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Mountain Equipment Co-op raises ire of bicycle industry

David Labistour, CEO of Mountain Equipment Co-op, talk about the new line of bikes designed by the company, now for sale in Toronto.

Deborah Baic

Mountain Equipment Co-op, which has built its retailing reputation on a feel-good image of environmental and social responsibility, has ignited anger in an unlikely place - the bicycle industry.

Its foray this month into bike selling has been criticized by rival specialty retailers for everything from unfair competition because of its tax-exempt status, to a Wal-Mart-style money grab, to unethical sourcing.

Bike enthusiasts' ire toward MEC intensified when an executive at the non-profit chain slammed the bike industry in a blog on the company's website, calling it "grey, dusty and dirty." The blog entry was later removed.

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Some bike-parts suppliers have even refused to ship to MEC, while one Quebec distributor last month dropped a major Canadian parts manufacturer from its roster because the supplier is selling to MEC.

"It's no different to me than somebody buying a product at Wal-Mart that they could buy at their local mom-and-pop store," says Pete Lilly, owner of Sweet Pete's Bike Shop in Toronto and former president of the Bicycle Trade Association of Canada, which represents suppliers and retailers in the estimated $1-billion industry.

"Independent bicycle retail offers something very different than Mountain Equipment Co-op can," Mr. Lilly says.

"It's moved to a Wal-Mart model but because they've opted to give a small percentage of their money back to green causes, they wrap themselves in this green cloak and appear to everybody to be fair and just and clean and green. For somebody like me, I simply don't buy it."

MEC started as a co-op in a single store in Vancouver in 1971, but has grown into the country's leading retailer of outdoor sporting goods gear and apparel with 13 big-box stores and annual revenue of about $265-million. It doesn't make a profit, but budgets 3 per cent of sales as surplus for capital funding and gives 1 per cent of sales to environmental initiatives.

It has sold bike parts for years but decided to expand into bikes as part of its mission to get Canadians active in outdoor recreation, chief executive officer David Labistour says. The retailer apologized to the bike industry for its blog comment about the sector being dusty and dirty, and insists its expansion into bikes isn't a money grab.

"There's no legislation anywhere in the world that states that we cannot go into bicycles," Mr. Labistour said this week. "We went to great lengths to give the industry two years' notice about the fact that we were going into bikes. … The only thing the bike industry has done in the past two years is put all their efforts into shutting us out of the industry."

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The Canadian bike industry can be a volatile one, sensitive to new players stepping into others' territory.

Dorel Industries Inc. faced an uphill climb last year when it entered the exclusive world of high-performance cycling. The company, which makes children's gear and furniture, and was already a major mass market player, wanted to tap into the growing high-end bike segment by purchasing Cannondale Bicycle Corp. of Bethel, Conn.

But in cycling circles, Montreal-based Dorel came under attack for flogging a low-priced line of bikes at Wal-Mart while selling the pricey Cannondale through independent bike dealers. The move would weaken specialty sellers, they said.

The latest biking dustup with MEC is stirring some of the same types of emotions. Last month, after bike accessories supplier Race Face told its retailers that it had decided to stock MEC with its body armour, components and other products, the Canadian distributor of the line promptly ditched it.

The distributor, Cycles Lambert Inc. of Lévis, Que., "is very disappointed with the decision Race Face has made in this matter," it said in a statement to its retail customers. "Due to Race Face's realignment with MEC, Lambert ceased its business relationship with the company.

"The importance of specialty retailers for Canadian cyclists is undeniable," Lambert said. "Lambert remains firm in its commitment to channels avoiding an every-day low-price strategy, which brings down reasonable market pricing."

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An executive at Lambert could not be reached, but one industry source said independent retailers had cancelled Race Face bookings worth about $250,000 for the upcoming season.

Mr. Labistour said MEC has tried to be as transparent as possible about its cycling moves. It is facing increasing competition in its core outdoor sporting goods business, and has to find ways to keep co-op membership strong by encouraging outdoor activities.

The bikes, which are priced at $650 to $1,400, are made in Taiwan under MEC's own private label. But MEC has said it will strive to improve conditions in factories that produce its bicycles. It is targeting $4-million of bike sales in its first year.

"We're not going to go away," Mr. Labistour said.

Not everyone in the cycling sector is anti-MEC. Martin Vellend, co-owner of Vellend Tech Canada in Toronto, said while he is torn over the controversy, he will continue to supply MEC with biking footwear.

"It's a little bit of a dilemma," Mr. Vellend said. "But they're a customer and a good customer, and they pay their bills and put their orders in on time."

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