However, according to an excellent article at Bike Biz, all is not well at CompetitiveCyclist.com as a recent blog post on their website reveals some discontent aimed at their UK cousins, and in particular Wiggle and Chain Reaction.
They suggest that some of its sales are being lost to these UK competitors who, they claim, are "exploiting a market anomaly" and are being supplied with high-end products by suppliers who are not offering "pricing parity."
There would appear to be some mileage in this complaint. In its latest annual report, Chain Reaction Cycles state that: "The proportion of turnover generated outside the EU [in 2010] was 37 percent." This is a ten percent increase on 2009.
According to its blog, CompetitiveCyclist.com believes half of that turnover increase was at the expense of US bicycle retailers, including itself.
"If the same holds for Wiggle, that adds up to nearly $40 million in US exports per year….This $40 million was spent on high-end Shimano, Sidi, Continental, Vittoria, and countless other primo brands, the very sort of marquee goods purchased by American IBD's highest-value customers."
CompetitiveCyclist.com says part of the sales success of Chain Reaction Cycles and Wiggle is because the stores are based in Europe, "Chain Reaction and Wiggle have the advantage of buying their goods directly from manufacturers."
The argument loses some momentum here, given that the likes of Shimano and Pearl Izumi being based in Japan, but for many brands, such as Sidi, Castelli, Assos etc. this does hold true.
The blog goes on to claim that "They then leverage their savings by selling the goods in foreign markets such as the US where distributors and importers normally add a layer of markup. Because of this, the retail prices at Chain Reaction Cycles and Wiggle are upwards of 30 to 40 percent less than what you'll find in American retail stores - whether it's your local bike shop, or at Competitive Cyclist."
UK independent bicycle stores also complain about Wiggle and Chain Reaction (as do IBDs in many countries, including Australia). Chain Reaction Cycles, for instance, gets amazing delivery rates and delivery times from the Post Office in Northern Ireland. Chain Reaction Cycles is the Northern Ireland Post Office's biggest customer.
But most of the complaints about Chain Reaction Cycles and Wiggle from UK IBDs stem from the cheap prices.
And CompetitiveCyclist.com says it's all but impossible to fight on price: "American retail pricing on a pair of Look's fabulous Keo 2 Max pedals is $180. Chain Reaction charges $104 for a set."
Because of volume sales, suppliers are happy to supply Chain Reaction and Wiggle:
"Whenever we ask manufacturers why they don't have global pricing parity, they plead the same case: They'd love nothing more, but they have no enforcement mechanisms," says CompetitiveCyclist.com
"They claim that the EU has strict anti-trust regulations that prevents them from regulating MSRP or Minimum Advertised Price (MAP) and from punishing a retailer for violating pricing guidelines. 'Price Maintenance' laws in the EU are purportedly far less friendly to manufacturers than in the US, where a single advertisement for a product at sub-MAP pricing gives a manufacturer full legal right to cut off a retailer's supply of goods with no notice.
"Chain Reaction and Wiggle aren't winning in the high-end US marketplace because of a strategy. They're winning by exploiting a market anomaly. Exploitation is not a strategy. The only party capable of reversing this situation is the manufacturers who supply them their inventory. If manufacturers don't shut down this UK-USA sales channel, they're the ones that ultimately stand to lose the most. Why? Manufacturers who've already made global pricing parity a priority – including Specialized, Trek, Cannondale, and SRAM - will rapidly gain mindshare and marketshare as retailers recognize that stable pricing is a brand asset as powerful as high-zoot technology and top-dollar marketing.
"Decisive action from bike manufacturers to create pricing parity will require a focus and discipline they don't always show. But decisive action from bike manufacturers to create pricing parity will require a focus and discipline they don't always show. To call it a probability, let alone an inevitability, would be far too optimistic."
So CompetitiveCyclist.com aren't feeling too optimistic about the future, which is a shame as their website and stocking policies appear to be spot-on. But as LBS in the UK know, competing with the likes of Wiggle and CRC can't always be done on a level playing field...
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