The headline for this article is a quote from Paco Underhill's column in the March 2008 issue of ddi (display & design ideas) magazine.  For those of you who don't know, Paco Underhill i

Dear Jay Townley,

We're making huge investments ($500K) to differentiate our business as an independent bicycle retailer aligned with your guidance. Our major supplier has taken note and applied significant pressure to open as a Concept Store since we meet all the requirements and they like our market presence. Question is will we lose our manufacturers incentives and handshake geographic agreement to a closely placed Concept Store in the future?

This call will be available to Bike Profits members free of charge or to non-BP members for 19.95 as an mp3. This allows you to listen to Jay's lecture in your car on your computer or mp3 player.

Please feel free to listen to the free introductory call on "perfect competition" located on this blog.

I had an epiphany, as in a sudden insight into reality, in May at a meeting where a long time friend in the industry offered the opinion that the U.S. bicycle industry is in a classic state of perfect competition. My immediate response was "...that sounds like a good thing!" My friend, who went back to graduate school after working in a bike shop, for a major component manufacturer and prominent bicycle brand quickly responded with "...no, you don't understand." He went on to explain that when he studied economics in graduate school he became aware of perfect competition which is a term of art in economics for the most competitive market imaginable - one where the companies and businesses realize the bare minimum profit necessary to keep them in business.

Are you wondering why you aren't making the money you should be?  Did you know the "typical" bike shop doesn't make money on the sale of new bicycles?

Stop and think about what I have just said.  The typical (based on a median) bike shop in the U.S. didn't make a profit on the sale of new bicycles last year - and in fact hasn't for the last 12-years!

I just got back from a 10-day trip that started from Madison to Raleigh North Carolina and back to Madison, and right back on a plane for Los Angeles, than from LA to Seattle and back to Madison. I didn't total the mileage, which isn't as important as the 21-bike shop visits and the 6-supplier visits along the way.

Tuesday May 2 - we finished our meetings in Kent Washington and went looking for a bike shop in Renton that I had been told about last year. We drove up and were immediately impressed with the building and signage. This store would have to qualify as one of the top-ten buildings dedicated to specialty bicycle retail in the country. From what I have seen it would also rank in the top ten to twenty such buildings in the world. We walked in and were blown away! We thought the exterior was great

Sunday April 30 - another bike friendly city that actually has a bicycle named after it … Portland Oregon. I have never seen so many elevated highways and bridges all intertwined and curving around and over water in my life! However, with all this elevated concrete …
the bicycle is fully integrated into an inter-modal transportation system that is a model for whole country. We mystery shopped one of two locations we visited

Saturday April 29 - both of us mystery shopped a bike shop in what has to be one of the most bicycle friendly cities in American, Davis California. Davis is also one of the most intensely competitive bicycle shop markets in the land - with three competing bike shops within a one square-block of each other, and four more within walking distance. We went in at different times, but both were treated to a Body Scanning (OK, I'm biased), a consultative interview and a test ride on a bicycle individually fitted according to

Thursday April 27 - stopped in a bike shop in the garlic capital of the U.S. that was busy, so we didn't do a mystery shop. We were intercepted and greeted as soon as we walked in and explained that we were just visiting from out of town. After observing and tracking (following shoppers) for about 15-minutes we left - waving to the young man that had initially greeted us. We hadn't gone 10-feet when the manager came out the door behind us, and asked if we had been helped, and making sure we hadn't left without being served.

There was substantial discussion at the Bicycle Leadership Conference about the women's market potential for the specialty bicycle retail channel of trade.  There was general agreement that selling more bikes to women is vital to the future growth of our business, and that just putting a women's department in stores is not working.

Why all this interest in attracting and selling more to women?  Because, according to Mary Lou Quinlan, author of Just Ask a Woman, "... women buy or influence the purchase of eighty-five percent of all products and services sold nationwide."  Women are the most important shoppers and dominant consumers in the U.S. market today.