Case Study: Veloce Bicycle, Portland, Oregon

“A place where the client dictates the direction the shop takes, growing around their wants and needs!”

- Demetri Macrigeanis, Owner

There are very few bicycle mechanics that have not turned a co-worker at one time or another and quipped “Someday I am going to have my own shop where I only work on good bikes and I will only sell the best. No more Huffy’s!” There are a handful of these shops across the country, but most focus on the bike, not the person buying the bike. A smaller percentage focuses on the client first, and because of that, they find themselves only working on and carrying the finest bikes available.

One such retailer is a compact operation in the Hawthorne Neighborhood of Portland, Oregon. Demetri Macrigeanis opened Veloce Bicycle three years ago with a very simple vision, “Give people the proper fit on a bike.” What Macrigeanis did not consciously realize that he was opening a store that is consumer-centric. “As the neighborhood has changed so has Veloce. “I still have fixtie [fixed gear bicycles ed.] riders coming in the store but also the elite athletes. They are both looking for the same thing, a proper comfortable fit,” said Macrigeanis of the way the store evolved. “I want to offer a shop with an old world attitude. Clean bathrooms, a place to sit, and a clean, friendly, atmosphere. A place where the client dictates the direction the shop takes, growing around their wants and needs.” Many a bike mechanic would be envious.

T.H.:  This isn’t the first time you have had a bike store is it?

Demetri Macrigeanis: No. At one time, I had three stores in Eugene (Oregon). I opened the first in 1980. I sold one to an employee and the other two went to competitors. They were big and not flexible. One time they were repairing a bridge near one of the stores and it just about killed me. I was struggling just to keep it open. It was too big to change to the circumstances.

T.H.: So then Veloce? Why?

DM: I had a vision of a small “boutique” place that would be flexible to change. We are always revamping the store. Redesigning, repainting, cleaning… I want customers to always have a fresh approach to the store. This year, when we close in the New Year for two weeks, Tom, my mechanic, will be repainting the floor. We already knocked out a wall and expanded the service area. And not only the looks change, but as the customers/market changes so do we. When I first opened, I had a lot of “fixtie” riders coming in, but as my reputation for fit grew so did the clientele. We still have the “fixtie” commuters but I also work with carbon fiber crowd that want the best. We grow around what the client wants and needs.”

T.H.:  What is your average bike sale?

DM. Veloce is road bikes only. I do sell Breezers for commuters, but the primary focus is on road bikes. I would say the average bike sale is between $1200 and $1500. The lowest price bike in the shop is $750. I did sell a cruiser this winter for a good client; it will be the last one I sell. I try to meet the needs of my clients. I will buy Soma frames and put consignment parts on, again, being flexible.

T.H.: You sell consignment bikes, too. How much of your annual sales are made up of consignments?

DM. First of all, we don’t just sell any used bike. They have to be quality. Whether it is a 1959 Robin Hood 3-speed or a 2005 Trek carbon fiber, they have to be quality bikes. We take 30 percent of the retail-selling price and the cost of labor and parts to bring them up to our standards. I only have ten spots for consignment bikes and they only have 60 days to sell. From those spots, we sold between $80 and $85,000 in consignment bikes last year.

 T.H.:  What were your sales last year, if I may ask?

DM. Given our small space, I think we have peaked. The first year I opened, I did $168,000. The next year about $450,000. And it looks like we will top $700,000 for 2005. I think it is physically impossible to go beyond that, especially if we want to stick with our vision of custom fit/custom built.

T.H.:  Tell me a bit more of your sales process and how that vision fits in.

DM. Well, it is all about the fit… if it doesn’t fit you shouldn’t be buying it. That goes from shoes to bikes. When a person comes into the store they are always greeted with a “how” question, something I learned from O’Farley’s Ice Cream here in Portland. We always ask questions that the customer can answer. If they are looking for a bike, I ask them what type of bike and what their budget is. I then explain the philosophy of the store – it is about the fit – and I do a rough assessment of size. I then explain the differences in the way bikes fit and ride and explain the whole fitting process that they will go through when buying a bike: the measurements, the bike adjustments, the cleat adjustments, handlebar and stem changes… If they are truly interested in buying a bike, a fitting is scheduled. These are done before we open the doors to the public.

The fitting process itself takes an hour. I use the Body Scanning system to start. In just a couple of minutes, I have the measurements I need and I have found out more about the clients preferences in ride style and use. We then further discuss the bikes and one is selected. The bike is then put in a trainer and I take a very critical look at the person on that bike. Body Scanning nails the fit almost every single time; this gives me more time to discuss bikes and accessories to the client. Body Scanning is the magical basis for fitting, people are so impressed with it; it is great eye-candy and well worth the amount I pay every month for my lease. That is a check I gladly write.

Every client is told that they will need at least $300 in accessories for their new bike. Some will have all they need and some will need everything. If they are ready to put down money on the bike right there, they still can’t have it. I would say 98 percent of the people walk out of the store without a bike. I rarely sell what I have on the floor, but I constantly order from my suppliers. Since almost every bike needs to be customized to that one person this not only saves us time but I don’t have to stock a huge number of bikes.

T.H.:  And it gets them back in your store.

DM. And when they come back they are excited and they have had time to think about things they may want or need.

If someone walks into Veloce, wants a bike right there right now, and doesn’t want to be fit, I send them down the road to one of the volume stores. If they want a bike they will fit and be happy on for years to come – they buy from me. Even though we maybe more expensive then across town we offer fit and service that others can’t match.

T.H.:  Do you charge for your fittings? It seems you take a lot of time to do one.

DM. If they are buying a bike, no, there is no charge. If they come in with an existing bike then it is $75, and that is up from $50 that we used to charge. However, I rarely charge because of parts needed to make the bike fit them properly.

And for new bike customers it is such valuable one-on-one time that they get my undivided attention, I can’t place a dollar figure on that.

T.H.:  How do you market Veloce?

DM. Actually, our advertising cost went down lat year from $9600 to $9340. That is yellow pages and everything. The sale is on the fitting and the time I spend on the client; everything is focused on their wants and needs. Because of this the word-of-mouth advertising is big. I have about 20 clients that are my very good ones. They get a 10 percent discount, but they are the ones that really talk me up.

People come in, for the first time, looking for a bike. They leave sold on Veloce.

We have one part-time person that worked in another shop for seven years; he is slowly being taught the Veloce way. If employees don’t buy into philosophy of the store, or the owner isn’t involved, then they are just selling bikes, not giving service. We do more than what needs to be done. That is our marketing.

Interview conducted and case study written by Tad Hylkema