HOW TO MANAGE TECHNOLOGY
IN BIKE SHOPS, PART 1

Does this look like how you manage the systems in your business? You’d be surprised how many times I hear “yes, it is.” Then again, maybe you wouldn’t.

Too many times the systems used to manage a small, and not so small, business are treated as a nuisance rather than tools. Like any tool your systems need to be cared for properly, upgraded as necessary, protected and kept sharp.

Over the next few installments, we’re going to talk about how the systems that keep your business running can be and should be managed, protected and strengthened. We’ll discuss how you can set up protocols to protect passwords, how often and where you can or should back up your data, and how to identify and mitigate threats to your data.

These won’t guarantee that you’ll never have a systems problem, breach or loss of data. But, hopefully they will provide you with tips that will minimize the chances of that happening.

Your business depends on information you can trust. Some of that information is intrinsic and obvious, some of it not so much. A lot of the information you need comes from the data you capture, save and analyze from the systems you use to manage your business.

Some of the systems may be simple, a spreadsheet to track the hours of your employees or card files to keep track of inventory.  Some of the systems may be more sophisticated, a payroll system that makes sure deductions and taxes are calculated correctly, or an accounting system that lets you measure the profitability of your business or where investments will have the greatest return.

So a starting point is to identify the individual systems you use in your business.
I mentioned a couple of them above but you should make a list so you know what is running in your business, Again, you might be surprised by how many business owners don’t fully realize how many systems they have running. Here is a partial list to get you started:

> Accounting/Taxes
> CRM (customer resource management)
> Inventory
> Operating System – primary
> Ordering
> Payroll
> POS (point-of-sale)

The above listing may not be complete relative to your business. If not, go ahead and add what I missed.

Once you have listed all the systems you use, then you should determine whether the system is wholly contained inside your business (internal) or is connected to a server or company outside your business via an internet connection (external). A system that is wholly contained internally doesn’t mean you can ease up on how you manage it, but may not require all the protocols we’ll discuss today or in subsequent articles.

Once you’ve determined what systems you use, and whether they are internal or external, the next step is to determine who has access and at what level. Depending on what a specific system does will determine which employees should have access and with what permissions.

Typically, the highest level of access is for the system administrator. Administrator access should be restricted and tightly controlled. While it may be tempting to have yourself as the sole administrator, it is good practice to have one other person with administrative permissions on select systems. This provides the business a backup should one person be away and changes need to be implemented.

Each system usually will have different levels of user access as well, limiting what parts of the system they can access and/or what kind of input they are allowed to enter.  For example, if you have a payroll system, you could allow employees to enter their hours but not their pay rate.

In addition to system access, you will also want to determine who has what access to system interfaces, i.e. what data from one system gets transferred to another, and who has the ability to make or change how data passes from one system to another. An example of this would be an interface from your POS system to your inventory system and more, accounting, payroll (is there a commission component to compensation?), and possibly others.   

Access is a tightrope, and there is no right or wrong way to determine who should be granted what kind of access. The general rule of thumb is you want to restrict access to protect your business, but not so much as it causes dysfunction. So how much access is too much? I’ve always found it is easier to grant as little access as necessary initially, and as conditions warrant allow additional access. It is far easier to grant new systems access to an individual than to take it away.

It is also a good practice to re-evaluate systems permissions periodically. When employees get promoted or move to a different department, their access requirements to company systems may change as well. Sometimes access to certain systems should be removed when an employee changes position. New access should not be added without a review of current system access to determine if any is no longer needed.

Another thing to consider as you evaluate the systems your business uses, is the management and updating of those systems. It doesn’t matter whether this is an internal or external system, or whether it is a manual or computer system, at some point they will need to be upgraded. For a manual system it can be done at your convenience, though that may get driven by the interface to a computer system which has issued a new release and requires a revised interface.

There is another area where the nuisance part of systems happens. Most software programs are continually updated with new features, bug fixes and general improvements. It is important to stay current with these updates. Microsoft continually sends updates to Windows and will tell you when a particular released will no longer be supported. Some other software programs don’t. Rather, they will notify you of an update or send you new code you need to install. To insure your systems are running the latest version, you should have a specific person who is responsible for system upgrades. Most often this would be one of the system administrators. And it is incumbent upon the business principal to make sure all systems are using the latest version.

Along with making sure the systems themselves are up-to-date, it is important the hardware is also up-to-date. This may come as a result of an upgrade to a specific system that requires new capabilities from a specific piece of hardware, adding another device to an existing network, or replacing a device already attached. As with software updates you will probably want to keep this ability reserved for your system administrators. However, keeping the hardware updated may require outside help to make sure all the hardware works together.

A lot of the above may seem like common sense, and a lot of it is. The key is it also requires advance planning, to keep the tools of your business cared for properly, protected and sharp. In the coming installments we’ll look at systems security, how much and often you should consider backing up your data, and how to minimize threats to your data.

Comments? Thoughts? Reach Steve Bina at: steve@humanpoweredsolutions.com

BIKE BOOM? NOT THIS YEAR.
CONSUMER INTEREST SOFTENS
(EXCEPT FOR E-BIKES)

Consumer demand is what drives the U.S. market for goods and services. The 2020 surge in sales of bicycles (including e-bikes) that some in the media are calling a “Bike Boom,” was the American consumer demanding and purchasing bicycle products in greater numbers than the business has experienced in two decades.

The demand for service work (as opposed to services like restaurants, vacation destinations, theme parks, entertainment venues, air travel, etc.) also surged to new levels, as American consumers seemed to take every available bicycle they could find in their basements, attics, and garages, to bike shops to get them serviced into riding condition.

Bike shops ran out of new bicycles to sell and ran short, or out of, components to repair the bicycles brought in for service, just as other retail channels large and small experienced shortages, outages, and an overall inability to meet and satisfy consumer demand for goods as they shifted from services. Bottlenecks and disruption in the supply chain created further delays. 

American consumers, like consumers all over the world, also shifted their shopping and purchasing of goods online because they did not want to go out into stores and run the risk of contracting COVID-19.

Given the pandemic-induced market disruptions in 2020, annual U.S. bicycle riding participation is a vital component in defining and better understanding the U.S. bicycle market demand.

The National Sporting Goods Association (NSGA) has consistently used the same research methodology to conduct its annual consumer survey of sports participation, which includes bicycle riding participation, for over three decades.

Because the same research methodology has been adhered to for such an extended period of time, the data is stable and comparable, even in a pandemic and more importantly is reliable for trend analysis. The following is presented, in detail in the NBDA U.S. Bicycle Market Overview 2020 Report that can be purchased at www.nbda.com.

43 million Americans seven years of age and older rode bicycles six or more days during the year 2020. For those following the NBDA annual report, this is a substantial increase of 5.2 million or 14 percent in the number of bicycle riding participants compared to 2019.

NSGA will publish its 2021 bicycle riding participation data in early April and the NBDA U.S. Bicycle Market Overview 2021 Report will be available, including 22 years of U.S. bicycle riding participation data, by the end of April.

The NSGA bicycle riding participation data for 2020 confirms that the surge in sales of bicycles (including e-bikes) was driven by the increase of 5.2 million Americans seven years of age and older who rode bicycles six or more days during the year, contributing a 14 percent increase in bicycle riding to the overall demand for product and service in 2020 over 2019.

In November of 2021, the NBDA Bicycle Buying Consumer Research Study concluded its field work, and the sponsor reports and first editions of the 150 Powerpoint slide supplier report were made available for sale Christmas week.

The first version of the retailer report became available for sale January 6, and the second version on February 4. All versions of this landmark consumer research reported:

  • 53 percent of adult cyclists purchased a bicycle (including an e-bike) in 2020, meaning 47 percent did not.
  • 39 percent of adult cyclists purchased a bicycle (including an e-bike) in 2021, meaning 61 percent did not.

The purchase to non-purchase ratio among adult cyclists in 2021 corresponded to reports from the field during the fourth quarter of the year that retail store traffic and corresponding sales were declining, as was demand for service work.

To investigate this further, Human Powered Solutions (HPS) looked at a number of sources of data, including, as a member, the PeopleForBikes (PFB) Business Intelligence Hub. One of the data sets is the Google Search Index from Google Trends searches for any combination of the phrase “buy bike.” Google Trends is a tool to analyze the popularity, and change of popularity, of search terms to compare the search volume of different queries over time.

PFB presents the Google Search Index as: “A near real time leading indicator” because it is a record of consumer searches, in this case any combination of the phrase “buy bike.”

Given the need to understand the recent store traffic and sales decline, we determined to dig deeper into the Google Search Index and Google Trends as real time leading market indicators as identified by PFB, and contacted the HPS webmaster, Jacob Rheuban, seeking his opinion.

HPS considers Jacob to be an expert on the subject because in addition to a bachelor’s in economics and a Juris Doctor (JD) degree, he founded his first e-commerce company in 1998 and is the founder and CEO of Prevelo Bikes, a consumer-direct youth bike brand. Accordingly, he has demonstrated that he knows a lot (at least more than we do) about search engines.

The first thing we learned is “buy bicycle” is an uncommon search term for our purposes because the data is or can be volatile. To give us some perspective Jacob ran a series of sample searches.

What we determined, is the Google search term “bicycle” yielded the least volatile and, we believe, more accurate leading indicator, as shown in Chart A below. The graph shows the results for the search term “bicycle” January 15, 2017 to August 31, 2021, a five-year period through the end of the second quarter of 2021. The market pattern per-pandemic, along with the sales surge of 2020, is clearly shown, along with the sales decline in 2021.

CHART A


Chart B shows the search term “bicycle” vs. the search term “e-bike” for four years from January 2018 through December 2021. Beginning about the second quarter of 2021, consumer searches shifted significantly from the term “bicycle” to the term “e-bike.”

Jacob reminded us that someone looking at this chart could conclude that in absolute terms interest in “bicycle” is now less than interest in “e-bike.” What this chart says is that relative to the beginning of 2020, searches, which is interpreted as interest in e-bikes, has grown while searches, as interpreted as interest in bicycles, has declined.

This is an indicator of relative interest through searches that need to be verified to the extent possible by asking consumers, as the NBDA has done.

This leading indicator of consumer searches points to increasing interest in and the possibility of shifting demand away from “bicycles” and toward “e-bikes” during the time frame charted.

CHART B

Chart C is another step in digging into the leading indicator identified in Chart B. Jacob suggested we create a basket of 10 bike shop brands and a basket of 10 direct to consumer brands (DTC), and compare the average trend lines, which is what this chart shows.

CHART C


Remember that this is not absolute, but as consumer interest, in the form of searches, shifted from the term “bicycles” to the term “e-bike,” so did consumer interest, in the form of searches, shift from the average of our basket of 10 bike shop brands to the average of our basket of 10 DTC brands.

The leading-edge indicator is apparent consumer interest, in the form of searches, shifting from “regular” bicycles to e-bikes, and from traditional bike shop brands to DTC retailers, with overall consumer demand ebbing.

While brands should be paying attention, bike shops are advised to take action to adjust strategic and business plans to accelerate development of omnichannel merchandising with a commerce-enabled website, social media presence, and an expanded offering of e-bikes integrated into all product categories and price ranges.

Do not expand your SKU count. Rather, consolidate with e-bike models integrated into your merchandise offerings, and replace regular bicycles with e-bikes, paying attention to retail price points and your gross profit margins.

Pay particular attention to new, emerging e-bike product categories being marketed by DTC brands (as an example, the so called “BMX” 20 and 24-inch fat-tire e-bikes).

Watch inventory levels carefully, and monitor KPI’s like gross margin return on inventory (GMROI), inventory turns and net profit per category and SKU weekly.

If any readers have questions, please contact me and I will do my best to help you: Jay Townley, resident futurist, Human Powered Solutions: jay@humanpoweredsolutions.com