The chain-store syndrome

I was sitting at a red light pondering the shell of a Blockbuster store on Coburg Road that recently closed.

A closed Blockbuster storefront in Eugene Oregon

This is a just fate for Blockbuster, I thought — that the Internet should kill Blockbuster after Blockbuster killed the local independent video shop. Capitalism is cruel.

And this led me to start thinking about chain stores: We have chains that sell books, clothing, groceries, ice cream, towels, frying pans, Chinese food, furnishings and coffee (all of those in Oakway Center alone, more or less across the street from This Old Blockbuster).

Why, I thought next, has there not been a national chain of bicycle shops on this scale? Not that I want to see that. I don’t particularly want to see that. I was just wondering why. It was refreshing.

So I started poking around and … uh oh.

I’m sure this is not news to anybody who owns an independent local bike shop, but it looks like the big-chain-store syndrome is on the attack in the bicycle business. I don’t know if it will come to Eugene anytime soon, but Performance Bicycle Inc. seems to have dreams of being the Barnes & Noble of bike shops.

You may know of Performance. It has been around for a long time — as a catalog/mail-order place before there was an Internet, and then as an online store. They began opening a few bricks-and-mortar stores around the country. But it was small potatoes in the world of national chain stores.

In 2007, Performance had 74 retail stores in 14 states. That compares to this sampling of retailers:

    • Bed Bath & Beyond (1,100 stores)
    • Trader Joe’s (350)
    • Old Navy (1,000)
    • Home Depot (2,200)
    • PF Chang’s (200+)

But things are changing. Have a look at this chain of events:

  • In 2007, Performance was “recapitalized” with “a controlling equity investment.” What that means, we think, is that the company was purchased, more or less.
  • The buyer was a private equity group known as North Castle Partners. What they seem to do is buy a company, try to grow it and then in five or 10 years, sell it off. So I’m guessing they bought Performance because of their blind passion for cycling.
  • From a press release in which executives toast the deal over single malt scotch, we glean these telling snippets:
    1. “poised for significant growth”
    2. “operates in a highly fragmented industry” (meaning, I guess, bike shops are mostly mom-and-pop kind of stores)
    3. “accelerate our growth into new markets”
    4. “poised for significant growth” (I know, I already listed this one, but it is such an exciting cliché that a second executive used it in the very same press release, just a couple of paragraphs after the first guy)
    5. “aggressive retail store growth plan”
  •  The plan was to expand from 74 shops to about 160 in four years (i.e., by 2011).
  • By the end of 2009, they were up to 85 stores, including a new one in downtown Portland.
  • In 2010, Performance hired “retail veteran” Tom Tolworthy as president and chief operating officer. He formerly was an executive at the Vitamin Shoppe (400 stores) and Barnes and Noble (700 stores).
  • In his previous jobs, we are told, Tolworthy “drove revenue growth” and “reach[ed] milestone achievements.”
  • Later in 2010, they hired one James Hilyard as VP of “visual merchandising.” Among his duties: He was to revamp the “guest experience” in Performance shops. His resume includes jobs at ShopKo (135 stores), Golfsmith (a mere 59 stores) and Kinkos (1,500 stores). (All I can say is that I hope the “guest experience” he creates is better than the ones I have had at ShopKo.)
  • By the end of 2010 Performance had 94 stores, including a new one in the Seattle area.
  • This past April, Performance opened six new stores, bringing the total to 100. Among the new ones: Boise, Sacramento and Berkeley.
  • Performance plans another handful of store openings by the end of 2011, with shops on the drawing board in Michigan, Illinois and Texas. (They appear to be behind the goal of 160 stores by 2011, but I suppose the recession intervened.)
  • In July 2028, after a broadband Internet breakthrough that makes it possible to download inner tubes, Performance revenues plunge and it begins closing stores by the dozen.

It was hard not to notice, too, that in all of its press releases of late, Performance keeps repeating a particular phrase over and over, variations on this: “Our mission is to demystify cycling.”

Demystify cycling? No way! That’s my mission! Somebody! Get me a lawyer …

In the meantime, I’ll see you around at one of our local indy bike shops.

7 thoughts on “The chain-store syndrome

  1. I ain’t scurred! I can’t see them doing that well in Portland, much less so if they dropped a shop in Eugene. Though there are no shops north of the Willamette River, leaving the Delta/Sheldon/Oakway/Coburg area open to an offensive.

    Let’s build a wall?

  2. I confess that if I can, I buy bike stuff from REI. I’m also a big fan of because they’re in Portland, so UPS ground shipping is nearly always overnight to us.

    I’ve been trying to support the Springfield Hutch’s though – it’s the only bike shop in town, and Mark moved over from the Eugene Hutch’s and he’s awesome.

    When I need something, I usually call 2 or 3 local shops, and if they all say “I don’t have that, but I can order it!” I just give up and order it myself.

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