Tim Jackson on early model-year introductions.

[This post comes to you from my trusty blogging compatriot, Tim Jackson.]

A lot has been said in recent years about early model year introductions being bad for the cycling industry, but especially for retailers. Retailers get caught up in preseason order requirements from their vendors and pressure to order more inventory, only to be "stuck" with product that suddenly becomes "last year's bike" when new model year bikes are introduced during the peak of the summer selling season. They are then in the position of needing to discount bikes they haven't even paid for yet, in some circumstances, so they can make room for the new bikes that the consumer is expecting but the retailer might not have even seen yet. How can this be a good thing?

Innovation and development are a central part of the industry, but there are many cases where the model change may only be a color change and not much else. How does this merit the need to discount the previous model? It doesn't in my opinion.

How did all of this get started?

Some people will blame the auto industry for setting the example that has been picked up by the cycling industry searching to gain more sales. Some people will blame Shimano for new product introductions that have seemingly come earlier and earlier. Does anybody else remember the "good old days" when new products were unveiled at Interbike? Remember when you strolled the aisles of the show looking over the shoulders of the crowd gathered around a booth to see what was new? That was a fun and exciting time for product geeks like me. Now, everybody wants to get the most amount of press before the show even starts, months ahead, and releases their products and creates as much noise as they can to build momentum heading up to the show. Now, that is smart marketing, no doubt. But is the marketing leading the industry down a primrose path?

Manufacturers are in a tough position as well. We need to have product ready to ship, all the time and not just seasonally. To do this, we need to buy and stock lots of product. However, if a new component is coming that will make the old components suddenly "obsolete", then we need to get rid of "old" stock. So we discount bikes to get them out of the warehouse and create the space needed for them and get out from underneath the cost of that inventory. It creates a momentary boon for the retailer, but we manufacturers take a hit. This leads to more expensive bikes. If we are worried that we will end up deeply discounting the bikes later in the year, then we have to build in higher profitability for the first part of the selling season. Then the retailer either has to take a smaller margin on their end to stay price competitive or the consumer has to pay more for the bike. How can this be good?

I can only speak for my company, but we are looking to get away from the stigma of model years. It is difficult though. We've all been trained, from consumer to retailer to manufacturer, that we have to have a model year to tell the bikes apart from year to year. But why?...for the purpose of marketing? what else are you going to say in  your catalogs and on your websites?

Wouldn't it be cool to get together, as an industry (who am I kidding) and decide to work together for the good of the industry? For the past year, I have been floating the concept of no model year to my retailers. Why wait to release a new bike if it is ready? Just roll it out when it is ready to ship. Why stop selling bikes that have current spec? Keep selling them and making full margin. If a new color is needed to freshen up the bike, then add the new color and keep selling bikes. When a new component comes out, roll that bike out too. Advertising and marketing will have a challenge, but that's what websites and magazines are for. If the only perceivable difference between one year and another is the color or maybe a tire choice, then why discount the older model to make way for the newer model? If there is a radical change, like a new frame, new component group (like new 10 speed 105 over 9 speed), then it makes more sense to be more aggressive in the marketing and even maybe a little discount at retail. But if we are doing this on a limited basis, the entire line of bikes won't need to be discounted. This leads to a lower cost of doing business for the manufacturers, which leads to lower priced bikes for retailers and a lower retail price point for the consumers.

How can this be a bad thing?

We talk about reinvigorating the consumer and we know that lower priced bikes help. Why not make lower prices the norm, but without everybody living off of tiny profit margins? This is such a difficult industry to survive in already, why design it to be even more difficult? If nothing else, let's get back to those "good old days" of Interbike (or other shows) being the time when products are released to the world at large. How could that be a bad thing?

Comments

[Michael Nover]

Here at Mountain Cycle, we have officially thrown the idea of model years. I pressed my guys for several months to come up with one compelling reason to keep them, and no one could.
Tim: cut the cord!

The only ones who benefit from model years are the closeout specialists and (arguably) the consumers who buy them. But I would say in the long run consumers want new and better products and benefit more by an industry that is healthy and not bled dry by discounting.

No model tears doesn't seem to have held Santa Cruz back. They make models as long as there is demand and introduce new ones when they are ready.

When it really comes down to it, why do car companies really need model years? I would say financing and valuation issues are probably legitimate, but that's about it.

[Tim Jackson- Masiguy]

Michael,

Sitting in my hotel room in Montreal, watching the rain come down so I can't go for a ride.

I agree with your comments and that is the reasoning behind our thinking. It is obviously nice to read that Mountain Cycle has made the switch without any negative fall-out.

It has been our thinking that bikes should come to market when ready and rolling changes should be smooth and seamless, hopefully making life easier for shops.

Deep discounts, though a momentary boon for the consumer, are bad for the industry in my opinion. If the industry hopes to remain healthy (or just get healthy), then there needs to be a way for us all to make a profit. The consumer will benefit from greater innovation, more healthy competition between brands and better regular pricing throughout the year.

Tim Jackson
Brand Mnager
Masi Bicycles