In my last blog I wrote about the benefits of riding on a team. The continuing financial crisis has created a situation in the cycling industry where teamwork will be needed to survive the storm. I have been visiting a few bike shops recently and several of their owners have informed me that since the stock market crash a few weeks ago, business has been way off.
Many bike shops enter into business agreements with the big bike manufacturers and suppliers wherein they receive price breaks and access to popular products in exchange for an agreement to stock their store with a majority of a company's products and also feature those products prominently in their store. This is supposed to be a win-win for both the shop and the manufacturer/supplier; the shop gets preferential treatment from the manufacturer/supplier and the manufacturer/supplier sells more product.
This whole scenario works well as long as the bike shop is selling product. If the shop isn't selling product, as is happening at the moment, then a problem can arise. The situation is similar to the mortgage crisis. When a homeowner can't make the payments, what should the bank do? Should the bank immediately foreclose on the owners and force the occupants out of the house? Or should the bank cut the homeowner some slack and try to figure out a way for both parties to reach a new agreement which keeps the occupants in the house and money still flowing to the bank?
Now is the time for the different players in the bike industry to realize that they are a team and to proceed appropriately. That doesn't mean that the manufacturers/suppliers should just roll over. What it does mean is that both parties, the manufacturers/suppliers and the shop owners need to work to preserve their relationship as it is these relationships that will hopefully provide long term success after the current financial crisis has passed. Strong arm tactics from either side is not the solution. We are all in this together.