Walmart Bikes

Triathlon Forum
24

Cerveloguy: Wal-Mart came to Canada and saved thousands of jobs by taking over Woolco stores (the location not the store itself). Without Wal-Mart, Woolco would be gone and Canadians would have only a few lousy retail choices. To say they are destroying small towns ignores the reality that Wal-Mart has injected some real competition into what used to be a highly protected closed market dominated by fat cats like Eaton’s. While you may not like Wal-Mart and can afford to shop elsewhere, millions of Canadians (and Americans, Brits, etc.) vote with their wallets.

It is true that Wal-Mart pays rock bottom wages to its least skilled employees (as does just about every company on the planet). But, few companies can provide the personal growth opportunities that Wal-Mart creates. About 70% of Wal-Mart top execs started as hourly employees (yes, I realize there are definitional issues associated with the term top exec). Wal-Mart is growing at 12-15% per year. What can KMart offer its hourly employees? A dead end job in a bankrupt company (now merging with Sears). I have met Wal-Mart execs who started as hourly employees and while not everyone wants the opportunity or is capable of exploiting it, it definitely exists.

25

I just think its funny that a group of people who will gladly pay $50 for a foreign made seat post or tire are so quick to get on Wal-Mart’s back for providing people the option of getting cheap goods.

Anybody out there who hates Wal-Mart for taking work off shore interested in throwing way their Shimano or Campy parts and buying American? That type of machine work and the tooling that goes along with it actually is high skilled union type work and it has all been driven off shore ---- by us.

26

I have bought my kids bikes from Walmart before but never again. Those bikes are absolutely crap and assembly is sketchy.

I don’t think the manufacturers of those bikes had a big booth at the Interbike trade show (I don’t know maybe they did). I think most people would agree that while the bikes may be robust they are not the quality you see in your local bike shop.

Are local bike shop guys threatened or bothered by Walmart selling the bargain bikes? I don’t think so. If someone walks into there store and wants to buy a bike for less than a pair of running shoes, I think most LBS guys would direct that customer to Walmart. That said a LBS can usually come up with a low cost option, just not $50.

27

With regards to cheap bikes, that is one area where I think it potentially damages peoples opinions of bikes.

Person buys cheap $50 bike and rides it. After a few weeks it becomes so out of tune person cannot ride it. Takes it to the LBS to get it fixed and shop owner charges $xx. Consumer complains it only cost $50 to buy the bike why would I pay that much to fix it? Person never rides the bike again following this experience and thinks LBS is trying to rip them off.

28

Correct! Huffy had a great run but things went horribly wrong. Walmart in general uses their bikes as lost leaders to get the public in their stores.

29

I bought two bikes at Wal-Mart recently. A $100 beach Cruiser and an all chrome Low Rider for $90. I then dropped by the bike shop and bought three tubuler tires (race tires) – they were $60 each – for a total of $180. I spent more on tires than I did on the bikes at Wal Mart.

With that said – I love cruising to star bucks, the pool, the beach, the store, etc. on the low rider and my wife loves her beach cruiser. No way do I want to take my nice bikes out and about like that – and biking on a beach cruiser beats driving any day.

32

Look at the employees at Wal-mart. They are not college educated graduates looking for a career.

Our Wal-mart employs: high school kids working for some spending money, retired folks looking for something to do and a lot of Sudanese refugees who are very grateful to be living in the U.S. and have a job. It sure beats the alternative of them living in their war-torn, poverty stricken country.

If not for Wal-mart, most of those employees would either not be working or working at another minimum wage job.

34

Of course Wal-Mart is trying to erase the competition. Making the competition irrelevant is the model for every firm everywhere. If the mom and pops had decent quality and decent selection they would still be in business. They don’t and so they are gone. But, keep in mind: history shows that challenges to Wal-Mart will come along and threaten their strategy. New retail concepts, logistics systems, etc. will be invented and Wal-Mart will suffer. That is the great thing about competition. Wal-Mart is winning now but eventuall growth will slow, good people will leave, new stores will gain share" look at Sears, Kmart, etc.

35

$50 for a Wal-Mart bike? That sounds like roughly $1 per pound. That is cheaper than ground beef. What a deal!

----->Trent

38

From http://www.fastcompany.com/magazine/77/walmart.html

"John Mariotti is a veteran of the consumer-products world–he spent nine years as president of Huffy Bicycle Co., a division of Huffy Corp., and is now chairman of World Kitchen, the company that sells Oxo, Revere, Corning, and Ekco brand housewares.

He could not be clearer on his opinion about Wal-Mart: It’s a great company, and a great company to do business with. “Wal-Mart has done more good for America by several thousand orders of magnitude than they’ve done bad,” Mariotti says. “They have raised the bar, and raised the bar for everybody.”

Mariotti describes one episode from Huffy’s relationship with Wal-Mart. It’s a tale he tells to illustrate an admiring point he makes about the retailer. “They demand you do what you say you are going to do.” But it’s also a classic example of the damned-if-you-do, damned-if-you-don’t Wal-Mart squeeze. When Mariotti was at Huffy throughout the 1980s, the company sold a range of bikes to Wal-Mart, 20 or so models, in a spread of prices and profitability. It was a leading manufacturer of bikes in the United States, in places like Ponca City, Oklahoma; Celina, Ohio; and Farmington, Missouri.

One year, Huffy had committed to supply Wal-Mart with an entry-level, thin-margin bike–as many as Wal-Mart needed. Sales of the low-end bike took off. “I woke up May 1”–the heart of the bike production cycle for the summer–“and I needed 900,000 bikes,” he says. “My factories could only run 450,000.” As it happened, that same year, Huffy’s fancier, more-profitable bikes were doing well, too, at Wal-Mart and other places. Huffy found itself in a bind.

With other retailers, perhaps, Mariotti might have sat down, renegotiated, tried to talk his way out of the corner. Not with Wal-Mart. “I made the deal up front with them,” he says. “I knew how high was up. I was duty-bound to supply my customer.” So he did something extraordinary. To free up production in order to make Wal-Mart’s cheap bikes, he gave the designs for four of his higher-end, higher-margin products to rival manufacturers. “I conceded business to my competitors, because I just ran out of capacity,” he says. Huffy didn’t just relinquish profits to keep Wal-Mart happy–it handed those profits to its competition. “Wal-Mart didn’t tell me what to do,” Mariotti says. “They didn’t have to.” The retailer, he adds, “is tough as nails. But they give you a chance to compete. If you can’t compete, that’s your problem.”

In the years since Mariotti left Huffy, the bike maker’s relationship with Wal-Mart has been vital (though Huffy Corp. has lost money in three out of the last five years). It is the number-three seller of bikes in the United States. And Wal-Mart is the number-one retailer of bikes. But here’s one last statistic about bicycles: Roughly 98% are now imported from places such as China, Mexico, and Taiwan. Huffy made its last bike in the United States in 1999. "

39

"And Wal-Mart is the number-one retailer of bikes. But here’s one last statistic about bicycles: Roughly 98% are now imported from places such as China, Mexico, and Taiwan. Huffy made its last bike in the United States in 1999. "

My point proved. I can rest my case.

41

The CEO of Mattel told me a similar story. He said that Mattel had all sorts of problems that had to be fixed in order for Mattel to continue as a Wal-Mart supplier. Mattel fixed the problems and significantly improved the company (and helped Wal-Mart become the largest toy retailer). He was very positive about the impact Wal-Mart has had on American business.

43

There are so many reasons not to shop at Mall*Wart I can’t even begin to get into them here. People can’t help themselves, though to save a buck, even if they know they are contributing to the decline of our towns, our economy, our living standards, etc.

Otherwise, I assume your question is rhetorical.

'wolf

44

I have bought a bike at Wally world. It is a comfort cruiser that I use for the Rails to Trails rides with the extended family. Cheap suspension fork and suspension seat post. Upright position, BIG comfy seat with a lambskin cover, plastic pedals w/straps. Works great. I can ride all day on that thing, under those conditions. I couldn’t imagine using it for anything else though. There was no way I was spending $300.00+ for a bike that wouldn’t see anything but pavement/crushed stone and a grade <1%. If someone steals it while I am in a store off the trail, big deal, I’m out ~$100.00. Cheap bikes fill a niche for people like me (cheap) and, while I understand their limits, I like them.

.

45

What point was proved?

46

Suppose the market for high end tri, road, and mountain bikes was large enough for Walmart to be interested in carrying them. What would happen to the retail prices of Felt, Kestrel, Cervelo, QR, and any other high end bike you can imagine? My bet is the prices would drop. Just so happens there is not enough of a market for Walmart, so the LBS serves the market. What kind of margins are the high end bike manufacturers making? We know the LBS isn’t making a ton. How about the plant that builds the bike? The design and technology of the bike? That is worth something.

They all have a place in the bike market, just a different target customer.

47

“What point was proved?”

You don’t get it? Sad.

48

I enjoyed the Frontline episode last night, and I enjoyed the quote you just posted.

That said… the source of the quote you posted was Jon Lehman, who currently works for a union trying to organize Wal-Mart emplyees. He has somewhat of a bias, I think.

50

Brian -

All those stats show me is that Wal*Mart is very very big, very very profitable for its shareholders, sells a lot of goods that save consumers a little bit of money, and exploits an enormous amount of workers (this last point is worthy of an article by itself).

Your stats do not tell us anything about the lives of their workers, the impact WM has had on small business owners, the impact WM has had on the landscape of America and small towns, the impact WM has had on the number and variety of quality products that have been driven from the marketplace, etc.

In short, all you have told us is (1) that the average consumer cannot resist lower prices, and (2) that WalMart is really good at selling cheap goods at a profit. It is not surprising that people can’t resist their prices because, often times, that is the only information they have. Most consumers do not understand WM’s negative impacts. And, even if they do, most believe that it would be pointless to shop elsewhere because they are too small to have an impact. Individually, there is truth in that. Collectively, people do have power. This is why communities often vehemently oppose the introduction of WM in their towns but, once the store opens, they all shop there anyway.

None of this means that WM is good for the country, the towns or its employees. It is clearly good for WM shareholders – esp. the Walton family – but I don’t think anyone disputes that.

52

There are a few too many unsubstantiated generalizations in your arguments. First, many employees are very satisfied with Wal-Mart as an employer. Any company growing 12-15% a year must be a good place to work for a lot of people. Second, based on the number of products the average Wal-Mart sells versus that of a mom-and-pop, what evidence do you have that products have been driven from the marketplace? Third, Wal-Mart does much more than sell cheap products at low prices. Wal-Mart’s innovations in logistics, information management, and other areas have made your life better (whether you want to admit it or not). A very significant proportion of the US productivity increase in the 1990s was Wal-Mart driven because Wal-Mart innovations have found their way into many competitors and industries. You may not set foot in a Wal-Mart but I guarantee the retailers you do patronize can look to Wal-Mart for many of their retail processes.