“There are undoubtedly a lot of challenges at the moment”: Madison distributor focus

Following the supply and demand chaos of the pandemic, Madison CEO Dominic Langan tells Alex Ballinger about how the distributor plans to adapt its business to prepare for all eventualities

This piece first appeared in the August edition of BikeBiz magazine – get your free subscription here

The first half of 2022 has been a bumpy return to earth for the bike industry. Following the remarkable demand from consumers at the height of the coronavirus pandemic, the cycle industry has now been beset by various speed bumps, from ongoing supply issues to global financial woes denting wallets in the cycling market.

Milton Keynes-based distributor Madison has been able to weather the storm, despite the supply nightmare for one of its biggest brands Shimano, and is now looking to the future to adapt its business for any more unseen shocks to the system.

Founded as a small bike shop in North West London back in 1977, Madison has grown into an enormous distributor of cycling, motocross and freesports equipment. While the Madison side of the business distributes dozens of brands, from Shimano components to its own range of clothing, Sportline acts as the specialist bike wing of the company, distributing Saracen, Genesis, Ridgeback and Adventure brand bikes.

CEO of Madison, Dominic Langan, has shared his thoughts with BikeBiz for the first installation in our new regular Distributor Focus series.

The challenges
“There are undoubtedly a lot of challenges at the moment,” said Langan, “but navigating the business through this cost of living crisis whilst doing everything we can to counter some of the inflationary pressures, is top of the list.”

Langan said that the first half of 2022 was more challenging than the previous two years, but things appear to be returning to normal following the Covid boom in cycling. Low stock levels are beginning to level out and Madison’s stock is now almost back to pre-pandemic levels, with the exception of some key lines, while supply issues are ongoing on the bike distribution front, under the Sportline business.

Langan said that the low stock levels on bikes are in-part due to Sportline’s reluctance to compromise on specification, as the brand wants to avoid causing issues for retailers and ensure a high standard of aftersale service.

“We are running pretty much in line with budget so far this year and ahead of 2019 with the IBD channel running quite considerably ahead of where they were in the year prior to the pandemic breaking out. But we are simply no longer seeing the demand we enjoyed back in 2020 and 2021.

“As a country, we are still facing quite some challenges with low consumer confidence, rising inflation, the increasing cost of living, a weakening GBP, the war in Ukraine, increasing costs, labour shortages, the spread of industrial action/ disputes and a Government in total disarray at a time when we really need strong credible leadership.”

Langan said his main concern is that these challenges could continue or even get worse in the coming months. While the cycle industry often thrives during economic downturns, as people turn to the bike to try and cut costs, working from home could prove to be a barrier to the success of the cycle industry during the next year.

The retailer view
Despite all the uncertainty facing industry at this turning point, independent retail remains robust, Langan said, especially when compared to the first half of 2019 – the last ‘normal’ time we have for comparison.

“Many stores are reporting being overstocked and we know some suppliers forced retailers to take stock they no longer had the demand for when they initially ordered it. We did not do that at Madison or Sportline as we are keen not erode the value of inventory supplied by us through forcing retailers to promote heavily just to generate cashflow.”

The performance, or enthusiast, cycling market remains strong, as Madison has already pre-sold the first of the newly announced Shimano 105 Di2 groupsets, but the leisure and commuter market appear to have slowed.

Langan added: “Footfall across retail is widely reported as being down and not without reason, consumer confidence is very low. Shops are well stocked but the demand is simply no longer at the levels enjoyed over the last two years and inventories will take some time to balance out again.

“We are seeing retailers investing in their stores, but especially in their workshops through investing in new Park Tools and our tool boards, the CRC Smartwasher parts cleaners coupled with our very competitive consumables subscription service and not forgetting the Asecos cabinets for safe e-bike battery storage and handling.”

Product and portfolio
Madison has made a number of product changes in its portfolio recently, including the addition of Tooo rear camera light. Quadlock, a leader in smartphone mounts, has also rejoined the brand portfolio, and during the pandemic Madison launched Vittoria tyres, offering a better margin than some other tyre brands.

ODI, specialist in bike grips, was announced in 2020 as a Madison brand, offering an add-on accessory with low stock investment, and varied POS. During the pandemic, Madison invested in a Holland Mechanics wheel-building set-up for the M:Part wheel range.

Finally in March, Lazer announced its new Kineticore rotational impact protection technology for helmets, offering protection, ventilation, and lower wait. Langan added: “We continue to look for opportunities in the market and gaps within our portfolio to ensure we offer everything our customers need to meet the demands of the consumer.”

Room to grow
Following on from the opportunities of the pandemic, Madison has plans to continue growing both in its exports and in behind-the-scenes infrastructure. Despite the difficulties imposed on international business by Brexit, Madison continues to see growth in exports, and improving its service levels for the EU are a priority, said Langan.

Investment in IT infrastructure will be introduced to improve efficiency, while the distributor has also plans to upgrade its warehouse management and bonded warehouse systems this year. There are also improvements to the B2B and Freewheel platforms on the way.

But one of the biggest lessons from the pandemic relates to the “just in time” logistics model, as Madison is looking at “near-shoring” production to reduce the dependence on China for supply – a long term aspiration, but one that is essential if Madison wants to remain competitive, Langan said.

On the Sportline side of the business, demand for e-bikes and e-cargo bikes continues to grow, and the brand now has a five-year roadmap, backed by investment capital, to support that growth.

Langan added: “Sustainability is also a challenge we all must rise to. We are reviewing all elements of the business from energy use, solar energy for our facilities, electric vehicles, tyre, tube and e-bike battery recycling, materials we use in our products and of course ensuring our packaging is environmentally friendly.

“This is a huge task and something we are working with all our brands to deliver and I am not sure it is something we will ever finish, as there will always be technological advances to allow us to do more but we are on that path and committed to reducing our impact on the planet.”

Staffing changes
In recent months, BikeBiz has heard reports from retailers of staffing changes at Madison, particularly in the sales staff, but Langan says there is no reduction in headcount, instead a change of emphasis as the market changes.

Madison is investing more in product promoters, to “add value for customers, giving them more of what they need to help grow our businesses together.” The distributor is also increasing emphasis on staff training, visual merchandising, retailer event support, and bespoke point of sale.

Langan said: “The needs of the retailer are changing as products become more technical. Communicating about product and ordering via our B2B platform is easy and works well but what our customers need is the in-store support.

“We are investing in their personnel to ensure they are a well-trained and competent sales resource for our brands and for the retailer. If we are not adding value in store then we become an unwelcome nuisance and a distraction.”

Madison is not taking on any more sales agents and is taking on all new sales personnel. Andy Ashworth has recently been appointed as key account manager for Madison, who will support the senior sales team.

On the future for the market, and for Madison, Langan concluded: “We know consumers will be out there looking for a good value proposition and making sure their money goes as far as it can. We will be working hard to make sure our pricing is sharp and the margins we offer our customer base are competitive and achievable.”