Editor's note: A version of this article appeared in the July issue of Bicycle Retailer & Industry News.
(BRAIN) — Cannondale and GT say this season’s disruptions inspired it to shift its entire bike product cycle, returning to an updated version of the cycle the industry relied on in decades’ past: with dealer pre-season commitments made in the fourth quarter and model transitions centered around the new year. The company is promising to eliminate most mid-season model year changeovers and their resulting discounting.
“We’re not doing this because of COVID. The only thing the pandemic did was create an opportunity to self reflect and question a lot of things about our business,” said Nick Hage, Cannondale’s general manager for North America and Japan. “We really believe what we’ve gone through just accelerated decisions that companies were going to make anyway. We said, ‘You know, we’ve been talking about doing this for a long time, let’s just do it.’ This was the year that caused that to happen.”
This season, of course, is an anomaly, Hage said. But the Dorel Industries-owned brands are introducing their plan to its dealers this summer and will start the transition to the new cycle this fall. Cannondale will hold a dealer event (likely virtual) in October and work with retailers on pre-season commitments in the following weeks and months. Cannondale has already removed references to model years on its consumer website.
The plan is risky: moving deadlines for pre-season orders later in the year opens the door for competitors to lock up dealers’ open-to-buy dollars months before Cannondale and GT sales reps come knocking.
And, on the sales floor, Cannondale dealers might be showing “last year’s” (AKA: current calendar year) models through the summer while competing brands launch new model years as early as June. While Cannondale plans to hold the pricing line through the summer, dealers might be tempted by discounts dangled by their other suppliers throughout the spring and summer.
But the risk might be worth it for Cannondale because many dealers have been asking for it for years. They say they resent having to discount bikes during what should be prime selling season in the spring and summer, to make room — and dollars — for the new model year. Some aren't happy being expected to attend brand dealer meetings as early as July, when they’d rather remain in the store.
“We are going to be honest about the risk with our retailers,” Hage said. “We know (the risk) exists, we know you’re going to get pressure but we know you are committed partners and we believe in this change. … In the past we would wait for a Trek or a Specialized to do something and because of our position in the market, we tended to go along with what the other big brands would do. In this case we are going to take the opportunity to take a leadership position.”
Dorel is a publicly-traded company with sales of $2.3 billion last year. Its Sports division, of which Cannondale is a part, provides about a third of those dollars.
Although there is little public data available, Cannondale is widely perceived as trailing the Big Three brands in the U.S. dealer marketshare: Trek, Specialized and Giant. “Cannondale is the Fourth Musketeer,” one dealer likes to say.
But while Cannondale has been dangling behind the three-brand breakaway for years, it’s not pack fodder, either: it has the full product line, dealer base, R&D, manufacturing and marketing budgets and global sales that few, if any, brands outside the top four possess. It has the horsepower to compete with the top three, if it can bridge the gap.
Three buckets
Cannondale’s new plan has three key “buckets”, as Hage calls them, and there is a wide variety of other factors to be considered.
The buckets are:
- Align Cannondale’s product cycle with its dealers' by moving to a calendar-year cycle where bike inventories will ramp up in the spring and wind down in the fall and mid-season disruptions will be minimized.
- Extend the life cycle of key models. Cannondale plans to offer annual “collections” that will include some carryover models as well as new ones. Models that are continued might gain some refreshed color options while a core color continues, but spec variations will be minimized.
- Eliminate consumer-facing model year identifiers, simplify the product line and make most product launches in the first half of the year, all in the name of a new “Focus on the Rider.”
Of course there are factors Cannondale and GT can’t control. Aside from the competitive realities mentioned above, winter and early spring weather in some key regions can shift buying and selling cycles. Suppliers of drivetrain and suspension components announce new lines throughout the year, making bikes with the old parts less desirable, even if the new parts are still unavailable. And will Cannondale, which sponsors a ProTour team, be able to resist a traditional pre-Tour de France product launch opportunity?
Hage said Cannondale will deal with new component launches as necessary, perhaps making rolling spec changes as new parts are available, but without tying such changes to a new model year.
“The important thing is that we (the industry) have put ourselves in a position so that for most of our products we now give dealers two halves of a season to sell. We give them half of one season, and the first half of the following season; we never give them a full season. And then, when they are at their busiest, we come in and disrupt everything and ask them to take a bunch of products for the rest of the summer and fall and then sit on it over the winter.”
Other suppliers have moved in this direction in recent years. Trek has de-emphasized pre-season commitments while some upscale mountain bike and road brands are on multi-year product cycles. Most brands long ago moved away from full line refreshes every year and toward periodic refreshes of product families or platforms, such as Trek’s launch of its 2021 model year Emonda road bike platform in mid-June this year.
Several Cannondale dealers told BRAIN they are in favor of the change.
“I think it’s great, it’s long overdue,” said Chris Duffy, the director of bike purchasing for Conte’s Bicycle Group, which has 14 stores in the Washington, D.C. area and in Florida.
Duffy said the current cycle of mid-season model year changes “is a primary driver of inventory devaluation, low bike margins, and vendors running out of core inventory in the middle of the selling season.”
Chuck Kininmonth, the general manager of Pittsburgh’s ProBike+Run chain, said the plan was “refreshing” and “pretty well thought out.”
“Binging and purging is what pre-season is. It’s three months of purging to clear up inventory dollars so you can binge on the new bikes and then repeat the cycle the next year,” he said. “The better we can work with the manufacturers and really be partners, the better we will all be.”
