Following the supply and demand chaos of the pandemic, Madison CEO Dominic Langan tells Alex Ballinger how the retailer plans to adapt its business to prepare for all eventualities
This piece first appeared in the August edition of BikeBiz magazine – get your free subscription here
The first half of 2022 has been a bumpy return to earth for the bike industry. Following remarkable consumer demand at the height of the coronavirus pandemic, the cycle industry has now been beset by various speed bumps, from ongoing supply issues to global financial troubles that have rattled the wallets of the cycling market.
The Milton Keynes-based distributor, Madison, has been able to weather the storm, despite the supply nightmare of one of its biggest brands, Shimano, and is now looking to the future to adapt its business to any other invisible shock to the system.
Founded as a small bike shop in North West London in 1977, Madison has grown into a huge distributor of cycling, motocross and freestyle sports gear. While the Madison side of the business distributes dozens of brands, from Shimano components to its own line of apparel, Sportline acts as the company’s specialist bike wing, distributing Saracen, Genesis, Ridgeback branded bikes and Adventure.
Madison CEO Dominic Langan shared his thoughts with BikeBiz for the first installation of our new regular series Distributor Focus.
“There are definitely a lot of challenges right now,” Langan said, “but navigating the business through this cost of living crisis while doing everything we can to counter some of the inflationary pressures, is at the top of the list.”
Langan said the first half of 2022 has been tougher than the previous two years, but things appear to be getting back to normal after the Covid boom in cycling. Low stock levels are beginning to stabilize and Madison stock is now nearly back to pre-pandemic levels except for some key lines, while supply issues continue on the distribution front bicycles, as part of the Sportline activity.
Langan said the low stock levels on the bikes are partly due to Sportline’s reluctance to compromise on specifications, as the brand wants to avoid causing problems for retailers and ensure quality after-sales service.
“We’re pretty much on budget so far this year and ahead of 2019, with the IBD channel quite considerably ahead of where it was the year before the pandemic broke out. But we just don’t see anymore the demand we enjoyed in 2020 and 2021.
“As a country, we still face many challenges with low consumer confidence, rising inflation, rising cost of living, a weakening pound sterling, war in Ukraine, the rising costs, labor shortages, spreading social actions/conflicts and a government in disarray at a time when we really need strong and credible leadership.
Langan said his main concern is that these challenges could continue or even worsen in the coming months. While the cycle industry often thrives during economic downturns, as people turn to cycling to try to cut costs, working from home could prove to be an obstacle to the success of the cycle industry in the course of the next year.
The retailer’s point of view
Despite all the uncertainty facing the industry at this turning point, independent retail remains robust, Langan said, especially compared to the first half of 2019 — the last “normal” period we have for comparison.
“Many stores are reporting overstocking and we know some suppliers have forced retailers to take stock that they no longer had demand for when they originally ordered it. We haven’t done this at Madison or Sportline because we’re keen not to erode the value of the inventory we supply by forcing retailers to promote heavily just to generate cash flow.
The performance, or enthusiast, bike market remains strong, as Madison has already pre-sold the first of the newly announced Shimano 105 Di2 groupsets, but the recreational and commuter market appears to have slowed.
Langan added: “Retail footfall is widely reported to be down and not without reason consumer confidence is very low. Stores are well stocked, but demand is simply not at the level of the past two years and stocks will take some time to balance out again.
“We see traders investing in their stores, but especially in their workshops by investing in new Park Tools and our tool boards, CRC Smartwasher parts washers coupled with our very competitive consumables subscription service and not forgetting Asecos cabinets for a safe electric bike. battery storage and handling.
Product and portfolio
Madison has recently made a number of changes to its product portfolio, including the addition of the Tooo rear camera light. Quadlock, a leader in smartphone mounts, also joined the brand portfolio, and during the pandemic Madison launched Vittoria tires, offering a better margin than some other tire brands.
ODI, specialist in bicycle grips, was announced in 2020 as a Madison brand, offering a complementary accessory with a low investment in stock and a varied POS. During the pandemic, Madison invested in a Holland Mechanics wheel build setup for the M:Part line of wheels.
Finally in March, Lazer announced its new Kineticore rotational impact protection technology for helmets, providing protection, ventilation and reduced lag. Langan added, “We continue to look for opportunities in the market and gaps within our portfolio to ensure we offer everything our customers need to meet consumer demands.”
Room to grow
Following the opportunities of the pandemic, Madison plans to continue to grow both in its exports and behind-the-scenes infrastructure. Despite the difficulties imposed on international trade by Brexit, Madison continues to see growth in its exports and improving its service levels for the EU is a priority, Langan said.
Investments in IT infrastructure will be introduced to improve efficiency, while the retailer also plans to upgrade its warehouse management and bonded warehouse systems this year. Improvements are also underway for B2B and Freewheel platforms.
But one of the biggest lessons of the pandemic concerns the “just-in-time” logistics model, as Madison envisions “near-shoring” production to reduce dependence on China for supply – an aspiration to term, but that’s essential if Madison is to stay competitive, Langan said.
On the Sportline side of the business, demand for e-bikes and e-cargo bikes continues to grow, and the brand now has a five-year roadmap, backed by investment capital, to support that growth.
Langan added, “Sustainability is also a challenge that we all need to address. We look at all elements of the business, from energy consumption to solar power for our facilities, electric vehicles, tire recycling, inner tubes and e-bike batteries, materials that we use in our products and, of course, we ensure that our packaging is environmentally friendly.
“It’s a massive task and something we’re working with all of our brands to achieve and I’m not sure it’s something we’ll ever finish as there will always be advancements in technology to allow us to do more. , but we are on this path and committed to reducing our impact on the planet.
These last months, BikeBiz has heard reports from retailers of personnel changes at Madison, particularly in sales staff, but Langan says there is no downsizing, rather a shift in focus as the market exchange.
Madison invests more in product promoters, to “add value to customers, giving them more of what they need to help grow our business together.” The distributor is also placing greater emphasis on staff training, visual merchandising, support for retailer events and bespoke point of sale.
Langan said, “Retailer needs change as products become more technical. Communicating about products and ordering through our B2B platform is easy and works well, but what our customers need is in-store support.
“We invest in their staff to ensure they are a well-trained and knowledgeable sales resource for our brands and for the retailer. If we don’t add in-store value, we become an unwanted nuisance and distraction. »
Madison is no longer hiring sales agents and hiring all new salespeople. Andy Ashworth was recently appointed key account manager for Madison, who will support the senior sales team.
Regarding the future of the market and Madison, Langan concluded, “We know that consumers will be looking for a good value proposition and making sure their money goes as far as possible. We will work hard to ensure that our prices are fair and that the margins we offer our customers are competitive and achievable. »