Rod Seidner downsizes Bert's Mega Mall while expanding and improving it. He hopes that better, bigger, fewer stores are the future.Cover bert's mega mall California store
RON SEIDNER thinks the slowdown is no excuse for shoddy dealerships; on the contrary, a smaller market should result in fewer but better stores, he says. And the bigger the better. He cites Best Buy as an example: People want to go where they can see a lot of inventory in one place and get excellent service.
He says the same goes for our industry and offers up his own store, Bert's Mega Mall in Southern California, as the model. In 2007, it retailed 11,477 new units and 1,702 used ones. Last year these numbers declined 24 percent and 6 percent, respectively. This was in conjunction with a major remodel still in progress. Talk about a hectic year: How do you expand and contract at the same time?
I arrive at the store in late April to find out. Its breathtaking exterior reaffirms the statistics: 200,000 sq. ft on 9.5 acres in the city of Covina. Even next to the back side of a Wal-Mart, it looms large. Displaying the logo of nearly every major OEM, it's a mall indeed.
Bert's doesn't open for another two hours. I follow an employee in through a side door, and find Seidner. He offers me a drink from his new coffee bar, and a tour of the place. But first I excuse myself for a quick trip to the bathroom, which looks as if it belongs to a five-star hotel. Two women are cleaning it (I'd later see them cleaning other areas), but they politely exit long enough for me to do my business. Pink cleaner sits in each of a long line of sinks, which already sparkle.
Seidner is proud of his bathrooms and put a lot of thought into them, placing square mirrors in the men's, round ones in the women's. He also provides blow dryers so riders can dry their heads. It wasn't until walls were ripped down during the remodel that he noticed that the women's bathroom was twice as large as the men's (the building once housed a Target and a Kids R Us). He reversed that ratio, eliminating the backup for the men's while still providing adequate facilities for women.
After I return Seidner hands me my drink, explaining that its Suzuki-branded sleeve is sponsored. The cafe, Bert's Mega Brew, has several brown leather couches, flat-screen TVs, framed articles on the store's history, and (in addition to the bar) several vending machines. Seidner says the cafe doesn't generate much profit and is simply a convenience for customers and employees.
But enough of the bathrooms and cafe. On to the dealership proper.
THE HOUSE THAT RON BUILT
Seidner, 53, is of medium height and is dressed in a T-shirt, jeans and tennis shoes. His grizzled hair is slicked back neatly. Though soft-spoken, he's a fast talker, and analogies come easy to him. Considering his responsibilities, he's surprisingly relaxed. As we walk around, he greets every employee by name and makes a few personal inquiries.
First up in the tour is the roughly 45,000 sq. ft. addition that acts as the new storefront. Seidner's main reason for building it was to have more space for boats (which get longer every year) and other big units like side-by-sides, PWC and Joyner go-karts. The area will also serve as a patio area for events. Overhead doors can allow the entrance of 18-wheelers, and Seidner says he's planning his first Bike Night.
The new showroom is so impressive, he says, that during last year's opening week, some motorcycle shoppers thought it was the whole store. "The first weekend I had five people walk out," he remembers. "I said, 'Where are you going?' and they said, 'Well, you guys don't sell bikes anymore.'"
Seidner fixed the problem a few days later by placing a large "Motorcycle Showroom" sign above the second entrance. On the other side of this door is a reception desk that allows riders to check in their helmets and jackets. The coffee shop is immediately to the left. Stretching forward and far to the right is a sea of units, organized by type, then brand. They are wiped down daily. The walls are bare. Signage is minimal, Seidner says, because factory materials get lost in the vastness.
Adding fun to the showroom are statues of sundry things: pirates, a police officer, Hulk Hogan, a dinosaur. Hanging from the ceiling are a shark and a fighter pilot flying a wheelchair equipped with wings. "They don't really fit," Seidner admits, "but it's OK they don't fit. The kids run in and the first thing they do is go, 'Daddy, daddy, let's go see the dinosaur.' So that's the reason we do it, so people will remember."
A neon "Parts" sign hangs in the distance and contains an arrow pointing toward the store's third low entrance: the passageway to the 21,000 sq. ft. P&A department. A new skylight above the entrance adds to the illusion that you're going into an entirely different building.
Just past reception is a used-bike section and, to the left, the beginning of yet another department: The Red Tag Zone, where Seidner has already placed a good collection of blowout deals. Right now the section is just a fancy metal storefront (Seidner taps on it to demonstrate its quality). He will soon add walls. Sandwiched between this section and the cafe will be a Ducati storefront with its own entrance to the cafe.
Pass the Red Tag Zone, tucked into a corner, is the elevated sales office, adjacent to which are areas for the store's Internet and phone divisions, the latter of which prevents floor salespeople from being interrupted by outside calls. Stretching along the entire backside wall (where Seidner once displayed 20 boats) are 15 F&I cubicles, only seven of which are being used at the moment.
Seidner relocated the sales office from the center of the showroom. A consultant, who was also a customer, told him that previously the office was intimidating because it made him feel as though he was being watched.
In a similar fashion, much of the remodel was done to soften up the store. Earth tones replaced blue and red. A logo made up of a "B" encircled by a tachometer replaced a cartoon character of Seidner. Throughout the showroom, lounges consisting of a round table, chairs, sofa and partition replaced 4-foot-high sales desk cubicles. Loud carpet was similarly replaced, and more than 90 showroom aisles were reduced to three looping paths.
In the P&A department Seidner spent $28,000 to cut out the carpet and polish the floors. This removed about 36 walkways, and he's now freer to arrange things and has more space in which to do it. He replaced one traditional metal parts counter with eight checkout kiosks around which customers can walk. The effect is more like Nordstrom, going well with the three dressing rooms and large casual section, including mannequins displaying summer dresses. Walls dedicated to helmets and exhaust systems are two other highlights.
New energy-efficient ceiling lights throughout the building, including service, more than doubled candlepower. Whereas the previous light gave everything a yellow tinge, now colors pop, Seidner says.
I notice two boxes containing 50-inch plasma TVs sitting conspicuously outside the sales office. Seidner explains that they're part of month-long sales contest in which the salespeople must sell a certain number of units to partake in a pizza party/dice game that will decide the winners.
All salespeople, including those in P&A, work on 100 percent commission. Unit salespeople work on a progressive rate so that they earn a higher percentage if they sell more. The store pays them at least $20 for selling a heavily discounted unit. P&A employees are split into two teams at different commission rates. Is Seidner worried that competition will create vulture salespeople? Not at all. "Vultures are good," he says. "The problem with sales guys throughout the country is that they're not hungry enough."
Managers receive bonuses only if the average CSI score of their department is at least 92 percent. Seidner himself coaches the sales team three times per week (this in addition to the sales manager's coaching). Sometimes the training benefits from the vantage point of his office, which sits atop another office along the front wall of the main showroom. It's surrounded by mirrored glass. "It allows me to sit at my desk and make sure things are covered right," he says. "It also gives customers the idea that there is management."
Seidner also redid the front office of the service department. Service highlights in general include glass windows through which customers can view the mechanics at work, an in-house training program, several outside benches, loading lanes in the parking lot, delivery trucks, a parts-to-service counter, multiple dispatch windows and four bay doors that let in fresh air. Bert's doesn't work on outside brands and shies away from old bikes. It also does no performance or suspension work, instead focusing on tires, exhaust systems, maintenance and repairs.
In this way, service seemingly acts much as do the cafe and P&A department: as support to the store's main focus, unit sales. Another example of how Bert's is vehicle-driven is that it does no mail-order sales. Its website markets only units. Seidner puts it this way: "Niches I don't make any money in. I need to do everything large. We're mega."
During the store's recent heyday, when it could move 150 units in one day, the average time to get a customer out the door could swell to four hours. This led to the "Ready to Roll" program in which most showroom units are inspected, oiled and gassed. Pigtails are attached to battery terminals, and service employees charge machines daily on a rotational basis.
Now that the economy has soured, is the program still needed? Not as much, but now it's helping to counteract something else: layoffs. For example, the latest addition to the store is the Pick Up Zone, which replaces the delivery area. It mirrors the look of the Red Tag Zone on the other side of the showroom. Whereas delivery had five full-time employees last year, it now has three.
Which hints at the second part of our story: how Seidner is retuning his unit-selling machine to the new economy.
CONSTANT QUALITY IN CHANGING TIMES
Written above the Pick Up Zone counter is "Supporting Family Fun for Over 50 Years," the last thing Seidner wanted customers to see. That's right, Bert's is a half-century old. The name "Bert's" dates back to the sign of the bicycle shop Seidner's dad bought in 1959 in nearby Azusa. He and his two sons eventually built the store into a multiline motorcycle dealership. In 1976, a disgruntled service customer torched the place to the ground, and all franchises were lost. Dad and brother left the motorcycle industry, but Seidner continued to run the used-bike business across the street. Over the years, he regained the franchises and added more. In 2000, after local competitor Chaparral Motorsports upgraded its facility, he says he one-upped it by moving to today's location, adopting the "Mega Mall" monicker in the process. Seidner claims his store was the first superstore in the industry, starting the trend.
Seidner's wife and three of his daughters work at the dealership. His two other kids will probably begin this summer. Seidner says he and his family make a few ATV and Sea-Doo excursions per year. While we sit in the cafe lounge after the tour, Seidner spots a riding buddy and asks if he's still up for riding laps at a local dirt track.
The store is now open, and upbeat music plays throughout the dealership. Nevertheless the conversation turns to the economy. If the fire was the worst event in the store's history, the second-worse happened the 1980s when his only finance source stopped loaning. For six long months Seidner had to carry his own paper. "That's still my biggest fear," he says, "losing the finance companies. What would happen to the industry?"
And the credit crisis is affecting more than new-unit sales: P&A sales have fallen because banks aren't financing as many add-ons, the value of which is hard to recoup at repo. As Blue Book values fall, banks are more wary of used bikes. Like others, Seidner blames the years of easy credit. "I don't think it will ever be like it was, and the only reason I say that is because I don't think the banks or our country will ever be that stupid again. Everyone made money, but it should have never happened."
Seidner says his finance people watch for bad deals and don't send them through. "One of the most important things that needs to happen in this industry is the dealers need to start protecting the banks," he says. "If we don't take care of them, they're not going to take care of us. We're integrated."
The credit crisis comes at a time when streetbike inventory levels are high due to heavy ordering in response to last season's sales spike fueled by gas prices. Low demand is hitting California dealers especially hard because of the state's unemployment rate and real estate fallout. Seidner estimates that new-unit sales statewide are down 40 percent to 50 percent. He knows of six stores in Northern California that have gone out of business, and he thinks the wave is moving southward. "It hasn't hit here yet, and I think the reason why is a lot of dealers are holding off for the season, which is now. Problem is, there ain't no season, at least nowhere near last year's."
Seidner sees the industry moving toward fewer, better dealerships. "The better houses getting better because those are the places where you go to do your business," he says. "And eventually the manufacturers have to quit protecting dealerships. They hang on to them too long. For example, why do we need 50 Yamaha dealers in the state of California when we don't have the business and no one is making money? We need 20 good stores, houses that take care of stuff. It's kind of like the dinosaurs. They're gone. New life came."
Bert's Mega Mall is on solid ground partly because Seidner hasn't been afraid to downsize. "The store is a big ship to turn around in a small harbor," he says, "and it can be very costly to get it into the shape it needs to be in to perform for the next 10 years. That's the process I'm in now: reshaping inventory levels to where they need to be, not to where the manufacturers want them to be."
He's laid off 27 percent of his work force in the past year and a half and now employs 186. He stresses, however, that Bert's has remained consistent in quality and in the services it provides, seven days a week. There are just fewer people doing the same jobs, and more cross-training.
Seidner's accessory manager complained the other day about the hiring freeze. "I said, 'I've got a great idea. You've got all these reps who come in here. Every one of them should inventory, clean, straighten. They should prep your inventory, write the suggested order and return what you want. Let them do the work if they want the order. If you need 22 more man-hours, there they are, and they cost us nothing.'"
Seidner says distributor reps are happy to help. In fact, the whole industry is humbled: dealers, dealership staff, even the OEMs. "Across the board right now," he says, "everyone is more understanding. Everyone needs to get along because everyone needs everybody right now. We all understand that the industry is sputtering." He gives an example: "Kawasaki stepped up right at the front and said, 'We know you guys need the cash. We'll pay you guys every two months instead of every six months on your holdback.' That's 5.25 percent. It's a lot of money."
Still, does Seidner regret spending more than $4 million on the remodel? "No, I'm very happy with it," he says without hesitating. "I don't think I could survive without it. Our bathrooms, our coffee shop, the cleanliness of the dealership, our image, what you felt when you walked in here today, all this has been my lifeline. I want to go down as having run the very best, highest-volume, classiest motorcycle dealership."