Bicycle Retailer Pumps Up Cyclical Business
and Keeps Inventory Lean
Overview ―The biggest thing we needed was complete data Country: United States portability compatibility. And nothing delivers that Industry: Retail better than a Microsoft-made POS management Customer Profile
The Cycle Loft generates U.S.$3 million in product.‖ annual revenues selling 14,000 SKUs of
Jerry Slack, Owner, Cycle Loft bicycles and related services, clothing, and accessories. Cycle Loft is a full-service facility that sells bicycles of all kinds, Business Situation related accessories, triathlon gear, and clothing. The store‘s Fit Lab Owner Jerry Slack‘s idea to slim inventory
was bumped up against an older system customizes stock and made-to-measure, custom-fit bicycles to each that couldn‘t provide enough speed and
rider. At 17,000 square feet, Cycle Loft is the third largest bike agility to give him the reports or instant
data needed. store in the Boston area, selling more than 4,000 bikes per year Solution ranging from U.S.$200 to more than $6,000. Only a Microsoft? Windows?—based solution could give Slack the data
portability and nimble reporting he But inventory ballooned unprofitably. Although customer base demanded. Other bike dealers guided him mounted, the previous information system was error-prone and to Microsoft Business Solutions–Retail
Management System. difficult to export from. Owner Jerry Slack needed a tighter grip to Benefits turn and control inventory.
; Sales up 100 percent, stock down 40 percent
; Seeing margins at POS helps close sales Microsoft Business Solutions–Retail Management System (RMS) ; Data exports easily to financials helped him trim stock and suppliers. Now he sells more and gets ; Owner likes "supreme inventory control"
; Handles tricky work orders and layaways special concessions from manufacturers.
; Flexible reporting delivers the right data
Situation ―Computerize as fast as Cycle Loft‘s single store with 28 employees He back-pedals at high-volume Web sales. possible. Do not view on five lanes sells U.S.$3 million annually in a ―Many manufacturers don‘t allow it. They
complete range of bicycles and accessories. want their bikes assembled, sized, and fitted that money as an The two-story, 17,000-square-foot building is to the buyer; same with helmets and tights. If expense; see it as an the third largest bike store in the Boston area. I ride a bike saddle forty miles a day, I want to Bikes start at $200 and reach $6,000. High-sit on it first. Cycle Loft‘s service department investment. I‘ve had end bikes, often purchased by the part with only accounts for 8 percent of revenues, but seven computer each frame dimension hand-fit to the owner, assembles 4,000 bikes a year for free.‖
are only 5 percent of unit sales but 15 to 20 systems…. Each one has percent of revenues. Cycle Loft‘s Web site at www.cycleloft.com paid for itself in its first advertises a wide range of products and Yet this was not an easy hill to climb until, 10 publicizes forums, biking articles, events, year.‖ years ago, it dawned on owner Jerry Slack employment opportunities, and customer Jerry Slack, Owner, Cycle Loft that he was holding too much inventory, testimonials. But it has no shopping cart. selling too little, and buying from too many vendors. Slack set out on a campaign of Slack quips that the bicycle business is Expansion Requires Simplification. cyclical, going from 20 percent of capacity in
winter to 120 percent in spring and summer He cut his bicycle and equipment suppliers on a rough bell curve. ―We do 80 percent of
from ten to the two most responsive and well-our business in 50 percent of the year,‖ he
rounded vendors that he had dealt with, that says.
is, Trek Bicycle Corporation and Specialized
Bicycle Components, Inc. A few weeks of But all Slack‘s good ideas hit a bottleneck in sales and specials reduced his supply of his previous point-of-sale (POS) and IT system. goods and gear that had been slow rollers To maximize turns with leaner inventory, he from the beginning. needed stock levels, current rates of sale,
historical product success, and even vendors‘
―There were times I looked at the showroom real-time availability and pricing. Their biggest floor and wondered if we were still in the bike operational sore spot was managing business,‖ Slack says. ―But something funny inventory to maximize turns and profits and started to happen. We cut inventory 50 to keep customers returning.
percent but sales rose by 33 percent. And we
started to make money. Based on an earlier version of Microsoft
Visual FoxPro? database development system, ―We could give better deals because, as we the commercial application was stable but its became more important to our two suppliers, back-office flexibility, reporting power, and we got prices that helped us compete better. ease of use were not built in.
We got faster deliveries on in-demand
merchandise, which increased foot-traffic in ―So we needed the data moved into Microsoft and people riding out.‖ Excel to get reports and see trends, compare
year-to-year sales levels, and a lot more,‖
Slack dropped broad-based, shotgun-style Slack says.
advertising and began promoting Cycle Loft‘s
capabilities by supplying mechanics and But another weakness of the old product was support vehicles to health-related, fund-an inability to easily export to Excel. Transfers raising benefit rides. had to be done by hand, or piecemeal, or
through a multi-step conversion process. ―Today we have 40 ―You can‘t keep moving business data that Installation percent less inventory way without mistakes,‖ Slack says. ―It has to In the end, the solution also had to be easy to be easy, automated, and right on the money. learn. ―We had planned installing the new than we used to and we When it wasn‘t, we lost money.‖ system during slow winter months, but sell twice what we did hardware issues postponed it till late Solution February—exactly when people start looking then. That comes from ―The biggest thing we needed was complete for bikes and supplies,‖ Slack says. supreme inventory data portability compatibility. And nothing ―Suddenly, we were learning new software delivers that better than a Microsoft-made just as were getting crowded and before we control.‖ POS management product,‖ says Slack. He had all our usual people.‖ Jerry Slack, Owner, Cycle Loft began reading, searching the Web, and
asking fellow dealers for referrals and ideas. By March 2004, Microsoft Business Solutions–Retail Management System was Platform and Partner installed, running, and the staff had no ―We wanted and needed a software platform trouble ringing up their growing sales. that would allow us to grow,‖ Slack says. ―I
picked Microsoft RMS, and then went Benefits
scouting for a dealer who understood the ―Microsoft RMS didn‘t give me my good
bicycle business. I think that was wise ideas,‖ says Slack. ―But it‘s the tool that
because Digital Retail Solutions has been helps me implement them. I am very great for us. We were all on the same track. confident that Microsoft is the overall toolbox Defining needs went fast and so did that will help us grow.‖
Less Stock, Higher Revenues
Running a bike shop means wheeling and ―Today we have 40 percent less inventory dealing, which required a system to tell staff than we used to and we sell twice what we the lowest permissible sale prices for 4,000 did then,‖ Slack says. ―That comes from
SKUs. supreme inventory control. But it also derives
from its Microsoft SQL ServerTM database
Profitable Pricing being so eager to get along with other
―Selling bicycles is a balancing act,‖ says products, particularly the Microsoft Office Slack. ―Since you can‘t discount some bikes, suite.‖
we discount other things to give a package
price they can‘t beat elsewhere. But with the Slack exports data from Microsoft Retail old system, we couldn‘t know product cost or Management System straight into Microsoft a markup, or ‗not-below‘ selling price. Excel for analyses such as comparing current Sometimes we‘d lose money; other times versus last year‘s costs from vendors, or we‘d lose the sale. We couldn‘t know what we checking how much a given product category had to know at the time of sale. We‘d only is up over last year.
find out later!‖
Slack needed ways to handle repair work Slack says, ―The point of sale is where you orders, gift certificates, and the complicated show your customer if you‘re organized or
matrix inventory problems of items coming in scattered all over the place. This software different models, colors and sizes—which can gives our guys the edge. We can look up an change yearly. item so many different ways to get its price,
its right name, and the amount on hand. It good buy on stiffer-framed bikes, we‘ll mail ―Even if you have to takes literally seconds and it‘s very notices out to just the right set of people.‖ borrow the money to impressive. Both the item and customer
databases are a joy to work with. He thinks other retailers should ―Computerize upgrade to a modern as fast as possible. Do not view that money retail system, you‘ll get ―We do the sales, layaways, and work orders as an expense; see it as an investment. I‘ve all at the POS. This is the customer-centric had seven computer systems since being in your return on it part, and it had to be fast and simple, even the bike business. Each one has paid for because you are saving when business isn‘t—like when we have to itself in its first year. Your payback in better
add to a work order as we go along. Or when inventory control is fast. employees steps in jobs a customer remembers something as he they do many times a checks out. We don‘t make the line wait. We ―Even if you have to borrow the money to
put that sale on hold and run the rest of the upgrade to a modern retail system, you‘ll get day, many days a year.‖ line.‖ your return on it because you are saving Jerry Slack, Owner, Cycle Loft employees steps in jobs they do many times
Behind the Scenes a day, many days a year,‖ Slack says. ―We, as users, customize and ‗memorize‘ reports ourselves,‖ says Slack. ―And we
asked our Microsoft Certified Partner to build some pretty trick ones for us. Digital Resource Solutions has been an unbelievable vendor. We have reports we never had before and they are providing excellent support in all areas.
―They installed an extremely useful margin calculator. I give each salesperson the power to make deals, especially for our racing club and others. In the old days, we couldn‘t even
see our costs during a sale; now we can know our profit during the sale.‖
Cycle Loft uses the Internet to send a purchasing file to suppliers. Items arrive prelabeled as specified, ready to be put on the sales floor.
Getting More from the System
Jerry Slack has his eye on the targeted marketing and e-mail capabilities in Microsoft Retail Management System. ―As cyclists get
better, they want better bikes and gear. As teenagers grow, they need larger bikes. The guy who bought the fashion helmet last year is a good prospect for this year‘s new design. The way to economically touch each one of them is to know who bought what. If we get a
For More Information Microsoft Business Solutions Retail For more information about Microsoft Management System
products and services, call the Microsoft Microsoft Business Solutions Retail Sales Information Center at (800) 426-Management System offers a complete store 9400. In Canada, call the Microsoft automation solution for small and medium-Canada Information Centre at (877) 568-sized retailers, streamlining point-of-sale 2495. Customers who are deaf or hard-of-(POS), customer service, and store inventory hearing can reach Microsoft text telephone management, and providing real-time access (TTY/TDD) services at (800) 892-5234 in to key business metrics. Microsoft Retail the United States or (905) 568-9641 in Management System is a comprehensive Canada. Outside the 50 United States and solution for single-store and multi-store Canada, please contact your local retailers that empowers independent Microsoft subsidiary. To access information proprietors, store managers, and cashiers using the World Wide Web, go to: through affordable and easy-to-use www.microsoft.com automation. Microsoft Retail Management
System has the flexibility and scalability to For more information about Digital Retail grow with a retailer‘s business. It works with Solutions products and services, call (800) the Microsoft Office System, Microsoft 322-9471 or visit the Web site at: Windows Small Business Server, and leading www.digitalretailer.com financial applications to provide end-to-end
support from the cash register to the back For more information about The Cycle Loft office.
products and services, call (781) 272-
0870 or visit the Web site at: For more information about Microsoft Retail www.cycleloft.com Management System, go to:
Software and Services Hardware
; Products ; Dell Xeon server
? Microsoft Windows Server? 2003, ; Dell OptiPlex POS workstations
Enterprise Edition ; Epson TM88iii receipt printers
? Microsoft SQL Server 2000 ; Cherry keyboards
? Microsoft Windows XP Professional ; Symbol LS 2200 scanners
? Microsoft Exchange Server 2003 ; MMF cash drawers
? Microsoft Business Solutions—Retail
? Microsoft Office 2000 Professional
? Digital Retail Solutions—Bicycle Bundle ? 2004 Microsoft Corporation. All rights reserved. This case study is for informational purposes only. MICROSOFT MAKES NO for RMS WARRANTIES, EXPRESS OR IMPLIED, IN THIS SUMMARY. Microsoft, Visual FoxPro, Windows, and Windows Server are ? Microsoft Business Solutions Retail either registered trademarks or trademarks of Microsoft Corporation in the United States and/or other countries. The Management System names of actual companies and products mentioned herein may be the trademarks of their respective owners. Document published August 2004