By Eric Smith
<span style="color: #333333;">The bicycle industry has a significant, yet underserved, market of consumers who want a product that is priced somewhere between the offerings of big-box retailers and specialty stores, according to Bill Smith, president and CEO of The Huffy Corp.
Developing a product that falls into that sweet spot was the driving force behind the latest initiative from Huffy, a brand known for low-cost products found primarily in department stores.
The 126-year-old Dayton, OH-based company has launched Batch Bicycles, whose products will be made with better components and materials than the typical Huffy. And they will be sold at independent bike dealers (IBD), but will be less expensive than the lowest-priced specialty shop fare.
The first Batch products won’t roll off the assembly line for another 30 to 45 days, and the unveiling of the line of five bikes—a comfort bike, commuter model, beach cruiser, mountain bike and kid’s bike — won’t happen until September at Interbike Marketweek in Reno, NV.
But Smith gave SGB Executive a sneak peek at what Batch will offer consumers and the IBD channel. In this Q&A, the Huffy CEO outlines the strategy behind the new brand, including how the company plans to leverage its powerful supply chain for production and distribution, as well as how it plans to position the new line of bikes for the underserved market.
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What drove the decision to launch Batch? As I was speaking with independent bike dealers about becoming authorized Huffy Service Centers, that led to a number of conversations that began to refer to what we now term the “white space” that exists between the higher price points in the big-box retail channel and the entry price points that exist in independent bike channel. There’s a $200 to $300 to $400 gap, in our estimation, of a consumer that is underserved, and in many cases, not served at all. That led to discussions about a product line with many of the dealers. Over the course of time we thought that that would be an opportunity to generate incremental sales for Huffy and yet at the same time generate new customers and incremental sales for the IBD trade channel, which typically does not sell Huffy product.
What are the price ranges for these bikes? The white space, as we see it, is between about $299, where the mass retail tops out for adult bikes, and about $499. We would see our product line drifting a little south of $299 and perhaps drifting a little north of the $499. There’s no real brands that exist there on a national basis. And then on the kid’s bike line, the mass retail tends to top out at about $149, and we would probably start out about $149 and maybe go up to $299. By bringing better features, componentry and materials to these price points, which are typically found on higher priced bikes, we’re leveraging our high-volume supply chain to bring a real value for the consumer who would shop that IBD segment, or new consumers that the IBD segment has not historically been able to reach.
Will there be any manufacturing and distribution overlap between the Huffy and Batch brands? We’re not using an automotive equivalent where we’re going to take the same platform and slap different labels on it and call it a different brand. This is a product which is being designed specifically for the IBD trade channel, some of which will come out of existing factories, some of which will come out of different factories depending on the various product lines, but it’s not a relabeling [of] Huffy product to fit this other marketplace. There clearly will be differences in construction and materials and componentry so that the brand can stand on its own two feet—have its own personality, its own uniqueness and its own features and benefits. That consumer is discerning enough, savvy enough to know these things, and certainly the retailer is more so. Differentiation is a critical component of launching this brand.
Can you, in effect, create a market of consumers who didn’t realize that they wanted to be in that white space between big-box and specialty stores? I think you just hit the nail on the head. Someone asked me, “How many do you want to sell? What do you think your volume might look like?” And I said, “Honestly, at this point, I’m not sure what that looks like yet.” When I think about the white space, what I do know is that it’s underserved now. It’s a market that is generally served by last year’s models or closeout product, which says there is a need. But people want fresh product; they don’t want to buy last year’s stuff. They want the new features and benefits. We want to own that white space. We’ve identified it. And we think that we can serve it better than anybody else.
How will you position the Huffy brand as you market Batch to consumers? Will you make the connection known? We want the Batch brand to be a standalone, respected brand that is not dependent on Huffy for its success from a marketing standpoint. There’s no secret that the product is manufactured by Huffy. We’re not trying to hide it. We’re being very transparent on this and I think that is critical in this day and age of social media. We want to develop a unique brand that is proprietary and exclusive; that’s the important point. This is exclusive to the trade channel so that they feel like they have ownership of it.
Is the type of consumer you’re targeting going to feel comfortable walking into an IBD for the first time? Those stores can be intimidating for a bike novice. We want to make sure that when we talk to the consumer, it’s in terms that are friendly and understandable and simple to understand. We think we can help bring new consumers to that independent bike dealer trade channel by virtue of the way we’ll be targeting our media. We do think that we can bring more women into the dealerships by virtue of the types of products that we’re going to offer and the more attractive price points. A lot of people don’t want to spend $1,000 or $2,000 on a bicycle that they may not use that frequently, but yet they’d like to buy something with a few more features, a little higher specification than what they might typically find at the department store.
What’s been the response from the IBD community? I would classify the dealers as being very curious now as to what we’re doing. They are sophisticated and they are savvy, and I think they’re going to hold on weighing in until they see the line at Interbike.
You’ve got Bruno Maier (managing director of new business for Huffy Corp. and United Wheels, pictured far left) leading the way, along with Dorothy Pacheco (sales and marketing manager, Batch) and Chris Keller (general manager, Batch). How critical was it to assemble a top-notch team for this initiative? We knew from the beginning that if we were going to launch this brand—an exclusive brand for the specialty trade channel—that we needed to hire people who were familiar with the specialty trade channel and who were experts. So we have people like Bruno, Dorothy and Chris. They’re all people who have experience in working, selling, servicing and developing product for that specialty segment so that the product that we’re bringing is authentic and the story that we’re telling is credible. We can tell people, “Look, this is not a paint and label treatment. This is a dedicated product line and Huffy is making a significant investment in people, in marketing and in the product so that the brand can in fact stand on its own two feet.” That, in and of itself, brings the brand credibility.
What else should our readers know about this move for Huffy? We’ve been making bicycles since 1892. We have a pretty good track record. The Huffy brand has been in the market now, in some form or fashion, since the early 1900s. Certainly, consumers know who we are, dealers know who we are. And we think that we’re uniquely positioned with the consumer. That allows us to sell everything from tricycles to kids bicycles to mountain bikes to cruisers. And the breadth of that line is what allows us to bring such a broad assortment to this trade channel that typically they don’t see from their other brands because they tend to specialize in one area or another.
Look for more details about Batch’s product line in SGB Media when they are available and during Interbike Marketweek in September. Photos courtesy Huffy
[author] [author_image timthumb=’on’]https://s.gravatar.com/avatar/dec6c8d990a5a173d9ae43e334e44145?s=80[/author_image] [author_info]Eric Smith is Senior Business Editor at SGB Media. Reach him at eric@sgbonline.com or 303-578-7008. Follow on Twitter or connect on LinkedIn.[/author_info] [/author]
