Accell Fitness NA changes distribution model

Accell Fitness wants to make clear it’s not bankrupt or closing down its North American business. We’re told it’s just changing its distribution model. We go to the source for the details and to find out what the changes mean.
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It's been a goal to switch to a container-direct distribution model for Accell Fitness North America, said vice president of North American sales, John Trigg.

But since the fitness equipment distributor based in Kitchener, Ontario, Canada (www.accellfitnessna.com), began to implement the new distribution model early in 2011, rumors started to circulate it was going out of business. Not true, Trigg told SNEWS.

“We want everybody to know we’re not bankrupt,” said Trigg, who took his position at Accell Fitness North America in November 2010. “We’re still in business, and we’re still going to be around.”

Though Accell Fitness NA is not going out of business, a change in distribution model has caused the company to implement layoffs, sell off what Trigg called “stale” inventory, and rescind its return program indefinitely (unless, Trigg said, there is some type of defect or other flaw).

Since Trigg took over the North American sales for the company based in The Netherlands (www.accellfitness.com), he said he’s struggled to dispel the rumors.

“There’s been a lot of speculation that we’re leaving and we’re done,” Trigg said. “But we actually have a whole brand new series of product available.”

With a twist

Trigg said a container-direct distribution model, where retailers purchase their own container to bring in equipment from the manufacturer’s factory direct warehouse (in the case of Accell Fitness, this location is in Amsterdam), is the way business is done in Europe and Asia. He said it was always the plan for Accell Fitness North America to move to this model, which allows for retailers to keep products in stock and get them to customers more quickly.

“The North American market was the only market in the company’s spectrum that had individual dealer direct (distribution),” Trigg said. He noted the reason behind this was the model wasn’t common in North America.

“The old model (of dealer direct) is broken,” Trigg added. “Right now the model is, ‘I’ll buy a piece when I sell a piece’ and that doesn’t work. It’s a very difficult way of doing business.”

Trigg said container direct might have a negative connotation to some dealers.

“Anytime you hear ‘container’ I think it’s a little intimidating for a dealer,” Trigg said. “But this is a different style of container.”

The twist on the Accell Fitness container is, unlike other container-direct businesses that allow only one model per container, it can be filled with any number of any type of model a dealer or retailer wants.

Another twist is that there will be “key accounts” scattered throughout the country that will serve as small distribution centers for other retailers close to them that might not want to or be able to purchase their own container. This is not the case with the average container-direct model.

“We’re looking for bigger commitments and making bigger commitments,” Trigg said.

David Cantu of Uptown Fitness in McAllen, Texas, has made that big commitment. He’s been carrying Accell Fitness products for a little over a year and “they do provide a good product,” Cantu said. He is in talks to become one of those key accounts for his region and decided to make the commitment because Trigg always gives him good advice, he said. “Anything (Trigg) has requested I do, I’ve done it, and my sales always increase.”

Changes

Trigg said the company is not having financial troubles and pointed out Accell's second-quarter revenue was up. Fitness sales globally, however, were down 29 percent compared to the year-ago figures, the report also revealed.

Trigg said the container-direct business model might help boost fitness sales in general as it is the reason big box stores are successful. The model is very common in Europe and Asia and, he said, he thinks it’s the wave of the future for North America.

Of course big box stores have much more product in stock than specialty retailers, but moving to a container-direct model might help retailers compete with the bigger guys, Trigg said. He said big box stores generally bring in dozens of containers full of products whereas the specialty stores will only bring in one container at a time.

“Specialty retail has not made much money this year,” Trigg said. “Most of the companies are down, and big box is way up from where they were last year.’

He noted the difference is big box stores keep equipment in stock (which is part of a container-direct distribution model) so customers don’t have to wait so long to receive a purchase.

Trigg noted that retailers can purchase however many products they’d like – there are no minimum purchase requirements.

“You buy whatever you want however you want,” Trigg said. “You can fill our containers anywhere from one unit up to however many you want.”

What about the retailers?

Trigg said he understands the reality that many dealers are going to drop Tunturi or Bremshey products because of the changes.

“It does require a little bit more of an investment,” he admitted, adding, “I really do believe whole-heartedly if we want to be competitive, this is the way we need to go.”

Jim Clark, manager of Total Fitness in Ames, Iowa, said Accell North America’s move to a container-direct model was one of the reasons he stopped carrying its products, but there were other issues too.

“The biggest thing is, I was having too many service issues,” Clark said. “I look for equipment that has the least amount of service issues.”

Jim Ewoldt, owner of Peak Performance in Sioux City, Iowa, said he stopped carrying Bremshey products nearly a year ago because of the container-direct business model.

“We’re not that big of a dealer,” he acknowledged, adding the shipping price points would eventually become too high.

Rich Chavez, the owner of Busy Body Fitness in Denver, Colo., said he decided to continue to carry Bremshey in his store despite not knowing anything about the no-returns policy or the container-direct model changes.

“I wouldn’t really care as long as it could cut the shipping (charges) down,” Chavez said. He said he'll remain loyal to Accell Fitness products because, “from day one they were very customer-friendly. They’re really trying to make sure that we’re happy with how they are doing business so I guess if they’re making changes it’s probably for a good reason and I certainly don’t want to stop carrying their products.”

Trigg said he hopes to secure all the “key accounts” and individual retailers that will carry Accell products by the end of August or early September. Accell Fitness hasn’t yet ironed out the price points for the containers and shipping, he said, but the company has decided to continue to offer its warranty, parts and service programs.

Trigg urges all retailers with questions or concerns to call him at 215-756-2964.

 “I want people to know we are healthy and we’re getting back to our comfort zone,” Trigg said. “It’s an evolving industry and our business is changing drastically – almost on a monthly basis – and we’re trying to work within those changes.”

--Ana Trujillo

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