OUTSPOKIN’
march 2010
bestpractices 2010 NBDA EXECUTIVE COMMITTEE Chairperson > Bob Updegraff Harley’s Bicycles, Hutchinson, KS
President > Mike Nix Liberty Bicycles, Asheville, NC
First Vice President > Dan Thornton Free Flite Bicycles, Marietta, GA
Second Vice President > Jerry Hiniker Superior North Outdoor Center, Grand Marais, MN
Secretary > Beth Annon-Lovering B&L Bike Shop, Davis, CA
Treasurer > Bruce Heidlauf Mill Race Cyclery, Geneva, IL
DIRECTORS Mary Ann Cash > Cooper’s Bicycle Center, Stillwater, OK Chris Kegel > Wheel and Sprocket, Hales Corners, WI Jeff Bailey > Bikesport, Houston, TX Dale Brown > Cycles de ORO, Greensboro, NC Andrew Boyland > Cycle Craft Inc., Parsippany, NJ James Moore > Moore's Bike Shop, Hattiesburg, MS Jim Carveth > Bike Rack, Lincoln, NE Tom Jessup > Chainwheel Drive, Clearwater, FL Jay Graves > The Bike Gallery, Portland, OR Barry Brenner > SmartEtailing.com, advisor
TAKING CARE OF BUSINESS At Liberty Bicycles, that means focusing on the essentials: bike advocacy, inventory control and superior staff. By Chris Lesser Photos: Mary Smith
Mike Nix has been in the bicycle business for three decades—32 years if you count the two before he and his wife Claudia started selling Trek frames out of their home in Asheville, North Carolina, when Mike worked at shops during his summers off as a middle- and highschool educator. Once a teacher, always a teacher.“From the very beginning we’ve been an educational bike shop,” says Nix. “We’ve always felt that our job is to be there for our customers and to help them understand their bicycles better. And we’ve always focused on advocacy.” This is an advocacy power couple if there ever was one. Nix says that his wife Claudia spends 90 percent of her time on bike advocacy. She’s a member of North Carolina State Bicycle Committee, North Carolina State Trails Committee (which controls all federal grants for greenways) and Advocacy for the Blue Ridge Bicycle Club (which she
STAFF Executive Director > Fred Clements fred@nbda.com
Marketing & Communications Director > Michael Baker mike@nbda.com
Newsletter Editor > John Francis john@nbda.com
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Consultant > Dan Mann dmann@manngroup.net
NBDA ON THE WEB This issue in color: www.nbda.com/dir/348/files/mar2010.pdf
SUGGESTION BOX: http://nbda.com/goto/suggestions For more details on the NBDA, its programs and to become a member today, visit www.nbda.com or contact info@nbda.com, phone (949) 722-6909. Media inquiries please contact Michael Baker, mike@nbda.com, phone (949) 202-5500.
Proud parents: Mike and Claudia Nix have "raised" a business that at age 30 is both financially responsible and sensitive to the needs of staff, customers and community.
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The door is wide open. "For the IBD to survive," says Nix, "we're going to have to figure out how to get in front of average people."
started in 1974). She has a seat on the Metropolitan Planning Organization and two greenway commissions and plays an active role with the Buncombe County Health Department’s Healthy Buncombe initiative. For his part, Nix has been a League of American Bicyclists instructor since 1981, and now sits on the LAB board as well as the NBDA board. It may sound exhausting, but “it’s just part of our fabric,” says Nix,“We don’t look at it as something we have to do, we just go out and do it.” Battle of the Brands While all the shops in town participate in an owners association that leverages their cooperation to make Asheville a more bicyclefriendly community, it’s not all Kumbaya and ’smores. Competition for bike customers there is fierce. Although growth has leveled lately, Asheville saw a huge surge of second and third homes in the 2000s. That growth, combined with some of the best road and mountain bike riding in the country, attracted heavyweight manufacturers to set up dealers. Trek and Specialized, especially, have fought long and hard for retail space in this booming mountain town. The frenzy faced Nix with one of the hardest business decisions he’s ever had to make. As an increasingly rare dual-dealer of Specialized and Trek—both of which brands he had carried since he opened his store in 1980—Nix was getting pressure from both companies to take on more product. “Both companies wanted more, and that’s always the way it is. So we spent a year thinking about it and having open discussions,” says Nix.“This was not a sudden decision. We went over everything from financial terms to pre-seasons, and it was a long and agonizing exercise. What we finally realized was that as long as we had both brands, 1.) neither was going to be happy, and 2.) we were never going to get the best pricing.” In the end, Liberty Bikes chose Trek, and in the fallout Specialized is launching a Concept Store in Asheville this spring, which will bring the number of shops in town to a whopping nine.
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Controlling growth The battle of the brands was just part of the larger challenge facing Liberty Bikes. “We had years of 17- and 25-percent growth in the early and mid 2000s,” says Nix.“If I were to talk to someone outside of my business they’d say,‘You’re doing great, you’re growing every year.’ But at the same time our margins were slipping and our turns were slipping. Our growth was pretty much out of control.” Then the economy began to soften. Looking back, Nix can identify a bellwether of the changing economy: “I hadn’t sold a $14,000 road bike in two years,” he says. “We needed to tighten up our business, and not just our bike brands. We realized we couldn’t just live off growth. We looked at our business and saw that our inventory was high, and our turns were low. So starting in ’07 we reduced our inventory. We consolidated lines and tightened up our business.” By 2008, Liberty Bicycles had reduced its inventory by 20 percent, and just like that, Nix saw its turns go back up. The solution sounds simple in retrospect, but it was the product of a lot of work and conversation, and Nix says his business would be in an altogether different state if it weren’t for the NBDA’s Profitability Project. P2, as its called, brings together a group of non-competing retailers twice a year to brainstorm, critique peers’ businesses, go over data and seek new solutions. “Especially in the smaller shops, we tend to spend so much time on our own businesses that it’s hard to step away sometimes and see the big picture,” says Nix.“Joining the Profitability Project was probably the best single thing, business-wise, that I’ve ever done.”
After balancing Trek and Specialized for two decades, Nix finally had to make a choice. But there's no doubt what his real brand is.
OUTSPOKIN’
march 2010
“We’ve been called the most over-educated bike shop in the country,” says Nix.“I’ve got a sales manager who’s a recovering lawyer; my manager has a business management degree, we have a former IBM programmer on staff and our lead mechanic worked for Team USA at the World Championships this fall. “Luckily we can offer employees a great quality of life, and that goes a long way. We just had our best sales guy turn down another job that would have paid him three times as much. The bottom line: your people are your most critical elements.”
Nix credits the NBDA's "Profitability Project" with helping him get control of his inventory—and his business.
“The thing with this industry is that we’re all on the same page, but maybe not on the same paragraph. What’s coming out of the P2 group is a matrix of categories that you can plug your data into and compare yourself with others across the industry. That’s what’s going to come out of it, but it’s not cheap. We’re paying a per diem to travel and trade information twice a year. But that information gave us a head start on the economic downturn. Instead of owing people money when it came, we had money in the bank.”
“Joining the Profitability Project was probably the best single thing,
Putting the $ in $ervice Liberty Bicycles’ mission to educate customers shows in its store layout, with a service department island easily accessible in the middle of the shop, not shoved into the back like in most stores. “When gas prices went up in ’08, we saw all kinds of stuff come out of the closet. But starting this year, once the gas prices receded, that has dropped off considerably.” But when asked if he makes money on service, Nix says he’s still trying to figure that one out. “I don’t know. Does service mean fixing bikes? Does it also mean trouble-shooting and assessing repairs? Or is it selling replacement parts? That a subject we’re looking at and working at very hard. “The best way of looking at this that I’ve seen—and I give Dan Thornton of Free Flite in Atlanta credit for it—is this formula: If you can bill 60 percent of your mechanics’ time on labor, then you’re doing alright. And that’s about where we are. That other 40 percent is spent on all the peripheral stuff they do. If I did $100 in labor today, but paid my mechanic $125, I’ve got to think, okay, how much of his time did he spend talking to the customer, evaluating the bike, determining what needed to be done to the bike? How much time did he spend on cleaning up after he was done and putting away tools and ordering new parts?” Asked the boilerplate question of what Liberty Bicycles does best, Nix responds with the boilerplate answer: customer service—but he’s quick to add that while that’s what everyone says, it doesn’t mean what it used to.
business-wise, that I’ve ever done.” On the Ground But the NBDA Profitability Project wasn’t the first time Nix crossed the aisle to cooperate with other retailers. When it became apparent he couldn’t afford to send a dozen employees off to get trained in the art of bike fitting, he pooled his resources with some non-competing shops and flew Serotta’s Mike Sylvester (who now works for Trek) out for a training session. “We wanted sales staff to have as much knowledge as possible. So if you walk in to buy a bike, that person helping you is a trained fitter.” With no one on staff fewer than five years, it is easier for Nix to justify that kind of investment. And getting the right people in place has let Mike and his wife focus on other areas of the business, such as advocacy and the big-picture business outlook.
The more they ride the more they buy. Claudia Nix in particular has made bike advocacy her life's work, and the store sponsors many rides.
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HOW FIT FITS IN Bike fit is an important part of the business at Liberty Bicycles. Liberty’s co-owner Mike Nix has been fitting bikes to riders since the mid 1980s when he was a coach and custom frame builder. His store soon built a reputation for precision bike fit, and today his entire sales staff has been through multiple bike fit training sessions. More from Nix on bike fit: Outspokin’: How do you present this service in your shop? Nix: We have our fitting services prominently displayed in the store. If you buy a road bike or a mountain bike from us, we set the seat for height and fore-and-aft, and let you loose to put on some miles on it and see how it feels. Then we ask people to come back for a check. We find once they start putting in miles, they get fitting issues. And if they’re just getting into the sport their fit will change as they ride—maybe even up to three times in a year. But everyone should be back in at least once, unless they happen to be super flexible. And that’s included in the price of the bike. We’ll offer a 25-percent discount on any parts we put on during a fit, and we don’t offer a trade-in for those parts. We’ve already got a huge box of them.
Every bike purchase includes an expert fitting by one of six staffers trained and certified in the mysteries of bike fit.
“The standards have changed when you have the REIs and the companies that have done an outstanding job, maybe not in what they sell, but in customer service. Your typical shop might think that customer service is the fact that your bike works. But we’re being outsold. We have the better product, but we’re being outsold by REI and Performance, companies with more flash. “We’re getting old—we’re like me,”says Nix.“For the IBD to survive, we’re going to have to figure out how to raise our own standards. And for starters, we’re not very visible. To survive, we’re going to have to figure out a way to get in front of average people. We have a whole generation now, probably two generations, that don’t get the bicycle under the Christmas tree. “One of the things I feel we desperately need is an affordable kid’s bike, and the big companies haven’t helped us. We’re screaming for an inexpensive kid’s bike. Parents can’t pay $200 or $300 for a kid’s bike. That’s three or four times as much as a big box bike. “It would be great if our vendors would provide us with a kid’s bikes that is lightweight and functional at a reasonable price, because that’s our future.”
“We’re already at a price disadvantage, and if we don’t have the people advantage, we don’t have anything.” How much of a revenue generator is this for you? It’s as much a bike sales support. But we do tremendous business in handlebars and stems. We do a huge parts and accessories business tied to the fit. I don’t have a number, but it adds a lot. If we take a guy in, and fit him, and he’s comfortable, he’ll tell everyone he knows. It just kind of flows. And if someone’s buying a custom bike, and we sell 30 or so a year, the price of a fit is $150. That goes towards the deposit when the customer decides on a bike.
SPECS Liberty Bicycles Asheville, North Carolina Number of Locations: One.
What’s the secret to doing fitting right? It’s a very long process. The biggest thing is that you have to be consistent. We have four regular sales people doing fits, then Sam our manager does most of the fits for custom bikes. And Mike Smith, our sales manager can jump in too. So I really have six people on the staff at any one time I’d turn loose with any customer. I think the future of the mid- to high-end bike shop will depend on a lot on the quality of the staff—more so than in the past. We’re already at a price disadvantage, and if we don’t have the people advantage, we don’t have anything. -Chris Lesser
Total Square feet: 8,500 Years In Business: 30 Employees 18 Major lines carried: Trek, Seven, Serotta, Fisher, Turner and Moots. Net sales: $2 million plus Web: www.Libertybikes.com
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