Western Canada - High retail prices in Canada

Hi folks,

I've been shopping for doing some touring, and notice that retail prices still remain pegged at half again their US counterparts, or even more. What is up with this? Retailers about 6 months ago were quick to point out the vagaries of the supply chain--well, it's now been 6 months, and I think the chain has sorted itself. And I know that 2008 bike orders had to have been made recently. Yet, a Surly Long Haul Trucker is $1200 here, $900 in the USA. An Ortlieb Pannier that's $140-$150 in the USA is $230 at one local shop that I think has representative prices.

Colour me confused, if not outraged. Anyone know the scoop? Are we just being taken, or is there some other factor?

This subject is near and dear to my heart. While there are many different reasons (and many excuses) it's hard to see the price differences as they are currently. Keep in mind that Canadian retailers still pay for the duty (on some products), higher taxes (in general). Retailers also do not control what the suppliers charge....(Trek Canada* sets its its MSRP not your LBS) I think part of the issue is that the supplier's have not lowered prices and therefore some of them may be absorbing the dollar difference. The retailers in Canada do have to deal with a much smaller economy of scale and therefore the products will always be slightly higher here. ie Trek sells 10x? (number pulled from my ass) more bikes in the USA then in Canada so they pay less per bike on set costs.....but within Canada Trek's* expenditures still must cover the whole country for advertising, sales reps, training etc. All of this should cause the price to be higher here. Having said that, should the price be 30% higher here? Nope. The only way that anything will change is to put pressure on the suppliers. Write a letter to the supplier of the products, ask your dealer what gives. Unless people complain nothing will happen. Keep in mind most dealers aren't making a killing on you, they're just trying to provide you with the best products at a price that they can live with.

*I used Trek as the example cause their Canadian prices on bikes don't seem to be that different (at the levels I've looked at anyway)

Some of the component manufacturers have deals with both U.S. and Cdn. distributors where they will not allow U.S. retailers to ship their products to Canadian customers and the Cdn. distributors apply a much higher mark-up based on the claim that they operate in a smaller market and they will not allow their products to be sold on-line in Canada.

I have been writing to gov't reps at the Federal level and in Quebec where I live as I cannot agree with this protectionism. In the U.S. these kind of actions would end up in the courts. Quebec has a large slice of the cycling industry in Canada and Quebec has the 5th highest density of cyclists in the world.

The consequence is that the Gov't is getting the shaft b/c people buy the stuff off U.S. web sites and ship it to a U.S. address and then the person forwards it to the Canadian as a gift with No taxes or duties applied.

Example. Universal cycles had a Fox 80 RLC fork for 550$ U.S. and it included a CK no-thread set but the site indicated that it could not be shipped to Canada.

The LBS where I bought the fork paid the Cdn. distributor 647$ Cdn just for the fork and 90$ for the head-set and with mark-up I paid almost 1000$ Cdn for what I could have bought on-line for 550+90 taxes or 640$.

Ok i can at least understand higher costs from US owned companies but what about bikes from Canadian companies like Cervelo, Guru and Argon 18? The Argons sold in the US are still cheaper than the ones sold here, i assume the others are the same.

Ok i can at least understand higher costs from US owned companies but what about bikes from Canadian companies like Cervelo, Guru and Argon 18? The Argons sold in the US are still cheaper than the ones sold here, i assume the others are the same.

Although I cannot speak for Guru and Argon....Cervelo, although a Canadian company, does not make its bikes in Canada (they may be assembled here). Carbon Cervelos come from Asia. And again this still does not take into account the higher taxes here and the higher costs of a smaller market in Canada. Cervelo sells ten times as many bikes to the USA and therefore will give them a lower price. If you go to Home depot and buy 100 nails you'll pay more than if you buy 1000 nails.........at least per piece.

People charge what the market will bear. Look at cars, the prices did not come down until people started making noises. Magazine prices in Canada are outrageous compared to the U.S. ,I just stopped buying them. Bike prices will remain high in Canada until the industry begins to lose sales.

I don't mind paying a bit more buying from a LBS in Calgary since they take care of shipping and any warranty issues. They also have to maintain a store front and are available to me for help or service.

OTOH I won't pay a ridiculous amount more to buy local. I've got a good relationship with a couple LBS in town so if something is way out of line I'll talk to them about it and see what they can do - at least 50% of the time we can reach a reasonable compromise. There are some things that it just makes sense to mail order due to time & cost factors.

Often times it is the distribution chain that is at fault, other times it is a smaller company and prices are less affected by the economy, and still other times it is the local shop. I for one have never seen prices in the U.S.A. to be half of that in Canada. You first examples of Surly and Ortlieb are both distributed in Canada by NRG, a very small distributer out of Nelson B.C. These are both brands that are small, and specialized in the Canadian market, thus a higher retail in then in the states.

As for some of your other examples of Canadian bike brands, I still have not seen that great of price variation.

I'm not sure why people expect Canadian prices to go down, if anything American prices should be rising. It's their economy going down the tubes not ours going up.

I agree that US prices should be going up but it still a relative thing we should not be paying a third more than the Americans do. I would love to support a local shop but living in the hinterland my local shop is a ways away. I tend to mail order, which may give me the best price but it lacks the face to face contact which is worth something. I tend to agree with VIC support local if possible.

If you think that the price of bike and bike stuff is out of whack take a look at motorcycle stuff, its even more goofy.

I'm looking Surly LHT too. It's $1250 at a local shop A . I'd love to order it from Local Shop B (better service) but the company (NRG distributors) has some sort of exclusive deal with shop A, and won't let Shop B sell Surly's bicycles or frames.

This is all making me very grumpy. I'm already going to have to pay an extra few hundred on top of the cost. I'm under the assumption that QBP (Surly's stateside distro) sells to any bike shop.

Just about any shop can get parts through QBP including Surly parts and accessories but not every shop can get Surly frames and bikes.

I was just at Denman Bike Shop in Vancouver this past weekend looking for something to cruise around on and the lady was saying that prices are going to jump mid season due to increases in manufacturing costs. Now, I'm super skeptical of anyone who's selling me something that I don't know much about (I'm a total noob when it comes to proper bikes) so I was wary of what she was telling me? Has anyone heard about this yet?

Just one little item I've been thinking of mentioning for awhile. They don't sell bicycles or even frames but for the parts they do sell, Mountain Equipment Co-op has the best prices I've ever seen. My most frequent purchase there is tubes for the old 10 speed tires, 27 X 1 1/4 inch. They have been $2 for about 5 years now. I don't go there very often and pick up 6 to 10 at a time. A 5 gear Shimano rear sprocket was $8.

They don't even have frames or exotic parts, but for basic tools and everyday stuff they are really good.

I bought my last 3 bikes in the States. Way cheaper and better components. Canada has a 13% tarriff on bikes sold in the country. The last bike I bought on Ebay new I paid $635 US for it, when the CAN was almost at par with US. The same bike here would sell for $2,500 minimium. I had a hell of a deal. I had it professionally assembled and their jaws dropped when I told them what I paid for it.

Still, my fav soxs in the USA are $6.99, here they are still $15.99. Wow, FAIL.

Maybe there is hope. I just bought a Catrike Recumbent Villager, MSRP on their website is $1550, US$. I bought it in Bentley Alberta for $1,900. That is $350 more. The Canadian vendor said that is their costs for shipping and border crossing (some agent fee?). While that is a 22% over US prices I can understand the costs and didn't feel ripped off. The dealer custom fit the bike to me and installed accessories at no charge, and threw in a few extra's. Catrike's I'm told are built in the USA.

I'm looking Surly LHT too. It's $1250 at a local shop A
Where are you located? My LBS wants $1,600! :eek:

No one has mentioned the increases we have experienced since 9/11 either: The cost of paying for Homeland Security (biggest damn bureaucracy on the planet), as well as our own increases in Security have caused a "bump" in costs; as well as the cost of FUEL.
I was incredibly disconcerted to see a Brooks Saddle in Portland going for $110.00 USD, and then returning to my LBS and seeing the same model for $149.00 CDN.
Factor-in both taxes (BC, and Fed. Oregon has no tax on this item) and it becomes an absolutely ridiculous comparison.

*meh*

bump

Don't even start with MEC. Did you know they abuse their co-op status so they pay very little corpoate tax? canadian suppliers will not sell to them, so they are forced to use grey market suppliers out of the states. They have an unfair competitive advantage over IBD's because the dividends they make (profit for everybody else) can be put back into their business while a for-profit store must first pay tax on their profit before re-investing it. pretty slimy if you ask me.
Here's an article off their blog which exposes them for who they really are:


"As an MEC member and bike dealer I have some views to share.........(edited to save space)



In fairness you might have added that the text you quoted was a response posting to a blog written by a member of the public and not written by the author of the blog "Bike Industry - Green & Hype" http://blog.mec.ca/2009/05/bike-industry-.html . Thus it's a point of view of a person who does not speak for MEC. It's not necessarily factual nor is it an article.

Here's the response to the quoted text by the author of the blog:

Hi MT,

Thanks for the valid comments. The economics of what you say are debatable but some of your points are true.

I would like to make a few corrections. MEC DID NOT get into bikes because of some messianic need to clean up factories. It is getting into bikes based on member demand and the goal to get Canadians more active. Of course this is debatable for some as you have noted in your earlier comment.

In terms of factories in Asia being the state of art in terms of working conditions and wages. I find that questionnable. No doubt there is likely a handful of progressive factories in Asia but the bulk have significant challenges. You're right. We don't provide proof in the public domain for verification (for libel reasons with factories). We can in private conversations.

Based on your eye-witnessed account you have not encountered any major challenges. Based on our fairly extensive work with NGO's, environmental engineers, labour auditors and other bike brands in these factories, we're seeing something else.

I hope your first hand experience is right because if you are, MEC is definitely chasing the wrong factories. And the world of Asian bike factories is not as dark as what my colleagues at other bike brands and I are are encountering.

I'm a MEC member and I'll support the the LBS when their prices are reasonable. On the other hand, as I'm a regular guy who works hard for his money, I need it more than someone who owns a business.

As for MEC being a cooperative, I fail to see how reinvesting in the cooperative is slimy or underhanded. Nor do I understand what you mean when you claim that MEC is absuing their co-op status. It's not like some guy is siphoning profits off into his own pocket.

On the other hand, as I'm a regular guy who works hard for his money, I need it more than someone who owns a business.




I really don't understand this line. Are you saying that a bicycle shop owner makes too much/doesn't work hard? (or any business owner for that matter)

I find Canadian Tire are now carrying some good decent bikes for the price brackets. Ignore their silly full suspension bikes and look into their simpler hybrids and you can find some bikes with good quality components.

I really don't understand this line. Are you saying that a bicycle shop owner makes too much/doesn't work hard? (or any business owner for that matter)

I did not say that. I said I work hard for my money and I need it. I was not referring to the work ethic or finances of business owners. Businesses are not charities but if they act like they need to be treated as such to survive then I suggest that the problem lies with the management and not the marketpalce.

In fairness you might have added that the text you quoted was a response posting to a blog written by a member of the public and not written by the author of the blog "Bike Industry - Green & Hype" http://blog.mec.ca/2009/05/bike-industry-.html . Thus it's a point of view of a person who does not speak for MEC. It's not necessarily factual nor is it an article.

Here's the response to the quoted text by the author of the blog:

Hi MT,

Thanks for the valid comments. The economics of what you say are debatable but some of your points are true.

I would like to make a few corrections. MEC DID NOT get into bikes because of some messianic need to clean up factories. It is getting into bikes based on member demand and the goal to get Canadians more active. Of course this is debatable for some as you have noted in your earlier comment.

In terms of factories in Asia being the state of art in terms of working conditions and wages. I find that questionnable. No doubt there is likely a handful of progressive factories in Asia but the bulk have significant challenges. You're right. We don't provide proof in the public domain for verification (for libel reasons with factories). We can in private conversations.

Based on your eye-witnessed account you have not encountered any major challenges. Based on our fairly extensive work with NGO's, environmental engineers, labour auditors and other bike brands in these factories, we're seeing something else.

I hope your first hand experience is right because if you are, MEC is definitely chasing the wrong factories. And the world of Asian bike factories is not as dark as what my colleagues at other bike brands and I are are encountering.

I'm a MEC member and I'll support the the LBS when their prices are reasonable. On the other hand, as I'm a regular guy who works hard for his money, I need it more than someone who owns a business.

As for MEC being a cooperative, I fail to see how reinvesting in the cooperative is slimy or underhanded. Nor do I understand what you mean when you claim that MEC is absuing their co-op status. It's not like some guy is siphoning profits off into his own pocket.

I didn't have the rest of that blog post because MEC mysteriously pulled it soon after that comment was made. I had saved it before it was deleted.
This is slimy because they simply aren't playing by the rules. The fact is they are paying very little corporate tax on the money they make, vs. a for-profit shop having to pay tax on their profits. this gives them a gross advantage over a LBS because they can re-invest all of the money they have made back into their business, whereas an LBS cannot. The reason their prices are lower is because the are paying tax. If an LBS didn't have to pay tax of course they could compete. Not a single supplier in Canada will sell to them because of the way they do business. they have to go through grey market channels to get their product.
I'm a MEC member too, but i have to ask: why is MEC in the bike business? i thought the point of having a co-op is to fill a void in the market. seeing as how the market is more than served by the # of LBS, why does the 1200lb. gorilla feel they need to saturate the market even more?

I didn't have the rest of that blog post because MEC mysteriously pulled it soon after that comment was made. I had saved it before it was deleted.
This is slimy because they simply aren't playing by the rules. The fact is they are paying very little corporate tax on the money they make, vs. a for-profit shop having to pay tax on their profits. this gives them a gross advantage over a LBS because they can re-invest all of the money they have made back into their business, whereas an LBS cannot. The reason their prices are lower is because the are paying tax. If an LBS didn't have to pay tax of course they could compete. Not a single supplier in Canada will sell to them because of the way they do business. they have to go through grey market channels to get their product.
I'm a MEC member too, but i have to ask: why is MEC in the bike business? i thought the point of having a co-op is to fill a void in the market. seeing as how the market is more than served by the # of LBS, why does the 1200lb. gorilla feel they need to saturate the market even more?

The link I posted yesterday will take you to both the anonymous posting that you quoted and the response I posted. So as of July 14 and this a.m. it was there for all to read.

As for the pdf you attached, all I see are a few LBS owners complaining about someone else doing a better job at running a bike shop than they are. No real facts, no real sources, simply their opinion. Also, I don't hear Cabelas or Wholesale Sports complaining about MEC's co-op status. Don't get me wrong, I'm not against the LBS, I'm just tired of the sh*tty service and high prices that seem to be a common denominator in some LBSs. For example, I brought my bike in for a spring service. First thing I notice is they charge me for front brake pads, pads that I had replaced a couple of weeks before. I eat the cost and start riding home. Second thing I notice is I have almost no braking power on the rear as is they did FA to adjust the rear disc (which I was able to do in 15 minutes). Lastly, when I go to lift the bike onto the deck the FRONT WHEEL FALLS OFF! Turns out whoever worked on the bike forgot to tighten the wheel after replacing perfectly good pads. I did give them a second chance on another bike but they failed that test as well (I marked parts etc to know if the work had been done). So to answer your question, MEC is in the bike business b/c the members asked MEC to get into the bike business. I remember the survey that brought them to where they are now. Why? I've been told by others of similar experiences with other LBS.

MEC should be able to provide much more consistent quality than some of the shakier LBS'. Personally, whether I go to MEC or an LBS there is a 1/10 chance of either having what I want to buy. With MEC though, I can order it online if it is out of stock.

Bad luck for the LBS, yeah probably. But not too many LBS' seem to be targeting the utilitarian daily rider anyway. MEC has been doing that for well over a decade with cycling parts and accessories even on Sundays. The LBS has had lots of warning and are lucky that MEC has taken this long to expand their cycling department.

I'm a MEC member too, but i have to ask: why is MEC in the bike business? i thought the point of having a co-op is to fill a void in the market. seeing as how the market is more than served by the # of LBS, why does the 1200lb. gorilla feel they need to saturate the market even more?

I also have to ask why is Canadian Tire in the bike business? Isn't their point tires. Or Wal-Mart? Isn't their point walls? From the MEC site:

A co-operative is a democratically owned business structure in which members pool their resources to obtain a benefit. At MEC, members use their shared purchasing power to obtain goods and services for outdoor activities.

I think that answers the question and from a mission statement point of view, as long as MEC does not go into the indoor bike trainer business I don't see a conflict.

I have to visit your market as I have yet to be in any city anywhere in the world that is near the saturation point with local bike shops.

^^MEC sells indoor trainers.

There are loads of reasons why bikes cost more in Canada than the US.

One of the biggest ones is that Canada is, for the most part, a more expensive country to do business in. Leaving the extremely expensive parts of the US out (NYC mostly), wages - particularly at the low end - are higher. Rent is higher, shipping is higher. There's duty and there's taxes. Also, the entire country is a seasonal market, whereas about 1/2 the states is a year-round market, so there's less down time where they're not making any sales.

But one of the biggest things is that currency exchanges are unpredictable. Today, a 10% premium would roughly reflect the currency difference, but a month ago it would have been 20%. A few years ago it would have been 40%. So even ignoring the fixed costs in CAD, there's the issue that bikes don't flow in and out of the shop instantly. The LBS buys most of their stock sometime midwinter, so if the CAD improves going into summer, they still have to cover costs paid at a worse exchange rate.

If you live close to the border and are happy to cross to get any warranty service done, then that's a reasonable course of action. But I wouldn't buy a bike I'd never tried off the internet, and I live too far away to visit an American storefront, so I'm left with paying local prices. Still, I bought my last bike midwinter, and paid far less than MSRP in Canada or the US, so sometimes it's just a matter of savvy shopping.

There are loads of reasons why bikes cost more in Canada than the US.

...

But one of the biggest things is that currency exchanges are unpredictable. Today, a 10% premium would roughly reflect the currency difference, but a month ago it would have been 20%. A few years ago it would have been 40%. So even ignoring the fixed costs in CAD, there's the issue that bikes don't flow in and out of the shop instantly. The LBS buys most of their stock sometime midwinter, so if the CAD improves going into summer, they still have to cover costs paid at a worse exchange rate.



Once again a management problem. If you want to control FX fluctuations at a future date, you use a simple technique called hedging. You write a contract to purchase a load of bikes in six months in US$. At the same time, you purchase a contract to buy that same amount of US$ in six months at the rate of exchange in effect today, so no matter what happens, you're covered.

Sounds to me like most of the MEC complaints are merely whining from competing bike retailers. I think that if MEC were not around, bike clothing and accessory prices in Canada would be even higher. A common strategy used in the bike business is to lowball the price of the bicycle, and to maximize profits on accessories and clothing. In a free-enterprise economy, MEC and online retailers help to mitigate the outrageous prices that result.

I find that small businesses in general like to extoll free enterprise, but when it comes right down to it, they'll take any advantage they can get, and try to remove any perceived advantage anyone else has. For them, a level playing field is one that is smooth and flat, but tilted in their favor.

L.

pretty slimy if you ask me.
Here's an article off their blog which exposes them for who they really are:

"As an MEC member and bike dealer I have some views to share.


All I can say is BooHooo. I lived in Vancouver when MEC went into selling bike parts, tools, and sundry cycling items. I remember they were the first to offer SPD compatible pedals for under $100. Ritchies I think for about $70. This being about two years after SPDs came on the market (mid 90's) LBS were selling Shimano 747 and lower models for several hundred dollars. Even used 747's were a $100. In my opinion, at the time the majority of Vancouver shops were elitist with little selection. Now the local shops are complaining that MEC is stealing customers that they weren't all that keen on serving in the first place. Oh well. MEC started out selling cycling rain jackets, tubes, and tools nearly two decades ago. Personally, I can't fathom a slower reaction time to a change in the market place.

Lead, follow, or get out of the way.

Please keep posting anti MEC blogs, and I will keep posting that they're rubbish.

^^MEC sells indoor trainers.

Now they have crossed the line. Criminal :)

And now we will pay HST on Bikes. Great.

^ Aint that the truth. Stupid ass goobment. Like we aren't already taxed half to death....

The reason stuff costs more up here than down here is because Canadians are apathetic. We allow all kinds of things to happen that we shouldn't, cause we just can't be arsed to do anything about it.

^ Aint that the truth. Stupid ass goobment. Like we aren't already taxed half to death....

The reason stuff costs more up here than down here is because Canadians are apathetic. We allow all kinds of things to happen that we shouldn't, cause we just can't be arsed to do anything about it.


I was told the other day by a reliable source that LBS shipping and handling costs that are set by distributors and manufacturers have skyrocketed and thus prices on everything have gone up because the economics of a small business requires them to order smaller quantities more often. Ergo, more shipping.

One supplier had raised shipping costs 500% per bike.

And now we will pay HST on Bikes. Great.

Git yer new bikes quick!

And now we will pay HST on Bikes. Great.

You will, I won't.

( Well, for now. )

with the way things are, I wont be surprised that soon BC government will tax every cyclist. Imagine that we have to pay registration fee, license fee on our bikes.

For Bowcyclist's benefit: MEC MEC MEC MEC MEC.....

I just made an $400 order of winter riding gear from MEC. About half the order was on backorder. They only charge shipping once (which was free anyway on this order). Since my LBS's in a town of 5000 is Walmart or Canadian Tire, this is a pretty good deal.

Hey, speaking of shipping, here's more bad news: If you have something shipped from within BC to your home in BC, you currently only pay GST. There is no PST on in-province shipping. After HST, shipping is added to the total cost, and all of it is charged 12%.

On the other hand, there's no more 10% liquor tax (part of PST). So you will actually pay less for your pint. Currently, a $5 pint of beer is $5 + .25 GST plus .50 liquor tax = $5.75. After HST, it's $5 + .60 HST = $5.60. Drink up!

Even though HST might make life easier for businesses and make BC more competitive, I don't like the way the govt did it and I can't wait to vote to turf them out. And I don't like how they removed the tax exemption for bikes, parts, and service. Not only this, but a luxury car will actually cost less. Not many people know this, but PST on cars is 7% to $54,999. It then goes up by 1% for each $1,000 until it hits 10% at $57,000. After HST, all cars are taxed at GST + 7%. So you can hold off on that S-Class until July.

L.

Don't even start with MEC. Did you know they abuse their co-op status so they pay very little corpoate tax? canadian suppliers will not sell to them, so they are forced to use grey market suppliers out of the states. They have an unfair competitive advantage over IBD's because the dividends they make (profit for everybody else) can be put back into their business while a for-profit store must first pay tax on their profit before re-investing it. pretty slimy if you ask me.
Here's an article off their blog which exposes them for who they really are:




"As an MEC member and bike dealer I have some views to share.
MEC's position and stated mission to behave ethically and be socially responsible is laudable but disingenuous. While sourcing goods ethically in places like China is a priority, MEC is prepared to abandon those same principles at home in the interests of their own business objectives.
MEC's entry into bike retailing is the issue and yes MEC's competitive model is a problem. However, since you say "This huge and complex scenario will not be discussed here" let me boil it down for your readers.
MEC was established as a co-op to sell mountaineering gear that was not available in the market. That arrangement came with a big competitive advantage in that MEC paid no corporate tax. Fine. The problem was (and is) that, once a co-op was established, MEC was free to enter other areas of products regardless of the fact that those products were already available. MEC has taken full advantage of that loophole and exploited its competitive tax advantage with the result being that many outdoor retailers went out of business. Now MEC wants to sell bikes. Why???
I am a bicycle retailer in Vancouver. There are some 60 bike shops in Vancouver, doing approximately 30 million in sales. With 60 shops there is certainly no lack of selection or competitive pressure. There is an abundance of product and an abundance of places to buy that product.
Contrast that reality with the Co-operative Secretariat of Canada that lists as the benefits and objectives for co-ops to exist: job creation, correcting market imbalances, serving community needs, filling market gaps (the reason MEC first came into existence) and empowering little guys. Also, consider that all co-ops are supposed to act out of concern for the community. MEC’s own mission and value statement is that MEC will act with social leadership and community spirit.
Yet MEC, is going after the more than 60 family owned bike businesses that more than serve the market. So, rather than serving their community and empowering the little guy, MEC has grown to such arrogance of its own principles that it would rather crush the little guy to steal ever more business out of the market economy. With no tax benefit to the community, one has to wonder why government would allow this to continue, as any reason for MEC to ever exist has long since passed. Yet, they continue unchecked in their quest for growth.
MEC's own CEO attempts to sweep these issues away. Reading the transcript of a past AGM, in response to member concerns MEC is getting too big, he says their expansion is in response to “member demand”. So when he opened a new store in Montreal that devastated local retailers, was that in response to member demand?
It should be noted the MEC was formed to provide a small group of people with mountaineering gear that was not readily available in Vancouver. So, one has to ask why this has been allowed to grow into a cross Canada enterprise. Surely, the store in Halifax is not there to provide mountain gear for people in Vancouver. Yet, MEC has expanded into every major market, taking sales out of the market economy.
Furthermore, at the same AGM, the MEC CEO attempts to paint MEC as a small retailer with only 2% of the market that has lower margins and higher expenses (because they pay people more, he says) than similar businesses in the regular market.Yet, his arguments are untrue. Looking at the the financial statements of the Forzani Group, owners of Sport Chek, SportMart, Coast Mountain, Sports Experts and compare those with the numbers reported by the MEC CEO at his AGM. MEC margin was 33.7% and MEC expenses were 28.5%. Compare those with Forzani margin of 33.9% and Forzani expenses of 27.8%. The numbers are virtually the same.
Now also consider that Forzani sales were 857 million compared with 200 million for MEC. But Forzani has 260 stores in that group under many different banners. MEC has only 11 (or is it 12 now) stores all under the MEC brand. So, rather than a minor player, MEC is in fact, the largest sporting goods dealer in Canada under one banner AND their margin and expenses are no different than the other largest players. The only difference is that while Forzani struggles to deliver share value, MEC is debt free with over 100 million in the bank and intent on getting even bigger.
As I have already pointed out, there are 60 bike shops in Vancouver and MEC has already done serious damage to our industry. While the number of stores may suggest a robust industry, the truth is that there are very few healthy dealers. The reason is MEC and their entrance into the cycling clothing and accessory market several years ago. According to the CEO of MEC, cycling is now MEC’s largest area of sales. This has come at the expense of independent bike dealers who now lack a critical portion of their business (clothing and accessories) due to MEC’s aggressive pricing and sourcing practices.
Recently, MEC opened a store in Victoria. All the bike shops there report a loss in sales revenue for clothing. Consumers, persuaded by the low price of branded accessories (intended to be exclusive to bike dealers) obtained by MEC through grey market channels, are now buying their $200 Chinese made jackets at MEC.
As a result, bike shops have lost a significant portion of a critical portion of their business. The effect being that revenue and profits are reduced at the same time that there is significant upward pressure on wages. Yet, with MEC creaming off the most profitable part of our business, retailers are unable to raise wages. And now MEC also wants to sell and service bikes and are stealing our employees to do it.
None of this makes sense. MEC is taking business away from businesses that pay income tax and contribute to the tax base. For this exchange, what benefit is there to the community? MEC's paltry donations to environmental causes are an advertising expense that do not balance the damage to the local economy, private businesses and the families they support. It seems that MEC is running counter to virtually every benefit that a co-op is supposed to provide. There is no market gap, MEC is not creating jobs, MEC is not helping local economies. On the contrary, MEC is going after markets that are well served, MEC is taking jobs away from existing businesses and in every market MEC enters, existing business are damaged.
The MEC has become an 800 pound gorilla that has devastated the outdoor industry. Now they have set their sights on family owned bike shops in their quest for continued growth.
Imagine for a moment that whatever business you work for suddenly has a giant competitor move in next door. Now imagine that the government has given that competitor an indefinite tax holiday. How would you feel? Do you think that would be unfair when that business is selling exactly what you already do and giving nothing back to support the social programs and tax base on which we all rely?
Ethical and socially responsible? You decide. When MEC executives keep using words like “market share”, “expansion” and “wanting to be the number 1 outdoor retailer in Canada” they are more in the league of the Wal-Marts of the world, than the ethical and socially responsible, community minded co-op they pretend to be.
Consider that MEC has discussed plans to open satellite stores (like North Van) in suburban communities and even catalogue type stores (remember the Sears model) in outlying areas. Do those plans show any social responsibility for the impact on the local economy? MEC members need to say enough is enough and apparently, as evidenced here, some already are.
It is some comfort to see that many others on this blog feel the same. Realizing that there may be some member resistance, it appears that the new raison d'etre proffered by MEC for getting into bikes is the suggestion (no proof has been offered) that bikes are not ethically sourced. Your readers are supposed to challenge their local bike dealer about the origin of their bikes. MEC should be more careful before trying to throw bike shops under the bus. I for one have visited the factories where our bikes are made both in the US and Asia. All are ISO certified and were state of the art with excellent working conditions and good wages."


Thank-you for your view on Mec and their methods. I cannot however agree with you. I have been in way to may "small" bike shops that are arrogant uncaring retailers. Do you know how many times I've been into a bike shop and asked, "do you carry such and such a product?" only to be told: Nope our distributors don't carry it. End of story. Is that good service? No it isn't. And that's why MEC is doing so well for its members. I have a vote. If I don't like the guy who does the ordering I can vote to get him replaced. In the local bike shop I have no recourse other than not shop there. But guess what...all these local bike shops all get their stuff from the same distributors. Norco for instance supplies many shops with their product so there really is no choice locally. Try talking to Norco about what they carry. It seems the local bike shops have no pull, the consumers have no pull. Why? Because they are an independent for profit business. See my post "Norco Let Down" on western canada region forum. This kind of arrogance has to stop and that is why MEC is so successful. I really hope they start selling bikes so I can quit getting ripped off at my local bike shop.

Regards,
GregT

The link I posted yesterday will take you to both the anonymous posting that you quoted and the response I posted. So as of July 14 and this a.m. it was there for all to read.

As for the pdf you attached, all I see are a few LBS owners complaining about someone else doing a better job at running a bike shop than they are. No real facts, no real sources, simply their opinion. Also, I don't hear Cabelas or Wholesale Sports complaining about MEC's co-op status. Don't get me wrong, I'm not against the LBS, I'm just tired of the sh*tty service and high prices that seem to be a common denominator in some LBSs. For example, I brought my bike in for a spring service. First thing I notice is they charge me for front brake pads, pads that I had replaced a couple of weeks before. I eat the cost and start riding home. Second thing I notice is I have almost no braking power on the rear as is they did FA to adjust the rear disc (which I was able to do in 15 minutes). Lastly, when I go to lift the bike onto the deck the FRONT WHEEL FALLS OFF! Turns out whoever worked on the bike forgot to tighten the wheel after replacing perfectly good pads. I did give them a second chance on another bike but they failed that test as well (I marked parts etc to know if the work had been done). So to answer your question, MEC is in the bike business b/c the members asked MEC to get into the bike business. I remember the survey that brought them to where they are now. Why? I've been told by others of similar experiences with other LBS.

You are absolutely right. Lbs's customer service sucks. They treat you like its a privilege for you to be walking through their golden doors. Sorry homey don't play that. LBS's have poor selection and what they do have is horribly overpriced. LBS's don't even understand what a bike tourists needs are. They think we all want to ride around on 8K carbon fiber race bikes. NOT! Just try and get some touring clothes at an LBS. You'll go blind squinting trying to find it. They simply don't care about that segment of the market. Ask yourself this. When is the last time an LBS asked YOU what you'd like to see them carry? MEC does this annually. When are the LBS's going to wake up? It seems, not until they file for bankruptcy.

^ I don't know which LBS you have been to. But the ones I've been to like CAPs and most recently Experience Cycling have been very positive. CAPS has a huge selection of bikes. Folks are also enthusiastic too. No attitude whatsoever. Folks at Experience Cycling are very warm and friendly but due to size, selection is limited. But I go there for service which has been great.

^ I don't know which LBS you have been to. But the ones I've been to like CAPs and most recently Experience Cycling have been very positive. CAPS has a huge selection of bikes. Folks are also enthusiastic too. No attitude whatsoever. Folks at Experience Cycling are very warm and friendly but due to size, selection is limited. But I go there for service which has been great.

Yes CAPS has lots of bikes. Have you gone to their clothing section. Unless you are a road racer or mountain biker you are out of luck. What about all us cycle tourists? As for accessory selection. Go look at the pannier section. It's all one brand. Axiom. Why? Because that's all Norco distributes. Sad. Thankfully we have MEC. Good quality and good selection.

Cheers,
GregT

As a personal note on the MEC topic: They are not out to get other businesses at all. There's no invisible hand pushing the expansion of a co-op and abusing taxation for personal gain, rather, the expansion has been driven by members themselves who buy into MEC and BECOME MEC. Proportional representation. If there's incredible demand for such a service, they are simply filling in the demand.

The bicycle co-op I work at has been well encouraged by MEC. They've provided us with equipment, good discounts, and references. We exchange information back and forth. The staff at MEC have referred many people to our shop for lessons on repairs and workshops, and we've referred many people to them who simply cannot afford to buy $250 bike lights and $200 rain jackets.

I can't say the same thing about many local shops such as TBS or Bow Cycle, where the goal is to meet sales goals, rather than meet your needs and listen to you. Sometimes you can have good sales experiences and indeed, have your needs met - but that is not the case for many, whom feel alienated by the staff, the pricetags, or by the lack of support from a shop in meeting the cyclists desires.

Some shops have talked a great deal of trash about more things than MEC, our co-op has received a fair deal of trash talking and "verbal discrediting" because we have an agenda to teach and educate, rather than convince people they need a new Ultegra derailleur when their cables are just gummed up.

Ugh, tell me about it. Was talking about getting an Xtracycle at the LBS; owner said he could bring in a complete Big Dummy for about $3000. :(

Ugh, tell me about it. Was talking about getting an Xtracycle at the LBS; owner said he could bring in a complete Big Dummy for about $3000. :(

It wouldn't surprise me if he mentioned that because he simply couldn't get an Xtracycle for you. Last time I checked up on it, QBP was only stocking the Dummy and the accessory kit, not the Xtracycle kit itself. Many shops basically just run off catalogue suppliers like QBP and Norco.

Nah, we had talked about getting a free radical in, too. I would prefer having a welded frame over the extension kit. At any rate, winter has set in here so we have a good six months to save and decide.