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Virginia Shops Beat Slow Economy

Published June 2, 2010

WASHINGTON, D.C. (BRAIN) — Leading shops in the Virginia suburbs surrounding the nation's capital have overcome economic uncertainty this spring by maximizing inventory turns and ordering just in time.

Speaking to riders on the first day of the BRAIN Dealer Tour of D.C. yesterday, Bob Fadel, co-owner of Spokes Etc., a four-store chain in the Washington, D.C. suburbs, said it began focusing on increasing inventory turns about six years ago. Following Trek's continuous improvement program, it moved to fewer vendors, reduced SKUs and increased turns from 1.7 to more than 4.4 times a year. Now primarily a Trek and Specialized dealer, it has reduced its inventory by half and improved cash flow.

By resisting preseason programs and ordering based on need, it has remained flexible in weak economic times. "When the economy got soft we were able to change our offerings to adapt," said Jim Strang, co-owner in the 14-year-old business.

As a result, Spokes Etc. saw 6 percent growth last year in a difficult economy and is up slightly year-to-date despite record annual snowfall that caused sales to plummet in February.

Still, Spokes Etc. has seen wild swings in the market over the past 18 months that make it hard to predict sales. "The big challenge is the market is volatile," said Strang. "We'll be rolling 40 percent over one month then the next month we're off 20 percent. Now we see these swings."

At nearby Revolution Cycles, co-owner Mike Hamannwright has benefited from a similar approach to just-in-time ordering. Each of its four stores, which sell 85 percent Trek bikes, has the capacity to store just 10 days worth of bikes. It has no central warehouse and keeps little inventory on-hand despite selling around 6,000 bikes annually.

"We have to weather the storm with shortages, but to me it beats carrying that burden," said Hamannwright, referring to shortages this spring of 29ers, women's road bikes and kids bikes.

Despite early season bike shortages in some categories, its three-story flagship Arlington store was up 60 percent in April and is up over 30 percent for year. And thanks to a strong March and a "ridiculous" April, the entire business is on pace to be up over $1 million in sales this year. "If this continues, I may have to retire," Hamannwright joked.

Topics associated with this article: BRAIN Dealer Tour

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