to beleive that it's time to deck the halls and jingle all the way all over again.

Honestly, I don't know why I should be all that surprised. It's not like I didn't have any warning. After all, we've been bombarded by Christmas decorations and holiday ads for the past 3 months. Is it just me, or does it seem like each year, there's a race by department stores and discount retailers to be the first to play Christmas carols and hang holiday decorations in their stores? It's worse than watching Cat 4's race for beer preems. Is there any reason we need to be looking at Christmas ornaments well before we've even started thinking about what we're going to dress up as for Halloween?!? For crying out loud, let me enjoy Halloween and Thanksgiving before having to even think about buying Christmas presents and stringing lights. Every year, it never ceases to make me wonder what the reward is. With all the hype that surrounds Christmas during the preceding 3 months , once Christmas does finally roll around, it's downright anti-climatic.

What else does this scenario remind you of? It's funny; I get a similar feeling when I walk through the front doors of the Interbike trade show each year. While it's a great opportunity for we industry folks to see people we only get to see once or twice a year, cut loose, and party a little bit, that's really not what trade shows are for. In a perfect world, trade shows are supposed to be a sales and marketing function where attendees come to see your new products. But what happens when all the attendees have already seen your product? It's about as anti-climatic as the holidays can be.

Welcome to the bike industry...where the model years just keep coming earlier and earlier. It's not uncommon for manufacturers to release their new models as early as May; a full seven months before the end of the year. Just like I do at Christmas, it really leaves me wondering what the reward is. Seems like everyone loses and nobody wins, to me. Dealers certainly don't win. Since much of the U.S. is under snow until Spring, "new" models pretty much become obsolete before their peak selling season even begins. Just when the dealer is ready to place orders to gear up for Summer, vendor's stock levels leave much to be desired since they are getting ready to start placing orders for the next year's new models. Any "new" product ordered better be turned around pretty quick, too. If the dealer has to sit on "old" product over the Fall and Winter months, they don't stand a chance at making full margin on it come Spring since consumers know that the new models will be released in July. I'm not real sure that vendors are big winners either. For the reasons just mentioned, you've gotta wonder if we'd stand to gain more sales if we had product when it's convenient (and easy) for our customers rather than the other way around.

So what's the solution? It's simple, really...we just move away from model years. I suppose this is easier said than done since there are fewer manufacturers living by this business model than are actually doing it. Unlike the traditional model, it seems like it's a win-win situation for everyone. Dealers have bikes to sell on a more consistent basis...when it's convenient (and easy) for them to sell. No longer do dealers have to suffer through long dry spells of unavailable product while being forced to wait for new product to be available. Plus, no more closeouts...dealers maintain margins year-round since there's no threat of a whole new batch of bikes being released when they still have "old" product on hand. Vendors will win in a big way. I can't even imagine what it would be like to not have to go through the brutal "crunch time" that occurs each year from roughly May through early July as we struggle to get sample bikes ready for catalog shoots and product launch meetings. Our expenses will decrease tremendously if we don't have to produce expensive catalogs and re-do our website each year. Inventory levels and supply chain management would be much easier to manage.

But, like many things in this world, it's going to take a major player to pioneer such drastic changes like this for others to follow suit. So who's going to go first? Is anyone brave enough to swallow the pill in the name of creating a better mouse trap? Who knows, if we're successful, we just might be able to use some of the skills we learned to convince the department stores to let us all enjoy Halloween and Thanksgiving for just a little while before rolling out the Christmas trappings.

Happy Holidays, everyone!

Posted by jill hamilton at 8:01 PM

6 Comments

  1. Blogger Donna Tocci posted at 6:50 AM  
    Jill - your first post was well worth the wait. Wow. Good stuff here! Welcome to the Krew.
    Happy Holidays.
  2. Blogger Fritz posted at 8:43 AM  
    Bike and car manufacturers have model years for the same reason Shimano created the Dual Control Levers and Biopace rings -- to encourage people to buy buy buy. If my riding buddy has a 12 pound 2005 Unobtanium bike with carbon everything and top of the line DuraRecord components, the only way I can upstage him (well, besides riding better) is to get the 2006 model. Keeping up with the Joneses is all about the bike.
  3. Blogger Bernie posted at 9:19 AM  
    Personally, I think the move away from model years would "save" a lot of the big manufacturers, some of whom I think are moving toward a Schwinn-like extinction. But people think my theory on that is crazy.

    Also, I can't speak for the rest of the country, but in our neck of the woods I think we're already starting to see a consumer backlash against the ever-increasing Christmas retail push. Day after Thanksgiving sales were lower than ever, probably because consumers were tired of having heard about Christmas since the day after Halloween. Our business didn't start to pick up until two days ago, just 10 days before Christmas.
  4. Anonymous J Charles posted at 10:14 AM  
    Jill - you hit on one of the biggest problems the bike shop channel of trade has created over the last 15-years as it first adopted a product-centric focus, and than narrowed that focus to hold onto its most loyal customers, mostly white, male baby-bommer enthusiast cyclists. Retailers benifit more than the brands do ... because some retailers have modified their business models to include using brand close-outs as part of their merchandising plan. I was recently in a Top 100 retailer who had no less than 3-model years displayed and priced as new merchandise. It is only the enthusiast cluster of core customers who know the difference and insist on the latest componentry. The majority of customers rely totally on the retailers recommendation, and for many retailers their recommendation isn't based on the model year of the bicycle. Significantly no less than 20 to 25 percent of all bicycles sold as new will be last years or older models, and this has been the case for over ten years. Calling for an end to model years is a start, and please continue the dialog.
  5. Anonymous J Charles posted at 10:15 AM  
    Jill - you hit on one of the biggest problems the bike shop channel of trade has created over the last 15-years as it first adopted a product-centric focus, and than narrowed that focus to hold onto its most loyal customers, mostly white, male baby-bommer enthusiast cyclists. Retailers benifit more than the brands do ... because some retailers have modified their business models to include using brand close-outs as part of their merchandising plan. I was recently in a Top 100 retailer who had no less than 3-model years displayed and priced as new merchandise. It is only the enthusiast cluster of core customers who know the difference and insist on the latest componentry. The majority of customers rely totally on the retailers recommendation, and for many retailers their recommendation isn't based on the model year of the bicycle. Significantly no less than 20 to 25 percent of all bicycles sold as new will be last years or older models, and this has been the case for over ten years. Calling for an end to model years is a start, and please continue the dialog.
  6. Blogger mg posted at 7:20 AM  
    awesome post jill... there are already a few companies in the bicycle industry that have chosen to eschew the model year cycle.

    maverick is a pretty good example of a company that has experienced solid short-term success without "model years" (i would argue that they haven't been around for long enough to determine whether their success will bear out in the long term.). instead, maverick has adopted a procedure for naming its frame models that loosely mirrors the software industry.

    when the original maverick ML-7 appeared, it got the name from being the seventh iteration of the monolink design. each successive mod to the frame gained a new moniker. that original frame has now evolved into the ML-7.5, and maverick recently introduced a new longer-travel platform, the ML-8. it's the first truly all-new frame from maverick since the ML-7, hence the move up to revision number eight.

    as improvements have come along, by not adhering to a model-year strategy, maverick has been able to make product improvements as-needed, on-the-fly. no need to wait 'til "next year's models" to introduce the improvements, when you know consumers will benefit from the improvements now, right?

    in many ways, a model year marketing strategy slows, or at the very least delays, product innovation. some might argue that maverick has needed to make changes on the fly to simply make their products reliable, and to a certain extent, that may have been true in the past. my experience however, is that current maverick products are well-sorted and reliable, but there still don't seem to be any model years attached to any maverick products i know of.

    now that they are working with an ouside vendor to produce their frames and forks, i'm curious to see if maverick will eventually fall into the model year trap. this may be wrong, and i'm sure someone on this board will be happy to enlighten me, but it has occurred to me that the industry's adherence to the "model year mentality" may have something to do with their work with outside vendors to get their bikes/products manufactured. those companies (eg. merida, hodaka, fairly, etc.) have annual goals, and the pressure to "make numbers" at the end of the month. perhaps these pressures, while having nothing to do with the bicycle market directly, end up influencing the behavior of the company's customers (PMs at bike companies).

    it's my opinion that the basic trek 820 buyer doesn't give a rip about what model year the bike is. they care about color and price. if this is the case, perhaps a model year-less strategy could work, and not just with high-end product.

    my $.02...

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