Chain of Success

Jim Bellas has three words to explain a sales philosophy that has enabled him to build one of the largest bicycle store chains in the country: and then some. “If you want to be successful, do everything that is expected of you, and then some,” he says. “That’s our philosophy. In working with customers, constantly exceed what they expect.”

In his 25 years in the bicycle business, Bellas has exceeded all expectations – possibly even his own. Manager of a small bike shop in Washington, D.C., in the early ’70s, he left to open his first Bicycle Exchange store in 1978. Since then, the business has grown to 10 stores in the Washington area and one in Raleigh, North Carolina, including six Bikes USA, the country’s first bicycle superstore, modeled after Circuit City.

Alan Wurtzel, the former CEO of Circuit City, who became one of the first investors in Bikes USA, did so in part because of his belief in Bellas. “I liked Jim and thought he was a straight shooter,” Wurtzel said. “He’s an imaginative and hard-working guy and the business he built incorporated all the essential values for a successful operation, like total commitment to customer satisfaction. He had all the right instincts for building an organization to make it attractive to the customer.”

Bellas’s customer-driven approach is renowned in the industry. He explains it as a collaborative rather than manipulative process in which the salesperson is willing to relate to the customer by divulging all the “proprietary information” in an effort to win a sale.

The idea that a salesperson should “share power and knowledge” instead of withholding it to maintain an advantage defies common perception, Bellas says. “Frequently selling is not this way,” he admits, explaining, “the payoff you get is that you gain an enormous amount of trust from customers. They get a chance to look at all aspects of the product at their pace and can confirm what you say.”

Bellas calls this approach a “sales-assisted merchandising system,” which he identifies as a key element of his business. The idea is to “minimize the intimidation people often experience and demystify the buying process,” he says.

Bellas developed his customer-oriented philosophy at Chevy Chase Bicycle Service, where he worked in the ’70s after failing to find a sales job at International Harvester and a range of other companies. “It was a humiliating experience,” he says of his job hunt, but it ultimately worked out because the bike shop job, originally intended as a two-year prelude to law school, lasted seven years and became the springboard to his lifetime pursuit. “I enjoyed the whole dance,” he says. “I fell in love with the business, the process of taking care of customers. I loved people and I loved winning.”

When the owner of the Chevy Chase store wouldn’t give Bellas equity, he decided to start his own business. With the help of a friend, Ed Brandt, he opened the first Bicycle Exchange in Fairfax, Virginia, in 1978. It grossed only $87,000 the first year, but after sales exceeded $360,000 the second year they were able to open another store in Arlington, Virginia. “It was even better than the first,” Bellas says.

Eventually, he and Brandt opened five stores and “we made the transition from a bike shop to a retailer,” Bellas says. “We became a business as opposed to a mom and pop.”

The distinction is crucial because the American bicycle business is comprised largely of mom and pops and only recently have larger businesses begun to grow. According to the National Bicycle Dealers Association (NBDA), a trade organization, about 85 percent of the 6,800 bicycle dealerships are single-location/one-owner operations.

While 13 percent of the businesses now have at least two locations, Bellas has taken growth a giant step further with Bikes USA, the superstore operation he started in 1993. The business represents “a new concept in bicycle retailing,” Bellas claims, “larger stores, lower prices, guaranteed satisfaction and broader selection.” Indeed, the business offers everything from high- to low-end bikes, parts and accessories from pedals to pumps, and a full line of apparel from helmets to gloves, all at mass merchant prices.

Since starting the first Bikes USA in Gaithersburg, Maryland, a 10,000-square-foot operation, Bellas has opened five more, four in the Washington area and one in Raleigh, North Carolina. He has also closed smaller Bicycle Exchanges in areas where Bikes USA have opened and plans to open only Bikes USA in the future.

Explaining his decision to try the superstore concept, Bellas says, “It comes out of a natural process of being in touch with what’s changing with the products and customers. We kept asking the question, what’s going to happen next?” To make the transition, Bellas says, “We made a list of the 150 worst things our competitors could do to us and went out and did them all. From that model, about 80 or 90 were valuable and some didn’t pan out. But then we had a store, and a lot of customers came in and agreed with us.”

To finance Bikes USA, Bellas turned to Wurtzel, who referred Bellas to the Avalon Group, a New York investment firm. There, company president Lynda Davey set about raising $5.25 million from Wurtzel and other investors, including Phillips Smith, a venture capital firm in Dallas that specializes in retail investments.

Virtually everyone who came in contact with Bellas and Bikes USA during the transition period was impressed. “I was very excited about the concept,” Davey says. “They’re bringing something new to the table.” Jim Flynn, a Phillips Smith spokesman, says, “It looked like an opportunity that someone of scale could get some leverage.”

Flynn, like Wurtzel, was impressed with Bellas’s approach to customers. “He’s a customer-oriented person, with a high level of integrity and a great work ethic.”

Indeed, Bellas looks to maintain his customer approach as he grows his business, creating a best-of-both-worlds scenario. Superstores have traditionally sacrificed service for price, but Bellas plans to offer both. He’ll keep his stores slightly smaller than the average superstore and much more personable. He’ll continue to train salespeople to “treat people the way they want to be treated” and sell according to the prescribed philosophy of providing as much information as the customer needs to make a buying decision.

Bellas, who opened his 11th store in Rockville, Maryland, in March 1995, is expanding at a good time. Bicycle usage is at an all-time high, according to the NBDA, with over 100 million U.S. bicycle owners, including 55 million adults and 45 million children. “It’s one of the few sports that is part of the fabric of being an American,” Bellas says. “It’s a rite of passage.” He says biking is both exercise for the body and therapy for the mind, an irresistible set of benefits that presents an exciting challenge for a super salesman.

“Every day we come to work looking for new ways to improve the business,” Bellas says. “There’s never a moment when we foresee we’ll be finished.”