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Economic Slowdown Worries Retailers

Published March 1, 2008

WASHINGTON D.C. (BRAIN)—A recent survey by the National Retail Federation (NRF) found that 12.1 percent of consumers plan to treat themselves to a major purchase with their tax refunds. But bike shops aren’t too bullish on consumers spending it in their stores.

Rather, news reports on a slowing economy and possible recession has prompted some to look at ways to curtail expenses.

“We’ve experienced a lull at end of last year and continuing to today,” said Scott Rittschof, owner of B&L Bike and Sports with two stores in San Diego, California. “I’m making some substantial changes to the business and the way we operate to be a little leaner and meaner going into this season.”

Aside from cutting expenses, Rittschof said he will hire summer help a little later in the season to ensure he sees the same level of upturn in sales as in previous years.

Ed Vigil, owner of Bokoo Bikes in Minnesota, said he’s trimmed down orders of high-end bikes by half this year, predicting a dip in sales of bikes priced from $2,000 to $5,000. He said he’s already seen a slight drop at the high end.

“Even our roadie customers are buying what’s on sale, what’s a good deal,” he said. “The press is hitting (the economy) issue hard,” which in turn is making consumers cautious.

“These are not times to be messing with speculative inventories, especially when manufacturers tell you there are deals on this or that. I don’t want to hear about any deals. I’m going based on history, and being cautious with my ordering,” he added.

Still, some retailers see a silver lining. Dale Brown of Cycles de Oro in Greenboro, North Carolina, said his customers are curtailing big vacations and using their bikes on more local getaways. “That’s good for us,” he said.

During these tough economic times, Brown is looking for ways to bring more customers through his doors, including women. His store just increased the floor space for women’s products to take up 25 percent of total square footage.

In Portland, River City Bicycles owner Dave Guettler prefers to “stay the course” and not cut back on payroll, advertising or orders.

“Some businesses will let themselves get so freaked out by economic news that they in fact cause a mild recession of their own,” he said. “In 25 to 30 years I’ve been in the industry, I have yet to see the bike industry affected by a recession. We’re about as insulated as an industry can be.”

While reaction to economic reports was a mixed bag, retailers did say that they generally stay away from tax refund-type promotions to get customers in their stores. Most feel this is an overused tactic that provides little return and a poor business image.

**The NRF 2008 Tax Returns Consumer Intentions and Actions Survey was conducted by BIGresearch. The poll of 7,977 consumers was conducted from February 2-12, 2008.

—Lynette Carpiet

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