BY JASON NORMAN
When talking to Performance Bicycle chief executive officer Jim Thompson about new retail stores it has opened over the last year, the word “demystify” comes up often.
“We found in our consumer survey work that customers were intimidated when they come into a cycling store,” Thompson said.
Last year Performance began implementing a “concept revolution.” Thompson felt new and old cyclists alike needed to have a positive guest experience, so the wheels began turning to change the stores’ theme to emphasize the cycling lifestyle.
“Any great brand first and foremost starts with heart and mind,” Thompson said. “There’s always an emotional attachment when you think of a brand. You don’t think of Apple without an emotional response.”
From the layout to the products that the new stores carried, Thompson felt it was important to demystify the bike purchasing experience for customers across the board. “It was about building a store that really spoke to various segments,” he said.
As part of these new stores, Performance launched its new Spin Doctor department. Thompson likened Spin Doctor to Best Buy’s Geek Squad.
“They are a brand within a brand,” Thompson said of Geek Squad. “Best Buy had a high return rate of computers not because they were defective, but because people didn’t know how to set them up. People were intimidated by it.
“We treat Spin Doctor as its own brand,” he continued. “It was and is critical for us with our mechanics in our stores, to our Spin Doctor advisors on the phone, to our Spin Doctor advisors that we position within the catalog, that we have a voice of understanding of the sport—a voice of understanding of the product. Spin Doctor is a store within a store. It’s a natural unification between product and service. That was a big part of the demystification for us.”
With the launch of several stores in the coming months in Southern California and Pennsylvania, Performance Bicycle will grow to 96 stores.
New Product Strategy. Along with these new stores has come an updated business philosophy. For years Performance has enjoyed success by positioning itself in the middle to low end in terms of product price points. But Thompson, in listening to consumers, has brought in more high-end product to fill enthusiast demand.
“It was clear to us that we had demand that was going unfulfilled,” Thompson said. “The consumer was telling us very clearly that they would buy more bicycles from us if we served them, and so we looked for partners that understood our business approach to position and present their brands in our catalog, Internet and store where it was seamlessly integrated.”
One of these partners is Fuji. “For us, Performance sells a higher average price than our other dealers because they really support the premium parts of our line,” said Pat Cunnane, president of Advanced Sports Inc., parent company of Fuji.
One higher end brand that recently began appearing at Performance was Focus Bicycles. Performance began selling Focus bikes in April.
“It’s one of the toughest decisions I’ve made in my career,” said Scott Rittschof, chief executive officer of Focus Bicycles about entering into Performance stores. “There is considerable emotion around Performance with respect to the other IBDs in the country. We view the IBDs as our No. 1 channel of distribution, therefore making this decision to go with Performance was very challenging because we did not want to upset the rest of the IBDs by going with Performance.”
Rittschof said he had discussions with dozens of its retailers about the brand going into Performance and most weren’t daunted by it. Their concerns revolved around Performance upholding pricing and the potential devaluing of Focus’s brand image.
Rittschof told retailers that Performance agreed to its pricing policy, which he said the business has stuck to 100 percent. “They’ve made their stores, catalog and Web site appropriate for presentation of the premium brands,” Rittschof said.
Rittschof said he felt that Thompson not only wanted to stay “rock solid” in the low to middle end of the market, but he also wanted to take it up a wrung to the premium segment.
“They saw that they were losing a lot of their customers when their customers became enthusiasts and Performance didn’t have an offering that would satisfy them,” Rittschof said. “They were looking for upscale brands. And the fact that our strategy from the very beginning was to embrace Internet as one sales channel—that really resonated with Jim and the Performance team.”
Thompson said Performance is now on its way to a more holistic mix of product that makes sense to cycling participants at all levels.
“We love the recreational cyclist, but we also believe there’s a real opportunity to expand our serving of the avids, who are clearly fans of ours,” Thompson said.
Streamlining Proprietary Brands. Performance also took a long hard look at its stable of proprietary brands and trimmed those down considerably in the last year from 18 to 11.
“We weren’t very strategic with some of the growth over the last couple of years,” Thompson said. “We just had too many proprietary brands. Now every brand will have its own message, it’s own position in the marketplace.”
This more streamlined approach to in-house lines will allow Performance to bring greater focus to the products, Thompson said. “And the brands are just more strategic. When we think of Forte, we think of componentry. Forte was on shoes; it won’t be any longer,” Thompson said. “Each brand is much more specific to categories that make sense to our expertise.”
Thompson said he realizes Performance elicits an emotional response from IBDs. “I suspect it’s because we have a clear strategy and we’re going to execute it,” Thompson said. “In more recent months there’s more clarity that we’ve provided the vendor community as well as the competitive landscape to the direction we’re going. I think we’ve gained respect from many of our competitors.”