The legendary component/apparel company Race Face just announced that they will be selling their products to Mountain Equipment Co-op (the Canadian equivalent to REI in USA). This has pissed off their current dealer Cycles Lambert and rightly so, so they will stop distributing Race Face products immediately. Recently MEC announced that they will be adding bicycles to their product lineup along with the current outdoor gear and bicycle parts. This has served as a bit of a blow to independent bicycle retailers in Canada as they believe that MEC possesses an unfair advantage as a Co-operative, since that format is considerably less taxed than other businesses. So MEC is not exactly a favorite among the bike shop owners or anyone in the bicycle business in Canada in general. See open letter from Canadian Cyclist here. In any case this move by Race Face has a lot of their fans loosing faith in the integrity of Race Face and their commitment to their product and their core consumers. In all likelihood they will make more money by making this move but will that be at the cost of quality? Many people believe so and point to MEC's shaky quality on certain things in the past. In any case people are a bit perplexed by all of this if not downright pissed off!
See letter from Lambert below:
LAMBERT ENDS DISTRIBUTION OF RACE FACE PRODUCTS
Levis, Quebec, October 23, 2009 - Lambert announced today that it has terminated its Canadian distribution agreement with Race Face, effective immediately.
Race Face recently informed Lambert of its plans to sell its apparel, armour and components to Mountain Equipment CO-OP (MEC). Lambert is very disappointed with the decision Race Face has made in this matter. Due to Race Face’s realignment with MEC, Lambert ceased its business relationship with the company.
The importance of specialty retailers for Canadian cyclists is undeniable. Lambert remains firm in its commitment to channels avoiding an every day low pricestrategy which brings down reasonable market pricing. Lambert will continue to privilege brands that support this same business direction.
Posts
Seriously Halldor? You think that RF's quality is going to go down because they're selling to MEC? That's bullshit and you know it. Who knows why RF decided to go to MEC as a distributor, but don't think that Lambert is concerned about anything other than their bottom line. Suddenly, the middleman is gone and Lambert won't be able to sell to shops at their current prices and keep being competitive. When RF stops dealing with shops entirely (ie shops getting stock directly from RF), then I'll admit that there is a problem, but until then it hopefully means lower prices for the consumer.
ReplyDeleteTyler... Huh???
ReplyDeleteLambert always sold RF stuff to IBD's at the same price as RF direct. They were basically an east coast warehouse for the stuff. IBD's won't want the stuff now (not that it was a hot brand - maybe 5 years ago...) because MEC will be selling it at a miniscule mark-up. It's the IBD's who will no longer be competitive. There are so many better product lines out there from suppliers who support the IBD's that noone will care about supporting RF.
You have no clue....
Last year at the Bike Trade Association there was a presentation on MEC's entry into the bike market. The presenters had clearly done their home work trying to uncover all the bad news about MEC. In the end, the tax status as a co-operative that everyone likes to harp on about is equivalent to 2%. 2%! This from a company that actually supports the products it sells, reinvests in the community and has sound environmental and ethical standards. Even the BTAC people had to admit that the money MEC invests in cycling advocacy benefits everyone. The real bad guys? Department stores like Canadian Tire, Sports Experts, Walmart, etc. which account for 50% of bike sales in Canada, all of which are badly made bicycles that discourage people from biking. MEC as the boogy man is a tired cliche.
ReplyDeletePete, I have no clue? Really? Because you seem to think that Lambert is some sort of magical unicorn that doesn't charge a markup. Tell me again who has no clue. And if you don't think RF isn't hot then you haven't seen their new cranks, their bars, and that a lot of companies use their stuff for complete bikes.
ReplyDeleteAnd for the record, I'm not a MEC supporter. I'm just tired of being gouged by Lambert and other middlemen.
Wow! A discussion. So people actually read this blog. That's awsome. Tyler: I think you're confusing things a little bit. MEC bought RACE FACE outright. so RF is not going to be selling directly to MEC, MEC now owns RF. So I DO think the quality will go down, that's just my opinion and I do not think it is bullshit. I think over time RF (MECRF) products will go downhill on the drool list.
ReplyDeleteBlackmale: You're probably right about the 2% I honestly don't know too much about the specifics. I'm just trying to report on what I've seen and heard in the bike biz. As for the Department stores selling garbage labeled as bikes, I totally agree with you. They are a cancerous tumor in the side of the bike biz and should be cut out immediately. But how? MEC does a lot of good things in the community but it's obvious that they do cause a bit of a havoc among the Local Bicycle shops when they sell items much cheaper than the LBS can afford to do.
MEC did not buy RF outright. They have decided to stock a limited selection of armour, jerseys and low level (ride/evolve) hardgoods. On top of that they've required that MEC sell at MSRP +/-10% and are offering further discounts to IBD's when they order from RF directly. Lambert is just mad to lose the middleman markup.
ReplyDeleteRace Face is not owned by MEC. I'd like to know where you got that from. Here is Race Face's reply to the whole thing:
ReplyDeletehttp://www.pinkbike.com/news/race-face-mec-2009.html
And they bring up good points. MEC already sells Shimano and SRAM stuff, some of it higher level stuff. No one complained there.
This comment has been removed by the author.
ReplyDeleteYes thank you Tyler, and anonymous. That was a misunderstanding on my part as I've noted in my latest post. I don't really know how I got that in my head, and I apologize for poor penmanship there. However, don't think that no one made a stink about MEC selling Shimano and SRAM stuff, the stink was certainly made. But regardless of that, as I see it, the consumer will only benefit in the long term if there's a healthy competition in the marketplace. Some people argue that by driving prices down, MEC will make LBS's unable to compete i.e. eliminate healthy competition and that is what I think said stink is mostly about.
ReplyDeleteNevertheless, I'm too poor to shop based on ethics, and will buy stuff from MEC from time to time (such as white Toblerone mmmm...). As a cyclist and a person in the cycling bis, I try to buy my bike parts in the LBS's. I just feel better about myself when I shop to support the little guy.
Anyway, thanks for your input, it's good to see a healthy discussion.
Tyler,
ReplyDeleteyes you really have no clue. If you want to blame someone for the high prices we pay in Canada for some items, blame the government and there 'pro-competiton' duties and taxes that we pay but other countries do not. Complete bikes, for example carry a 13% duty that we pay on any bike imported from the U.S. Most of the brands that I carry are 15-20% more expensive than U.S. wholesale, the difference being currency differences. Pretty close I'd say.
As far as Lambert goes... they, along with all wholesalers in Canada operate off tiny margins, distribute to a huge area with a very small population (comparable to the U.S.) and are usually within a few percent of U.S. wholesale. Most U.S. shops operate off lower retail margins than Canadian shops because they have a far larger customer base and can operate in a high turnover/low margin business model. Try doing that in a small Canadian town of a couple hundred thousand...
I buy plenty from Lambert and I can buy alot of what they sell from U.S. distributors as well, and many times Lambert is cheaper... not always... but rarely do I feel like I'm getting gouged.
Pete, apparently you haven't read anything that's been posted. I'm guessing you work in a shop, you've probably done so your entire life, and you've been fed this stuff by your peers about Lambert and IBDs (which also means you pay a fraction of what the average consumer does). I'm no MEC fan by a longshot and don't really buy much there at all, but you really don't seem to have a clue as to how the real world works. You think that Lambert is saving you money by making you pay to ship things to their warehouses out east, then ship it back to a local shop, not to mention the taxes that they pay for their province, and the taxes we pay out here, and then their profits on top of that? Go hang out on pinkbike with your "you don't have a clue" attitude.
ReplyDeletePfffftt... what a waste of time talking to someone who doesn't have an iota of economic sense. Are you from Russia? Have you heard of capitalism? Or are you really that naive that you think that profit is a bad word. Where do you work? Do you work for a non-profit organization? Does your company compete against someone who does not have the same tax status as yourself? Does your company not want to maximize profit? Are you still in Highschool? Gradeschool?
ReplyDeleteI never said Lambert doesn't make a profit... I hope they do! I hope everyone along the chain makes a profit. I hope I make more profit so I can pay my staff more. I did say that Lambert is not gouging us, and unless you have numbers to back up your statement, which you don't (because you really don't have a clue) you should refrain from saying things that you know nothing about.
I've got nothing against profit, I'm against taking advantage of the consumer. Why should I pay 20% extra for a part from Straitline (for example) that has to be shipped from Victoria to back east, warehoused and inventoried by staff, then shipped back out to Victoria, to a shop, to my hands, when the shop can cut all of that out in the middle. It's the same with Race Face. I want shops to succeed, but with proper business models. Take the middleman out of the equation and suddenly the shop can make more of a profit, but the consumer still pays less. I'll grant that it's not going to work that way in every case, but hey, keep up the insults, it really helps your side.
ReplyDeleteWhat shop do you work in? I'm going to stick with my guess of you working in a shop, since you plainly haven't got the intelligence to actually run a successful one even though you seem to hint at that in your post. I'd like to make sure I never spend a penny there and make sure that no one I knows does either. If you want to be an anonymous internet toughguy with a big mouth but nothing to back it up, that's fine, it's more what I'd expect from you.
Go here for another discussion where people don't sink to saying "you don't have a clue".
ReplyDeletehttp://bb.nsmb.com/showthread.php?t=127823