Insights on Strategy

Business Makeovers

A Monthly Newsletter published by Strategy Development Group, Inc.                          June, 2002

Sometimes the Answer to More Sales Is Just Staying the Course 

In my quest for more sales, do I expand my product offerings? Do I venture into new markets or add more stores? Do I start a new division? Do I increase my sales force? The list goes on. It is interesting to note that in almost every instance each question presupposes a significant investment in resources, whether it be management time or money; resources that are currently used in sustaining current business. SInc.e resources are scare, companies unknowingly end up diverting valuable resources from their current activities to new potential sales opportunities. In certain cases, this might make sense; but in many cases it may not.

Sometimes the most effective allocation of resources is to just strengthen what you currently have in place; putting your resources where they can give you the most leverage. If some aspect of service or expertise is why customers buy from you now, then strengthening related training programs might provide greater dividends. If unique product offerings are why customers flock to your stores, then finding more unique product offerings will keep them coming. This approach is not rocket science. And yet it is a common pitfall for many companies to seek other pastures for greener dollars.

One of my clients, Supergo, continues to focus on strengthening its competitive advantage and as a result is one of the most successful companies in its industry. Supergo operates five "super" bicycle stores in southern California and Arizona as well as a mail order and e-tail operation under the same name. Supergo's Santa Monica store is the largest grossing store of its kind in the United States. The chain overall has one of the highest internal growth rates in the industry, is very profitable and is surprisingly debt free.

It has done this by focusing on four areas in the business that make it unique and very appealing to the avid bicycle enthusiast.

1. Offering the cyclist every opportunity to buy from Supergo through its multi-channel distribution 
   
2. Operating the most efficient and highest quality stores in the industry
   
3. Offering the best deals and the greatest value through its unique buys and its own branded products
   
4. Providing the greatest selection and the best technical support in a "Big Box" environment

Over the past year, the company has invested heavily in these four areas, strengthening this simple formula for success. Owner Alan Goldsmith said in a recent article: "I am trying to create a new retail model for the bicycle business--a large format, visually impressive, superstore that is consistent with the specialized pro-shop aspect of our industry"

To improve multi-channel distribution, Supergo this year opened its fifth store in Orange County with near-term plans to open a sixth store in San Diego to solidify the Southern California market. Supergo has beefed up its mail order graphics department to increase the frequency of its catalog mailings. It revamped its website that now encourages buyers to shop at its stores, talk to live sales associates in the mail order department using a unique "call me" feature, and check out product comparisons and use its chat rooms. Says Alan, "...our goal is to be able to reach every bike enthusiast through one or more of our channels."

To improve operating efficiency, Supergo invested heavily in technology this past year with larger and faster computer servers and by upgrading its point-of-sale systems. "We need to have better control of our inventory selection so customers can find what they need quickly and keep coming back" says Alan.

To sustain its reputation as the place for great deals, Supergo recently took advantage of some unique buys related to the Schwinn/GT bankruptcy and other industry closeouts. To increase product value Alan purchased several brand names to enhance the private brand business and significantly expanded its Supergo apparel line.

In its new 24,000 square feet store, Supergo initiated a number of new and exciting merchandising techniques this year, including the bio racer bike fitting system, wide aisles for shopping carts, and parts and accessories stacked on pallets. "We've been successful in creating a bike-shop as entertainment", says Alan.

All of Supergo's investments leveraged existing core competencies and impacted multiple areas of its business. Having buyers come to the website to find the latest product deals brought more people into its stores. With new private brands Supergo now has an opportunity to sell more complete bicycles over the Internet, which, to date has been discouraged by most of the more successful national brands.

Consistent investing in your business strategy is not only the safer route, but as with Supergo is the fastest way to grow your business.