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is PerformanceBike bad for cycling?

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is PerformanceBike bad for cycling?

Old 08-06-07, 10:46 AM
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johnny99
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is PerformanceBike bad for cycling?

Interesting article in the Bicycle Retailer News: http://www.bicycleretailer.com/news/newsDetail/216.html

08/04/2007 9:08 PM
Performance To Grow with Capital Infusion

BY SEAN HONG

AUSTIN, TX—Hill Abell is on the frontline competing against Performance Bicycles’ retail outlets. So when Performance announced a multi-million dollar infusion of capital to launch another 90 stores over the next four years, he paid attention.

Early last month, Peformance announced that it had been acquired by private equity firm North Castle Partners based in Connecticut.

Abell is a Top 100 Retailer with two stores in Austin, a community he describes as a “very sophisticated cycling market.” Performance has a store near his north Austin location and is about to open another one mile from his central Austin store.

As a Trek and Specialized dealer, Abell isn’t concerned about Performance’s impact on unit sales, since
Performance stocks only “C” level product.

Instead, he worries that Performance, which has a reputation within the industry for mediocre sales and service, will turn off customers new to cycling.

“My concern about Performance is that we feel they don’t do a good job serving customers. We think that reflects poorly on all IBDs. More than anything, that’s our concern,” he said.

Abell described his stores as having a very differentiated product line so there’s little overlap between his operation and Performance.

However, Jay Graves, another Top 100 Retailer, has three Performance operations in the suburbs of Portland, Oregon, where his six Bike Gallery stores are located. And Performance has taken a bite out of his business.

“We’ve been competing with Performance in our Beaverton location for more than 10 years. At first we took a real hit, but now we have a differing customer base,” he said. But Performance added two more locations two years ago.

Graves said Performance typically attracts two types of customers—those with little cycling experience who only shop price, and knowledgeable cyclists who buy discounted parts and accessories and who work on their own bikes.

“We think things will settle down in our market,” he said, noting that his company actively pushes its community involvement. However, what his store managers report is that customers buy a name-brand bicycle, like a Trek, from Bike Gallery and then go to Performance for low-priced accessories. “That drives our store managers nuts,” Graves said.

While Performance continues to build its retail base, the company faces a significant problem finding and hiring managers and well-trained mechanics. Currently, the company has openings on its Web site for store managers or managers-in-training in 28 different locations. It also has a lengthy job list for other positions.

Also complicating Performance’s overall operation is the lack of major brand names like Trek or Specialized or smaller, high-end niche brands. While it carries a mix of Iron Horse, Mongoose, Schwinn and GT bikes, none have the brand-pull of a Specialized.

Mike Sinyard, president and founder of Specialized, said for dealers facing competition from Performance it’s essential they line up with a major brand. “It’s more competition for independent dealers and it raises questions for dealers about who they will work with to supply their bikes and equipment,” he said.

Jay Townley, a marketing and research consultant, said Performance’s recent purchase by North Castle Partners represents an unprecedented move by a private equity firm to add a bicycle company to its portfolio.

“If Performance is positioning to increase its number of retail locations, which recent history indicates it is, this deal brings in the cash to make retail expansion possible at a much faster rate than Performance has been able to finance in the past,” he added.

Performance currently operates 74 outlets in 14 states and has plans to open 90 more over the next four years. Besides the Performance brand, the company also owns Nashbar and 15
other proprietary brands.

Gary Snook, who co-founded Performance out of his basement in 1982, retains a “significant” equity position in the company. Several senior members of Performance’s management team will also have a stake in the company.

North Castle Partners has a focus on healthy living and, in particular, aging baby boomers.

Even before the deal with North Castle, Performance had ramped up efforts to open more stores. In mid-July, it opened a 7,900-square-foot store in Beavercreek, Ohio, the company’s fourth in the state. And in late July, Performance opened a second store in the Houston area—its seventh in Texas.

“On the surface it would appear that they see opportunity to expand their business model, which is unique in our industry,” said Fred Clements, executive director of the National Bicycle Dealers Association.

Clements said that unlike other multiple-store chains that focus on defined regional markets, Performance is a true national giant. Performance has been expanding its retail store program for years, but hasn’t grown as quickly as the company originally promised.

Alan Goldsmith, who sold Supergo to Performance in 2002, agreed. “I suppose Performance should benefit by having a motivated, new long-term investor that’s aligned with its objectives. Also, no more executive time will be lost shopping big Wall Street deals,” Goldsmith said. Performance had once sought to file an IPO on Wall Street.

“The simultaneously scary but reassuring implication for IBDs is the validation of the retail bike business that results from a new mega-buck investment in bricks-and-mortar by presumably ‘smart money.’ With more stores, how can Performance not affect more IBDs than before?” Goldsmith added.
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Old 08-06-07, 10:58 AM
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Originally Posted by johnny99 View Post
Interesting article in the Bicycle Retailer News: http://www.bicycleretailer.com/news/newsDetail/216.html
www.bicycleretailer.com Yeah...no bias there. Performance bad...LBS good.

I like the "very sophisticated cycling market", part too. Guess I'm too Freddish to ever ride a bike in Austin, TX. Maybe I'm just a $75 carbon bottle cage away from being "very sophisticated".

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Old 08-06-07, 11:08 AM
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The funny thing is that I get better service and attention at the local Performance store than I do at many of the LBS in the area.

In some of the LBS, it's like if you don't race for their team or spend lots of dough on tri gear, then they will treat you as if you don't know diddly about riding. Even trying to start a cycling conversation with an LBS employee or owner during an off-peak time when you don't have your credit card flashing in their face can be a trial. Granted, they are all not like that, but enough are to make Performance an attractive alternative when I need something that day.

I'll not even get into selection, price, or getting 10% credit back on every purchase.

So from the perspective of the 'everyday rider' who just wants to be able to browse a decent inventory, buy what's going to work for them, and get on the road, Performance is often the first place I'll look.
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Old 08-06-07, 11:14 AM
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CyLowe97, I agree 100%

Look at the perspective of the source, it is a business owner not a customer perspective. We have a new Performance store here too, and I find that most of the LBSs simply run as a business and not the local gathering place like they were in the past. If that is the model they want then they will have to face the music and see Performance as just another competitor.

I also find myself shopping at Performance more often than any LBS in the area, for the same reasons, selection and the 10% back (sometimes 20%).
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Old 08-06-07, 11:15 AM
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Originally Posted by The Story Above
Graves said Performance typically attracts two types of customers—those with little cycling experience who only shop price, and knowledgeable cyclists who buy discounted parts and accessories and who work on their own bikes.

“We think things will settle down in our market,” he said, noting that his company actively pushes its community involvement. However, what his store managers report is that customers buy a name-brand bicycle, like a Trek, from Bike Gallery and then go to Performance for low-priced accessories. “That drives our store managers nuts,” Graves said.
These paragraphs crack me up. The guy is mad that 'knowledgeable cyclists' will go to Performace. Duh!

Knowledgeable cyclists will also shop for the best prices on the web and for parts that the LBS won't have on the shelf. If the average LBS could carry enough inventory (which is not possible in a small store), then they wouldn't have to be frightened of Performance's inventory power.

Please don't tell this guy about PBK. He'll have a heart attack seeing why everyone in the US buys their Pro2Race tires from the UK.
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Old 08-06-07, 11:18 AM
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MEC is Performance of Canada, but with a much better customer service and product selection is really decent as well, and much cheaper.
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Old 08-06-07, 11:21 AM
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Originally Posted by CyLowe97 View Post
The funny thing is that I get better service and attention at the local Performance store than I do at many of the LBS in the area.

In some of the LBS, it's like if you don't race for their team or spend lots of dough on tri gear, then they will treat you as if you don't know diddly about riding. Even trying to start a cycling conversation with an LBS employee or owner during an off-peak time when you don't have your credit card flashing in their face can be a trial. Granted, they are all not like that, but enough are to make Performance an attractive alternative when I need something that day.

I'll not even get into selection, price, or getting 10% credit back on every purchase.

So from the perspective of the 'everyday rider' who just wants to be able to browse a decent inventory, buy what's going to work for them, and get on the road, Performance is often the first place I'll look.
Not all LBS's are like that though. There are certainly some around here ***cough*** Nytro ***couch*** but another shop that happens to be just down the street from a Performance Bike gives me 10% off all purchases and that's where I take my bike for repairs/tune-ups. They won't hesitate to recommend Performance Bike or the local Trek store if they don't have something in stock either. I've found Performance to be decent and have heard them recommend other bike shops when they don't have something.
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Old 08-06-07, 11:29 AM
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Originally Posted by SDRider View Post
Not all LBS's are like that though. There are certainly some around here ***cough*** Nytro ***couch*** but another shop that happens to be just down the street from a Performance Bike gives me 10% off all purchases and that's where I take my bike for repairs/tune-ups. They won't hesitate to recommend Performance Bike or the local Trek store if they don't have something in stock either. I've found Performance to be decent and have heard them recommend other bike shops when they don't have something.
Yeah, that's why I said "Granted, they are all not like that, but enough are to make Performance an attractive alternative when I need something that day."



It's refreshing to know the shops that are willing to work together or to make a few calls to save a customer the hassle of driving from one place to the next instead of just blowing off the customer or jumping to the QBP catalog for an extended order.

That willingness to get the customer taken care of the same day, plus the suggestion above to make the LBS an easier place to shoot the breeze about riding, would start winning everyday riders back to the LBS.
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Old 08-06-07, 11:36 AM
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Originally Posted by mrbubbles View Post
MEC is Performance of Canada, but with a much better customer service and product selection is really decent as well, and much cheaper.
I'd say MEC is the REI of Canada.
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Old 08-06-07, 11:37 AM
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I don't get what the problem this forum has with Performance Bike is.

I live in Austin, and I was in the actual Performance store the article mentions yesterday (And I've been to the LBS a block away from it). To be honest, the service I've gotten at that Performance Bike made me feel WAY more comfortable than the competing little mom and pop place. There's one guy in particular who works there (looks like Lance Armstrong) who seems quite knowledgeable, friendly and willing to help customers out, including spending 10 minutes on a stepladder taking a rack down off the display so I could test fit it on my car. They have some high school kids working there too, but they're not that hard to spot, and are primarily cashiers, as far as I can tell. I never had one try to convince me to buy anything other than a Team Performance membership.

At the LBS down the street, on the other hand, I felt like the guy talking to me just disregarded what I told him I was looking for, and wanted to show me something that costs twice as much, but didn't even care to try and convince me that it was worth the price.

I find that I'm generally able to do my own research, so maybe I need less service than most people, but I've never walked out of a Performance Bike dissatisfied. I can't say the same for most of the LBS kind of places (although both of the ones in College Station were pretty good, IMO).
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Old 08-06-07, 11:43 AM
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I live in Portland in the middle of the 3 performance shop triangle referenced in the article. I do buy most of my accessories at Performance but personally don't like their bike brands. I find Jay Graves Trek stores to have very high prices for just about everything, and I occasionally shop there for something I can't find elsewhere as I do respect Jay's commitment to the local cycling community.

A good friend of mine managed a Performance store and said the stores make money only on house brand Forte products, bike sales and service, and serve to promote the web site (which is very profitable).

They don't treat their employees very well, but will do just about anything to please the customer. I call them the REI of bike shops as you can just about return anything in any condition. In fact, my buddy told me a story where someone tried to return a heavily used, several year old pair of bike shoes. They refused and he complained to corporate, and the store manager got bashed so bad he was forced to issue a credit for the shoes and an additional gift certificate. Obviously, this is a one off case but you get my point.

I don't understand how they offer their price matching guarantee. I brought in the PBK pro race2 page and they matched it. Plus I got 20% in points the past weekend ~ $40 for the set. Sometimes I feel bad about that, but I'd be buying them off ebay or PBK anyway, so I might as well help their cash flow in lieu of the $100ish I'd pay in another LBS.

Last edited by PedalMasher; 08-06-07 at 11:56 AM.
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Old 08-06-07, 11:47 AM
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Originally Posted by johnny99 View Post
...customers buy a name-brand bicycle, like a Trek, from Bike Gallery and then go to Performance for low-priced accessories.
I get my name-brand bicycle from Performance and go to BikesDirect for low-priced components.
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Old 08-06-07, 11:51 AM
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Graves said Performance typically attracts two types of customers—those with little cycling experience who only shop price, and knowledgeable cyclists who buy discounted parts and accessories and who work on their own bikes.
So his customers don't shop prices and work on their own bikes, what is he the Bike Nazi.
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Old 08-06-07, 11:55 AM
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Originally Posted by The Story Above
As a Trek and Specialized dealer, Abell isn’t concerned about Performance’s impact on unit sales, since Performance stocks only “C” level product.
Another laugh line in the story.

I guess my Sidi shoes, Bell and Giro helmets, Look pedals, Selle Italia saddle, and Pearl Izumi gear are all C-Level compared to sterling reputation of the stock Bontrager saddles that virtually everyone ditches right away from their Trek or Lemond bikes.

And I guess the Kestrel Talon and Fuji Pro frames at the local Performance are C Level frames these days.

Thanks for the laugh. Needed one today..
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Old 08-06-07, 11:55 AM
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Guess I'll go ride my "C" level bike later tonite crying the whole time
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Old 08-06-07, 11:56 AM
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Sounds like a soon to be extinct species to me...
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Old 08-06-07, 12:01 PM
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This point has been made before. The LBS and performance store serve different types of consumers and bashing performance for "turning off consumers" is absolutely ridiculous. Private equity investors most likely are more financially savvy than most of us and wouldn't buy performance if it wasn't going to yield good returns.
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Old 08-06-07, 12:06 PM
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Have to say the that Chris, the manager at the Ventura, California Performance is really great. Helpful, friendly informed. All the employees are riders (even the high school kid knows his stuff). The LBS in the area are great, but the price is key when I balance kids, house and other toys. If you're a brand specific shopper, Performance might not meet your "Specialized" need to "Trek" around, but take a look at the frame selection hanging at Performance Santa Monica, and let the salivation begin.
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Old 08-06-07, 12:07 PM
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I work at a shop and i read this story at lunch the otherday. I laughed my ass off. This is pretty much how the owner of my shop feels, she is always bashing cheap parts or people that work on there own stuff. We had a Torrenio Razza 2000 come though and she kept making comments about how the frame was unsafe and wasnt "real" carbon. The bike came in at 17.5 lbs ready to ride with cages and pedals and everything. As light and spec'd higher than 99% of the bikes we carry for half the price.

I still shop at Performance and PBK (my favorite) and Price Point. If I can get parts for less than what I can get them for with my discount at work, why wouldn't I?
That said, this is my last week at my current shop before I leave for school and honestly i am glad to get out of there.
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Old 08-06-07, 12:08 PM
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I do 95% of all my shopping at performance. I've never had anything less than stellar customer service.
I only use LBS for a last minute item I don't have time to get over the net. There are probably 10 LBS within five miles of me. The selection is never as good as what's available on line. The prices are never even close. With performance, nashbar, pricepoint, etc I get a headsup on sales and always a good deal. The LBS doesn't seem to want to or do a good job of promoting their sales.

With the information available on the internet, forums, etc. I'd rather educate myself about something than rely on a 17yo snoty racer or college kid simply interested in a commission or sales contest, and pocket the cost savings myself.

LBS = high price + attitude, imo.
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Old 08-06-07, 12:09 PM
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Originally Posted by mcmalibu View Post
(even the high school kid knows his stuff).
Thank you for not bashing the highschool kids. We is being the smarts also to.
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Old 08-06-07, 12:12 PM
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Just called to cancel my Team Performance Membership. Their call center is in West Virginia (for all you The World Is Flat readers). I just didn't frequent their store or website enough to warrant my continued membership.
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Old 08-06-07, 12:21 PM
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Originally Posted by SDRider View Post
. . . another shop that happens to be just down the street from a Performance Bike gives me 10% off all purchases and that's where I take my bike for repairs/tune-ups.
Which one?
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Old 08-06-07, 12:21 PM
  #24  
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I fall into the second category of customer for Performance. I buy there because of price. The service is good at our local (ame one as CyLowe97), but within 1 or 2 questions one can stump anyone in the place.

I refer to them as the Walmart of cycling. I have for a while. I truely believe that they are. I have found that I now use them for basic consumables so that I can save, and I use a bunch of other LBSs for specific niche items.

Like all businesses the service aspect somes down to how many qualified people can they recruit and keep at the wages they are paying. I have had good service and bad service everywhere.

I think Performance is actually good in some respects when it comes to new riders. The workers have enough of a corporate "I don't give a crap" mentality that they don't seem to hesitate to say when something they stock is crap. Not only that it helps with their returns. Drop something off, even if it is in questionable shape, and you walk out with something new or a credit.

Other LBSs (IBDs) still have room to segregate a market especially if they represent a niche. It is their's to lose.

...oh and Performance's prices haven't been as outstanding as they used to be. I am finding enough sources for key consumables online that I am finding it actually hard to find something at Performance that I actually want to buy. I spent close to $500 in the last few weeks on stuff. None of it from Performance....
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Old 08-06-07, 12:24 PM
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Originally Posted by littlewaywelt View Post
I do 95% of all my shopping at performance. I've never had anything less than stellar customer service.
I only use LBS for a last minute item I don't have time to get over the net. There are probably 10 LBS within five miles of me. The selection is never as good as what's available on line. The prices are never even close. With performance, nashbar, pricepoint, etc I get a headsup on sales and always a good deal. The LBS doesn't seem to want to or do a good job of promoting their sales.

With the information available on the internet, forums, etc. I'd rather educate myself about something than rely on a 17yo snoty racer or college kid simply interested in a commission or sales contest, and pocket the cost savings myself.

LBS = high price + attitude, imo.
+1 to that...the other 5% of the time, when I don't feel like truing a wheel or when I actually wanted to pay someone to install new cables...I used, what I considered, a customer friendly LBS in my area. The mechanics there are great...sales people...not so much.

I mean, seriously, for things like tires, tubes, bags/panniers, pedals, almost any type of clothing (minus shoes), helmets, drivetrain parts and brake hardware; why wouldn't you use performance/PBK/nashbar/biketiresdirect unless you really LIKE paying more?

Of course, what do I know, being a C-rated commuter logging 75-100 C-rated miles a week, riding C-rated vintage steel.
__________________
Elwood: It's 106 miles to Chicago, we got a full tank of gas, 1/2 a pack of cigarettes, it's dark and we're wearing sunglasses.

Jake: Hit it.


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