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October 2008 is forever done, and other things

- October has come and gone. Based on what I read in the papers, it was the scariest October for retail since 1969. Based on the slow-drip fright felt by me, my partners, and the staff here at Competitive Cyclist, it was the toughest single month to live through since the inception of our business a decade ago. For the first time we had real cause to acknowledge the fact that there’s so much to business we don’t control. It’s the sort of contemplation -- not unlike a clear-headed meditation on the inevitability of death -- that paralyzes.

October has come and gone and we’re one of the lucky ones. Somehow we achieved double digit sales growth over October 2007. But our oppressive fear of the unknown made every day a battle, and it made our achievements less emotionally satisfying. With equal parts humbleness and sincerity we want to express thanks to all of you, our customers, for continuing to choose Competitive Cyclist. This isn’t the typical sort of thanks you get from a retail operation (which is usually just a calculated excuse to get the brand in front of you, likely accompanied by a one shot, deep-discount coupon that kills margin but at least churns out some cash flow.) No, there is no ulterior messaging here. It’s nothing more than an articulation of the purest gratitude I’ve ever felt.

October 31 was a Friday. My month-long sense of brittleness was worsened that day by two arguments with vendors who were incredulous, despite it all, that we weren’t willing to make huger-than-2008 pre-season commitments to their brands. Their short-sightedness put me to the precipice of murder that day. At 4pm I got on my bike and for the first time since my last race of the season in late July I pedaled in anger. I haven’t felt fury like that on my bike since my 20′s, when I raced not for the love of the sport, but for the hatred of some of the people I raced against. It was an hour of road rage. Never once this year -- not even when I had real fitness -- did I feel so fast and immune to the pain. For a month I’d been playing mind tricks on myself to stay calm about business -- the impact of which upon my body’s chemicals I never considered. But whatever my chemical balance was, it was upended by vendors upon whom I wished true harm, and 31 days of tentative fear catalyzed into an hour of fury. I always knew that the bike saves because of the emotional emptying it allows. What I never considered, though, is the wondrous effect of the physical assault it provides. Like with saints and mystics, self-torture can bring deliverance. That bike ride was the same as seeing ‘November’ on the calendar: It felt like liberation. The bike saves in more ways than one.

- The most under-reported story of the year is here. Kozo Shimano resigned from Shimano America this week. All we’ve seen so far are standard fare press releases. This is almost certainly a seismic story, and we hope sometime it sees the light of day. He’s a Shimano, for goodness sake, the bike equivalent of a Ford or a Rockefeller. For us, the story behind the story has little to do with his pedigree. Rather, many in the industry have noted some serious talent turnover at Shimano America in recent years, culminating now with Mr. Shimano’s resignation. Compare it to the upper management of the best-respected companies in the bike industry, like QBP or Trek. The same teams have been in place there for time immemorial. By contrast, it seems like every Shimano America manager we came to like exited the company too soon for our liking. George Eubanks, now of Highway 2 (the distributor of Continental and Fizik) was an agile diplomat who used his smarts to align Shimano and retailer interests. Sue Williams, a brilliant woman who had the right stuff to someday become the most powerful woman in the entire bike industry, left to get into retail. Shimano America is clearly capable of attracting top talent. Retention, it appears, is a greater challenge.

- The Toyota-United team has disbanded. As many of you know, their sponsorship model required them to sell ‘memberships’ where members could buy team kits, and even team bikes. They backed up this initiative by paying rent-a-hotties to sell Toyota-United-branded stuff at major US races. Based on the fact that our esteemed colleagues at Excel Sports Boulder ended up doing a major closeout of the Toyota-branded team bikes a couple of years back, the team’s sellthrough must’ve been lousy. And, now, with the global auto industry up in flames, Toyota chose not to renew their sponsorship. Maybe their pseudo-retail ambitions were a failure, and maybe they couldn’t prove to their sponsors that investing in a domestic US race team delivers sustained marketing ROI. Nonetheless, Toyota-United was reputed to be a classy organization, and they had no shortage of quality riders. It’s a sad day, and it’s made sadder by the total liquidation of the team service course here. There are maybe some nice deals to be had on some stuff. But who can visit an estate sale without feeling a tinge of guilt?

A peripheral irony is the fact that the professional Rapha-Condor team in the UK is emulating no small part of Toyota’s failed strategyfor the 2009 season. I don’t doubt the sizeable global affection for the Rapha brand gives them a better shot at success than the Toyota team had. Will it be enough?

- In our obsession with gauging how the cratering global economy affects the bike industry, we wonder if Bike Snob NYC has finally provided us a quantitative financial index of the high end bike market. (Scroll down the page a bit.) The Chris King Headset Composite Index (CKHCI) monitors the price of Chris King auctions on Ebay, and I dare anyone to develop a better way to assess consumer confidence and the forces of supply and demand. Maybe in the future he can use a finer tip magic marker to do his graphing so we can better choose arbitrage opportunities. But finicky details aside, all I can say is Standard & Poors you better watch out.

- A quick note on currency markets, bike component pricing, and you: We’ve been asking our vendors when we should expect to see price decreases (both in wholesale prices and in MSRP) due to the fact that in the last 3 months we’ve seen the USD to EUR FX go from 1.57/1 to 1.27/1 (that’s a 20%+ increase in buying power of the USD). The temerity of the question -- a question, in my mind, that begs to be asked -- totally catches them off-guard. Their hemming and hawing on the phone makes them sound like they’re worried they’re about to be Punk’d, when, in reality, we’re just trying to map out our cash requirements for 2009 inventory here at Competitive Cyclist. The answers we’re hearing is total Fred Astaire fancy footwork, ‘Um, we buy our Euros many months in advance and everything through next summer was paid for at 1.60….’ and it’s clear that it’ll take a continued nosedive in the retail marketplace to force prices downward. Supply & demand always corrects prices, even though this is an instance when currency alone should do it. What’s so frustrating is that a reduction in prices by our vendors (something they can do without sacrificing their profit margins of the last few years) might be the best strategy to forestall sluggish retail sales. Penny-wise, pound-foolish. This industry loves to undercut itself at every available opportunity.

- An interesting concept in bike clothes and bike safety. And since it was filmed in San Francisco I’m sure there’s some sort of urban hipness thing vaguely related to messenger culture here.