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Comments - Credit Crunch Revisited: Let the Price Reductions Begin

January 30, 2009

Why not wait for 40% discounts like those we all see in the rest of the retail world... 5% is an insult. Show me one other retail sector that is also discretionary and has offered such a pittance of a discount. I predict predatory pricing behavior and bankruptcies in the bike industry. ...more discounts to come, you can bet your last dollar on that.
- Steve, NYC

January 26, 2009

Electronics retailers face these same restrictions regarding minimum advertised prices. Many use,"price shown in shopping cart only", or a "members section" where the lower prices are shown after login via user id and password. These techniques keep the merchant and the lower prices offof pricegrabber or shopzilla price listings too as they are do not come up in on-line shopping searches. Competitive Cyclist could use the same techniques and legally not violate their agreements. Thus, you could pass along the savings you are seeing from some of the wholesalers to us. That seemed like what you want to do.....
- ken, manahawkin, NJ

January 23, 2009

I call bull pucky.
- jack, iowa city IA

January 23, 2009

Some of us started riding in the 1980's when steel was all there was and one could buy the best steel frame for $795. Thinking back, I believe i enjoyed riding those steel frames more than the carbon, titanium or aluminium frames available now. Maybe there are too heavy for racing but many of us do far more riding than racing. I would love to see CC connect with a small domestic frame builder of quality. No slight to Dario Pegoretti, but I bet great steel frames could be sold for $1600 and available in a month, not a year - and there would be no MSRP or distributors.
- Pete, Binghamton NY

January 20, 2009

Just to clarify, Teschner is not gone. This was a media release sent out by Peter Teschner - please read further: Update on TESCHNER in regard to the closure of two of our non trading companies ie Teschner Leggera Co Pty Ltd & Teschner Technologies Pty Ltd. The closure of these two companies does not in any way have any affect on our current trading entity Teschner Technologies USA Pty Ltd. Regards Peter Teschner CEO TTG
- Frank Mercurio, Walnut Creek, Ca

January 20, 2009

The above discussion is fine, but misses the point on so many issues that it warrants a few comments. I am from the N/E corner of Italy that has seen a few recessions, wars, etc. and somehow the manufacturers there adapt to whatever happens by selling quality, be it in the product/price relationship, in distribution or in promotion. CC has raised the bar on its competition by complementing the product with information which in this internet age is "promotion". The objective commentary does help. However, with all of the R/D now there is more than ample room to promote the manufacturers that, like Apple, understand that consumers may be looking for "value" and thus allow trickle down. CC could easily translate its distribution and promotion muscle to promote "value". Secondly, many women are frustrated that they still do not have their sub-section. While many manufacturers have just realised that half the globe is female, many distributors do not get it at all. Seniors, whose appreciation of compact drives, compact frames and value product are also absent. Thirdly, there is the issue of "the starter" as many have now focused on bicycles for the first time, and have a lot of questions, but a limited wallet. This is the lower end of that negative demand curve that I suspect has not been addressed by the above price matrices. And today's starter, is tomorrow loyal client as ti comes back for upgrades, or simply more.
- Mauro, Washington, DC

January 20, 2009

Yo Eddy - The reason that the other major currencies have fallen against the US dollar is because all of the major economies in the world are tanking as well. As a result, the US dollar is considered to be a more stable and safer investment at the moment.
- CS, New York

January 20, 2009

My question is "If the U.S. economy has tanked why has every other currency fallen against the U.S. dollar?" You guys caused this problem and the rest of the world suffers. Where has the money gone?
- Eddie, Sydney, Australia

January 20, 2009

I'm confused, many other cycling companies are cutting back but it is not being posted on Bicycle Retailer. Yet ABG & Teschner are going out of buisness? Think to be fair you should mention the many other companies who are cutting back, are they going out of buisness or just being wise in light of the current economic situation?
- Mike, Jacksonville, FL

January 20, 2009

anyone that can afford to buy this stuff new at full or sale price is all ready rich and isnt gona sweat the cost.You want real sales from the rest of us.......cut the price in half,the under paid slaves in the 3rd world bike part manufacturing plant get paid a few bucks a day o make the stuff the rest is another couple bucks plus the RnD is a few hundred ...........that makes the part come in around ...hummmm..lets say a thousand bucks and the wayyy high end and I have to pay over 5000....we are all getting ripped off
- Kevin , Los Angeles

January 20, 2009

very educational, do SRAM and shimano send you the same kind of letters as the campy one you posted the link to?
- tim, edmonton

January 20, 2009

Nice article, and some interesting comments. Thanks.
- Brian, Cambridge

January 20, 2009

Campy is wise to hold the line on doing whatever it takes to prevent erosion of their brand equity. As much as I would love to upgrade to SR at a true free market price I also recognize that a big part of why I want it so much is because it is so damn expensive. Go online and try to find a stainless Rolex Daytona for a "deal"...
- Mike, Phila. PA

January 20, 2009

Everything above is, well, nicely written, but completely irrelevant. I just bought a Pinarello Prince with Campagnolo Super Record 11, all brand new in the box, at about 50% discount compared to your prices, direct from a retailer in Italy, online. I really have a hard time believing you. If these guys can sell these items (and advertise them) and these prices, why can't you? Don't get me wrong, I like your website and i find it very informative. But I have a feeling you're not telling me the whole truth.
- Mihnea, Austin, TX

January 20, 2009

Thank you for this informative article that helps explain the state of the cycling business relative to the economy. As a business person who is a fairly serious roadie, I appreciate your taking the time to advise the interested reader the mechanisms of the biking business world. As a four bike owner, I understand that riding can be an expensive activity. I spend a sizable amount of money on riding related items and your article helps me appeciate the the economics of your business.
- terry, atlanta

January 20, 2009

As for my beloved Campy....................this has to be the worst timing ever to produce/resurrect a new group and raise their top three to eleven. I suspect many will ride 10s well into 2010.
- Fissel, Delaware

January 20, 2009

I'm not sure where you got your information from, but TESCHNER is still alive and well. Peter TESCHNER has voluntarily put two of his SUB cumpanies into receivership in order to satisfy Australian Stock Exchange requirments however this has had no effect on the TESCHNER bicycle company and it is still producing and marketing 1st class bikes. Prehaps a phone call or two wouldn't hurt in the future.
- Matthew, Brisbane

January 20, 2009

Yes, let's remember that when "The Street" was calling Southwest Airlines brilliant and forward thinking for hedging their fuel costs at $134.00 a barrel - as the experts were calling for $200.00 a barrel in short order! Oops, then oil dropped to $34.00 a barrel! Damn, that hurts! Italy, has threatened to leave the E.U. because they have brought in so many third world jihadi's and now feel the need to bail them out! I long for the day to buy Campy again with a conversion from Italian Lira! Mamma mia!
- Abdul, Detroit

January 19, 2009

But suppliers COULD have hedged their currency risk when buying the product up front. Follow me for a second here, lets assume that we have to pay for product on September 1st, and we know that we are paying a conversion rate of 1.40 USD for every one Euro that we purchase. We are effectively long the exchange rate at that time.... Now as a wholesaler I'd imagine I have an idea of 'when' I'll sell my inventory based on average turns of inventory per year, forecast demand etc...So I short (sell) the USD/Euro Futures exchange rate for the months in which I'll be selling product. For this purpose assume that the futures are all trading flat to the spot market. Worst case the market goes up and I'm essentially losing the difference between what I'm paying 1.40 and where the futures settle and can tell my retail markets 'look the price is what it is because of the exchange rates'... and best case the exchange rate markets come off or decrease (like what's happened here) and then lo and behold the supplier is still able to sling product to retail markets at a 'current' exchange rate. Now I'm not accounting for marginig costs or anything else in this simplistic example but my point is its not woe is me for suppliers there are things that can be done to limit risk. If in fact they didn't hedge the transaction they are going to get run over all year s people flock to foreign outlets to buy product. This exchange rate nonsense does sound like a really good story to push off on people though. Oh yeah, are you also telling me that distributors are really prepaying and not fronting an LC or have open credit with their supply. That too is incredulous and a bit hard to believe.
- Mike, Omaha, NE

January 18, 2009

This is the first piece I've read from CC that is all substance sans fluff. No J.Peterson or Zig Ziggler babble, no hyperbole, just information the cycling consumer can use. More please.
- Ria, Palo Alto

January 17, 2009

Suppliers importing on a regular basis from Europe were actually getting hurt badly by the Euro-dollar relationship until mid fall sometime, as were retailers. Most suppliers paid for Campy 11 speed products in September and August and had the products arrive in October. For suppliers ordering large quantities of this product from Campagnolo isn't like a retailer ordering from their domestic suppliers. The money needs to be produced up-front via wire transfer and then there's a long lead-time (often fuzzy) before the product arrives and is ready to sell. Yes, now a dollar buys more Euros compared to a few months ago, but most product now in the states was paid for up-front by suppliers at the end of the summer when the currency exchange was far less favorable. I do imagine we'll see further price drops on Campagnolo product as the year goes on, but you have to realize the affects of significant lead-times on the supply side and the delayed reaction in realizing the benefits of currency fluctuations in the form of price reductions. In other words, price reductions now are the result of being able to purchase more Euros per dollar in mid-fall when the value was approximately $1.40 per Euro. I believe you'll get your 15% drop.
- Andrew, Saratoga Springs, NY

January 17, 2009

i appreciate the blunt honesty of your post, and it provides great insight to the retail industry, but what prevents you from offering coupon discounts for your items? can't you offer a 10, 20, 30% coupon on assos or sidi, etc.? seems to be what other retailers do. just my .02
- sma, chicago

January 16, 2009

Correct me if I'm wrong, but your sales pitch sounds a lot like the one Bikes Direct, Pricepoint, and other lowball bike industry internet retailers have been screaming for years - we can't reduce the price of individual items, but we can wheel and deal on the whole package. I guess that's what you do when you only have to have the lowest price to get customers instead of working to support the long-term health of the bike industry. Why is it that only the internet retailers seem to get these "magical" deals when the brick and mortar shops don't? I believe that you are presenting a flawed and misleading (at best) scenario of why you've chosen to errode the value of the bike industry.
- Andrew, New York

January 16, 2009

Ok Guys, I know this adds to your manpower time on the sales side, but can't you use the same "unconventional means" with us as your suppliers are now using with you. I mean, why can't I email you and say "hey, are there any deals on that $385 Record rear derailleur today" and have you come back and say "sure, we can get that to your for $270+shipping". Play the game the same way. Sure the system of MAP will break down further but you're not going to see any of your customers going to complain to the importer about saving 10, 20, 30% and you get to make a sale that you wouldn't otherwise have made. And, the silly importer gets to move a unit that I wouldn't have otherwise bought. This situation is indeed absurd, and with "luxury only items" like Campy, Wilier, Cervelo....it's insane to perpetuate the MAP myth.
- Steve, Austin, TX.