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Big Bear
Big Bear distributes a range of brands, from snow sport-based (Spyder, Level, POC, SOS, Kask, Goode) to cycle-oriented (SiDi, POC Wheels, FRM, Pearl, POW, CicloSport) and straightforward outdoor (Cloudveil, and Mountainsmith); this breadth allows them to trade with at least three seasons of gear, so they're not as affected by the seasonality of certain sports as some.
The company has seen healthy growth in recent years, and Mitch let SGB in on some of the secrets of their success...
SGB: How has Big Bear grown? is the two- or three-season approach key?
Mitch Terleckyj: Not particularly but it helps smooth out fluctuations in markets. Five years ago, we started Montesol Ltd trading as Big Bear and we have grown about 25 to 30 percent every year since. We were lucky we started with a reasonably good year and 3 or 4 staff. Now we are up to about 15 of us and have seen successful growth, year-on-year, despite the current situation.
We try to offer the best value product in the middle to upper end of the market. We sell value, no matter what price. We don't sell on discount. In fact, what we did very early on was take away the discursives, the combative element of business, away from the sales. We have one meeting which had nothing to do with the product, which had only to do with the terms and conditions. We get that meeting out of the way and that is put on our database, our CRM system, and the customer always gets the discount agreed. That lets us concentrate on what's important; the product and logistics.
SGB: Do you operate a just-in-time model or advance orders?
MT: Our supply model is only partly just in time. We are taking a lot more pre orders from our dealers, we say 'okay, you can have just in time and we have a trade site for these orders but obviously with limited choice'. Take for instance Spyder, one brand with 36,000 SKUs. There is no way we can carry the size and colours of that many SKUs. The dealer has to tell us what they need in backup, and we can supply that, but we need to have some idea. We made it very clear very early on that we need this feedback or it is very hard for us to supply you.
The reaction was 'well how do we know what we need? We don't know what the customer wants', which is a ridiculous argument. If the dealer don't know then who does? I don't know how they are in business. In this co-operative way, we found a mutually agreeable solution and go forward together.
90 percent of what we sell is pre-ordered. Only 10 percent of what we supply just in time. We moved from a 50-50 model to a 90-10.
SGB: Do you not think that in a recession, just-in-time will thrive and pre-orders will drop?
MT: For me there are customers out there who rely on just in time. Someone walks into the shop, asks for something, they will take a deposit, they will order it from you, you send it to them, they will want a discount, and in my experience in the last 20 years, that hasn't worked.
There is a lot of growth out there, and there are a lot of losers. I think that the just in time model suits the losers, it doesn't necessarily work for the winners. The winners are winning because they are putting in big orders, they are getting good value, and they are giving better customer service because when a customer puts in an order, he gets it there and then or next day.
It's about the 'long tail'. Let me give you an example: iTunes. iTunes sold initially about 200,000 records; most record stores carry about 10,000 titles, the top-selling 10,000 titles. Itunes sold 200,000. They sold every single one. Obviously there was a tail of demand. It peaked at one end, at the popular one - Beyonce or whatever. And then it tailed down, but the more they added to the tail, the more sales they got. Once they started having 800,000 or 1 million, they still sold every one of those tracks. There is a long tail of demand that isn't being supplied by retail.
Where all the retail is concentrating is in the very short, niche, tight cluster of products at the front, and there is a whole consumer demand with a long tail going back to each colour and size extending out. People are getting tighter and tighter with what they carry, their stock exposure etc. They are reducing what they carry in store. The line ranges are reduced, choices are reduced, and that is counter-productive.
I see good retail not really changing, but being simply good retail and working now as well as ever before. Bad retail is as bad as ever before, and in fact the shortfalls are being highlighted. We know that there are a lot of dealers out there on life support, who have been relying on suppliers' credit for so long they don't even know what it means to be profitable. They don't have to be.
SGB: You recently took on Cloudveil as a brand - how does that fit into the Big bear portfolio? Why did you go for them?
MT: We are looking for primary manufacturers; we are not looking for badged marketing brands. We are not looking for a sunglasses range that has Tobacco Sauce written on it made by somebody else and Tobacco Sauce makes the margin. We are looking for primary manufacturers. The people we deal with are the people who own the brand. We try to look for strong management in the company. We want people to have a lot of say in what happens. We want people to feel passionate about what they produce. We don't really want to be working with conglomerates that are a sub division of sub division of a sub division because that is such a difficult animal to tame and understand.
Cloudveil was bought by Spyder, but we went over to Wyoming and had a look at the product. It was innovative, it was interesting, it was different, the colours were a little bit different, but at the same time the swatch was wide enough to provide the Anglo-Saxon colours, which is what we have, a kind of east American kind of palette.
Also the product was distinctive enough. It looks different, and the people there were passionate, so we went with it; and are happy with the decision. We see that there is good growth potential with Cloudveil over the next few years. The only problem is, of course, is what a hell of a time to start!
