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Helping IBDs help themselves

Having started as a family run business, Fisher Outdoor Leisure is now a multi-million-pound national distributor. The company’s CEO, James Browning, talked to CYCLE-TRADE about the initiatives the company is continuing to introduce to help its dealers face the challenges of running an IBD in the 21st Century

For the majority of the UK’s cycle trade, 2015 will go down in the annals of history as being at best flat. However, despite the general sense of gloom that is pervading, James Browning is looking back at a time of growth and success. “In our last financial year, which ended in July, we had a strong performance. It was the first year of our recovery program and my first full year in the company. We took a lot of debt of the balance sheets and a lot of other financial work which took us in the right direction. In terms of the market, what was good for us that year was that we finished it with some important and good new brands in our stable. We got Campagnolo as a brand. We got Earlyrider as a premium kids’ brand, which was really good, and we got sole supply on Muc-Off,” is how Browning looks back on the turn-around in Fisher’s fortunes over the past year.

He goes on to say, “We also stopped doing some things we’d been doing that were holding the business back. Some of our own label development we came out of and we exited some brands that weren’t what the market wanted. Our IBD business is in double digit growth. August to October this year against August to October last year we’re up by 11.5%, which in a market that is very challenging is very good going. A lot of that is driven by new brands, but even existing brands are giving us a good solid performance.

“We’re not up on all product ranges, but with our core products we’re just up on last year and then we have new brands that are coming in and layering in on top of those to give us those double digit growth figures.”

Among the new brands that Browning talks of is Campagnolo but Fisher is not simply aligning itself as yet another distributor for the Italian brand, as he explains, “We’ve brought some value-adds to our Campagnolo offering. We have the Campag groupset configurator on our B2B portal. We also offer our dealers margin protection against online discounting on core products in the Campag range.”

The margin protection package being offered by Fisher Outdoor Leisure is one example of how aware the business is of the challenge being faced by dealers when customers can buy goods online at lower prices. The protection put in place by Fisher is a sign of how committed it is to working with Campagnolo in the future with Browning saying, “Campagnolo is starting to try and get a grip on the problem of its goods being made available through multiple channels at differing prices, but it is not unlike the problems faced in lots of industries, things such as currency fluctuation, is it better to buy in euros or pounds and the internet makes cross-border trade easier too. However, it will get sorted as the industry matures.

“I saw the same thing happen in the mobile phone industry when I worked there. Distribution contracts got much tighter, pricing became much more aligned market to market. I’ve no doubt it will come. A lot of very important brands are still privately owned and Campagnolo is just one example of that. It will move at its own pace, the pace it wants to move at.”

A brand that Fisher has worked closely with and one which it supports strongly on behalf of IBDs is SRAM and the latest initiative with the brand portfolio is the SRAM Platinum Club.

“I’ve met with Gordon Fisher (who ran the business with his brother Trevor until they sold it in 2006) a couple of times, and from talking to him, I know that SRAM has been very important to the development of Fisher. There’s always been a good partnership between SRAM and Fisher and as SRAM acquired new brands, like Rock Shox and then Zipp, those brands were diverted into Fisher from the previous distributors. It has been a very important part of this business’ development and still is a very important part of this business.

“The idea of Platinum Club is to say to IBDs, ‘Give us your SRAM business and we’ll make certain commitments to you as a dealer. Buy all your SRAM from us and we’ll give you a different level of service back in return for the commitment you’re giving us.’ It has been designed to help stop people buying grey imports or OE take-offs and if dealers work with us instead of doing that, we’ll give them price matching and we’ll give them free delivery on any order that contains a SRAM component.

“The whole point of the Platinum Club is to create benefits for the customers that are loyal to us. As the market gets tougher you need to have partnerships in place: brands and customers, distributors and customers, and brands and IBDs. It is much easier to work with people in tough times than trade with them in isolation.”

It is that idea of working with brands and IBDs in particular that is a driver for many of the initiatives Browning is now putting into place at Fisher. Alongside the margin protection on Campagnolo and the SRAM Platinum Club, the company is now offering margin support on certain products. In Browning’s words, “That’s us saying we get the fact that certain products - Tracx trainers and Zipp wheels, for instance - get discounted heavily online and we get the fact that pisses off our dealer. When they’ve got it in stock and someone comes in store and says will you price match it, we’ll put our money where our mouth is and protect that dealer’s margin.

“When someone comes into your shop and asks for a price match, match the price and we’ll support your margin. We’ll take the hit instead of you.

“This programme has been very successful for us in growing our distribution points on those brands. The last thing a brand wants is to just exist on the internet. It has to have the oxygen that the IBDs give it. They are the brand builders.”

While it might seem that Browning is fighting the threat to traditional bricks and mortar retailers with the offer of margin support he is equally in favour of maximising the positive impact the internet can have on an IBD’s business. Having already been soft launched, and soon to be rolled out across the entire Fisher dealer network, Home Delivery is the company’s answer to the convenience offered by online shopping.

“If you look at what’s happening in the market, you’ve got, undoubtedly, a shift to more online buying for convenience, but a lot of it is also down to product range,” says Browning. “You can offer a lot more on the internet than you can in a small sized IBD store, especially clothing, where you have the added complexity of sizes and colours.

The idea behind Home Delivery is to enable the IBDs to offer an internet type service to their customers. The customer can go into the store and see, for instance, a Santini jersey in red, but not in the size they want. So, the shop goes to our B2B portal and places a home delivery order, entering the consumer’s details, and takes payment in the store. The goods then get sent by us the next day to the address the customer has supplied. Previously, the IBD might have said to the customer, ‘I can get it for you by tomorrow.’ But that would mean the customer would have to return to the store or the dealer posting the part out, this removes that step.

“IBDs shouldn’t lose sales, they can offer much wider product ranges and they don’t have to have money tied up in lots of stock because it’s all kept here. It replicates what would normally happen without the shop having to keep stock. You see it in other industries and it’s something we want to bring to cycling.

“It can also help a shop to make a sale on high-value items. If, for instance, a customer goes to an IBD and says, ‘I’ve seen a set of wheels online for £500, but they’re more than that here.’ Well, if the shop had bought them in for stock making, say, a 15% margin, that sale would not be acceptable, but if the shop doesn’t have to touch the product, just process the order for Home Delivery, then that 15% margin becomes attractive as it generates cash and there is no risk in buying in expensive stock lines.

“The more creative ideas and different business models and different options you can get, including working with the internet, the better. It’s got to be a good thing and if you look at the likes of Trek and what is happening there with online sales that are fulfilled by local IBDs who get a margin share, all of these online models are excellent.

“You have to learn to manage the internet, and channel management is becoming one of the biggest jobs for distributors to help their partners with. For example, you can’t buy Look bikes on a pure play internet site. Not because Look says so, but because we say so. We simply won’t sell to those sites.”

Learning to accept that customers will go online to shop is something that Browning acknowledges, but he is also confident that the traditional cycle store can hold its own in the face of such competition too. Helping to make this a reality is the online support offered by Fisher to its IBD customers with new initiatives such as offering virtual inventory on their websites. It works by Fisher supplying product imagery and specifications that the shops can then publish on their own websites from where customers order before it is picked, packed and dispatched by Fisher on behalf of the store.

“It’s an extension of the Home Delivery programme,” says Browning. “In theory, our customers can put up the entire range of Santini stock online if they want without ever actually owning the stock or seeing any of it.

“I think for the independents there will be more channel shift to online as with every product category you care to think of, but I think ultimately, the good IBDs will be absolutely fine because people will still want to go to a local specialist supplier to get advice, to buy high-value products and particularly to buy high-value bicycles. I don’t think people are going to spend £2K on a bike without sitting on it first.

“The internet is not going to go away. Don’t bitch about it. It’s not going away so accept that reality. The success of IBDs comes down to how they combat it, or how they work with it. For instance, there’re some things we won’t sell online, some if they are online and in the IBDs we’ll help the shops to protect their margin. There’re things IBDs can do. They can offer advice, they can offer service. Those are tools they’ve got to lock consumers into them that the internet guys don’t have. A lot of the time it seems to IBDs worrying about the internet, but I can tell you a lot of internet retailers wish they had a bricks and mortar presence in some form.”

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