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A retailer's crash course in dealing with tariffs

Published July 26, 2019

The added 25% tariffs imposed on many Chinese-made goods in May are about to impact retailers and their suppliers. Ninety-eight percent of the bikes sold in America come from China.

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These unpredictable market conditions seem likely to continue, and it’s safe to say that whatever happens, prices won’t go down. What can we do about it?

Stay positive

You’re not alone in this. With our consumer economy so dependent on China, most anything that competes with a bicycle for a share of a customer’s dollars will also be going up.

It’s challenging on the sales floor or online to be presenting the same product at a higher price. Here are some tips from around the industry to help your store weather the storm.

Present the value 

Some customers will inevitably bring up the tariffs and the impact on prices. To prepare for this, have a staff meeting to present and discuss strategy to counter price objections. Here’s one to try out:

“Bikes are a great value! Even at a higher price, what better value in sports gear is there than a bike? It’s a precisely made and assembled machine, you can use it every day, can you say that about your $500 golf club or your $1,000 kayak?”

Broaden their use

A second approach: Gear you’ll use more is always a better value. Make suggestions about how and where to ride more often, starting with their current riding style: “So you’re doing family rides on weekends? Have you considered using your bike for errands or riding to work one day a week? Let’s look at some gear to make your new ride more versatile.”

“Sounds like you do the same rides on a regular basis; let’s look at a route map, and I’ll show you some other great rides in our area? How about a car rack so you can head out a bit farther?”

Retailer insights

Mike Jacoubowsky, the owner of California’s Chain Reaction store, has his own positive spin on price uncertainty. “I explain to customers that we’re likely to see continuing price increases over time. There may not be a better time than now to buy a bike because the full effect hasn’t yet been factored in.”

“Price increases are nothing new to any industry,” notes Chad Pickard, owner of Spoke-N-Sport in South Dakota. “Stuff gets more expensive. Why are we hyper-focused on it? As long as our vendors are giving us the opportunity to raise our retail prices we should be OK with it.”

Coordinate your approach

“Make sure you’re telling your customer a clear and consistent price story,” said Holly Wiese from 3 Dots Design, a store design and visual merchandising firm. “Talk to your major bike suppliers about what to expect, then mark a date on the calendar. Schedule your approach to that date so your web pricing is right, your in-store tags and signage are refreshed. We’re in the midst of the season in most parts of the country, so it’s hard to make this a priority. You’ve got to, though, with social media the way it is, one slip-up can cause a big headache.”

Market alternatives

Brian Hawkins, the president of Fixture Lab, which does brand management and retail store design, said his inbox is filled with tariff-related promotional emails from his suppliers.

“I feel like we can learn something from the best ones,” he said. “A well-crafted announcement can actually strengthen bonds and promote trust, at the same time delivering news customers maybe don't want to hear."

Hawkins encourages shops to get out ahead of the news. Announce the looming price increases so they aren't a surprise. Encourage customers to buy now, rather than wait for the possibility of even higher prices.

“Be as specific as possible with the amount that you expect prices to go up,” Hawkins said. “If the standard expectation is that prices will go up 25%, then anything less than that seems like a hard-fought deal. Now would be a great time to promote any products in the store that have not been affected yet. Any domestically made products are low-hanging fruit.”

Tariff wrap-up

We in the bike business are often too immersed in our own world. When a bike we’ve been selling goes up a $100 or $1,000, it seems like a big deal. Some customers notice, others won’t.

For those that do, guide their view in a positive direction. Bikes are always a great value. Show the customer why and tariffs are off the table.

One final note, it seems obvious, but … never bring politics into the discussion with a customer. And strive to give neutral responses if the customer goes there. Just another way to keep it positive. 

Editor's note: This article appeared in the July 1 print issue of BRAIN. 

Topics associated with this article: Tariffs

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