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Why was Huffy's CEO at the IBD Summit?

Published January 21, 2017
Bill Smith at the IBD Summit on Wednesday

TEMPE, Ariz. (BRAIN) — Bill Smith is a confident man, the CEO of Huffy Corp., a company that sold 4.3 million bikes last year.

But Smith — who has been with Huffy since 1993 and has been CEO since 2009 — did display a small measure of sheepishness as he stood before bike shop owners and their suppliers here this week.

"A lot of people are probably wondering why I am here," the genial Smith told the group at the IBD Summit.

Smith came for two reasons: one, to look for ways to cooperate with the IBD channel to overcome broad "social and economic and demographic" factors that have contributed to stagnant bike unit sales in the last decade. Secondly, he came to recruit IBDs to serve as warranty service centers for Huffy.

On the first, Smith noted that the U.S. industry — including the mass market and speciality retail channels — has been relatively steady at 17.5 million bikes for at least the last decade.

"What we have is an industry that is growing some topline business but not growing unit business," he noted, despite a steady increase in the U.S. population.

"We need to talk about how we can grow our unit sales, how we can grow participation and bring more riders into the business," he said.

Smith noted that the issues discussed at the Summit, from an IBD perspective, are "eerily similar" to the concerns at Huffy's headquarters in Dayton, Ohio.

"They are big issues that are tough to solve," he said.

"People have more choices today with their discretionary income and their free time," he said, noting the growth of soccer and kayaking as examples.

He noted the growing perception that bike riding is unsafe, which has led to rules prohibiting pupils from riding bikes to school in some communities, including Dayton, a situation that Smith called "mind-boggling."

Smith said Huffy is focused on marketing the bike's role in creating memories and fun. He also said that Huffy has switched nearly all its marketing and advertising to focus on female buyers, who now make up 62 percent of the purchases of Huffy's cruisers, it's fastest-growing bike category.

"Our consumer advertising is completely focused on moms and women. We don't have any male ads; we are speaking to women exclusively," he said.

Smith is aware that some in the IBD community are dismissive of mass-market brands like Huffy. Some refuse to service the bikes, some see the mass market as the competition.

But he insisted that department store bikes serve as the entry point for the activity of bike riding, and that more enthusiastic riders inevitably go on to buy bikes from IBDs.

"No other bicycle brand puts more new riders on bikes every year than Huffy," he said.

"Some of you may view us as the competition. I don't see it that way. I think of us as one of the entry points into cycling. ... I hear people say that the mass market steals market share, but I don't see that. No one is going to say, 'I was thinking of buying an Audi A6, but then I saw a deal on a Camry so I bought that.' It doesn't work that way. We are a gateway brand, an entry point.

"It's a bit like craft beer guys. They may prefer a local craft beer but I guarantee that most of them started out drinking Bud Light and Miller Lite."

Smith said consumers and international suppliers don't make a distinction between the mass market and IBD channels.

"It's only those of us in this room that see (the channels) as separate and distinct. The consumers just see points of purchase. And the international suppliers don't see a distinction at all. We all benefit because of the 10 million tires that we buy every year."

'Send you some customers'

Getting down to business, Smith made a pitch for bike shop owners to become warranty service centers for Huffy.

"We'd like to send you some of our customers," he said.

Huffy currently works with 250 independent hardware stores and 169 bike shops as service centers. "We'd like to have a lot more," Smith said. "We'd like our customers to become your customers."

He said the service center agreement is very simple, requiring little more than proof of insurance. Smith said he'd like to add a service center directory to the Huffy website, which he said is one of the most visited sites in the bike industry.

Service centers are reimbursed for labor and are shipped replacement parts at no charge, usually the same day. He said Huffy keeps an enormous number of warranty SKUs in stock in the U.S., including specific model parts.

"When there is a problem with a Princess bike's saddle, the little girl does not want a generic white or pink replacement saddle, she wants the exact saddle that came with the bike. We have that in stock."

"I don't know how many customers we will send you, but we sell a lot of bikes and when there's a problem, they are not going back to Wal-Mart. They are calling us, and I'd like to send them to you."

Smith said retailers who are interested in becoming Huffy service centers should drop him a note at bill.smith@huffy.com.

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