SNOWBIRD, UT (BRAIN)—Ask John Thompson, Specialized’s national sales manager, how the economy is affecting business and he laughs. It’s all about the weather, Thompson said during a brief break over lunch during the company's Dealer Event.
“Here we are in July and dealers are still talking about the weather,” he said. “Weather, as it affects sales, hasn’t done us any favors this year. I sense that more dealers are being challenged by the weather than the economy,” Thompson added.
The Northeast and Midwest have been wracked with drenching rains and even Utah, a state best known for bright and sunny skies, hosted a series of early summer storms that put a damper on sales. And in other parts of the nation fickle weather has delivered sunny days during the week followed by rain-soaked weekends.
That keeps a “fair weather customer” out of stores, Thompson added.
Still, the economy has taken some of the steam out of business this season and Thompson predicts the industry will gladly put 2009 behind them, thankful that the year will weather a tough economy and tempestuous weather.
“The industry right now is, overall, fairly flat, and the velocity of sell-through we experienced last year has certainly slowed for models over $3,000,” he said.
Today, dealers who hope to meet last year’s profit levels will work harder, turn inventory more quickly, and will sell more lower priced bikes than last year, said Thompson, a former Cat I track racer, who has been in the industry—off and on—since the age of 14.
Despite the sales challenges facing dealers and suppliers, Specialized has launched what amounts to a new subsidiary—its Globe line of urban bikes. Branding is so minimal you have to look carefully to find the company’s stylized “S” anywhere on the bike. Even the head-badge is nothing more than a metal frame that lets customers create a personalized logo they can insert into the holder.
Mike Sinyard, the company’s founder and president, told dealers Monday night that he intends to keep investing in the company despite a weak economy. “Right now we are investing more than ever,” he said, recalling the dire financial straits the company faced nine years ago.
“Those were tough times. The bank was breathing down our friggen neck,” he said. “I learned more in that one year than I had in the previous 25,” Sinyard added, noting that this is the company’s 35th year in business. “I’m obsessive about equipment and I know I drive people nuts sometimes,” he said to a round of applause.
The company has been listening to its dealers and has brought pricing down on most of its 2010 bikes in reaction to what Bob Margevicius calls “time rich” consumers. Today, whether consumers are employed or not, they compare products for price and value. Company wide, staff refers to the trend as the “New World Order."
“We think that behavioral change will persist and that consumers will continue to shop very carefully,” he said.
Photo: Specialized CFO Mike Haynes and national sales manager John Thompson.