We Have Come to the End of an Era of
Bike Shop Retailing!
By
Jay Townley
In 2015 we have come
to the end of an era of bike shop retailing in America
In a recent blog post and YouTube video Doug Stephens,
author of The Retail Revival: Re-imagining Business For The New Age Of Consumerism, said “We have come to the end of
an era in retailing.”
I thought about this for some time and realized that bike
shop retailing, like the bigger retail world we are a part of has also arrived
at the end of an era that roughly coincides with the bigger world of retailing
in America .
Before I go any further, let me make it clear that I am not
talking about the END of bike shop
retailing…I am talking about the end of
the third era of bike shop retailing that started in 1960, saw the birth of
the discount store, the rise of the Total Store bike retail concept, went
through the Bike Boom in the early 70’s, the introduction of the Sting-Ray,
mass produced lightweight, derailleur equipped adult bicycles, the BMX craze,
the Mountain Bike explosion and the migration from bicycling as an activity to
bicycling as a sport, with American bicycle brands becoming a significant
factor in international racing and the growth of triathlon, biathlon, Xtrea and
Cyclocross.
All tolled I am talking about the 50 years from 1960 to the
great recession to 2010. Bike shop
retailing, as we have known it…is at the end of its’ third great era, and is in
transition to its’ fourth era, which could be the greatest era the bike
shop channel has ever seen in America !
The first era of bike shop retailing in America was from the
invention of the ordinary bicycle
through the first Bike Boom, sometimes referred to as the Golden Age Of the
Bicycle, up to the first world war, and embraces the Wright Brothers bike shop
that saw the birth of powered flight!
The second era was between the Great War and the Korean War
and includes introduction of the great balloon tire kid’s bicycles exemplified
by the Schwinn Phantom.
The third era started in 1960, and is rooted in the
emergence of the great homogeneous consumer that realized the American
Dream!
In 1962 the Fair Trade Laws that prohibited discounting of
consumer products were substantially repealed…and that same year Kmart,
Walmart, Kohl’s and Target all opened their first discount stores!
Frank W. Schwinn and his son Frank V. Schwinn, along with
Schwinn executives Ray Burch and Al Fritz all played significant roles in the
Third Era of Bike Shop Retailing.
Ray Burch is at the right in this picture. He was hired as the Schwinn Sales Promotion
Manager in 1950 and retired from the company in 1979.
Ray Burch hired me out of
Al Fritz was the Schwinn director of engineering and vice
president engineering for two decades and became president of Excelsior Fitness
Equipment Company, a Schwinn subsidiary for the next two decades.
I also had the privilege of working with Al Fritz, shown in
the picture on the previous page, taken after his retirement, as well as
directly for him when he became Schwinn Executive Vice President.
It was his innovative vision, along with Schwinn Chief
Engineer Frank Brilando[1], who
represented America as a cyclist in two Olympics that developed and introduced
the first American made derailleur equipped lightweight bicycles in 1960 and
the iconic Sting Ray in 1963 – that in turn lead to a dramatic improvement in
the profitability of U.S. bike shops and set the stage for the third era of
bike shop retailing that Ray Burch shaped into a dynamic wholesale and retail distribution
channel.
At the same time George Garner opened his multi-location George Garner Cyclery stores in California ,
and in cooperation with the Schwinn Bicycle Company opened the first Total
Concept store in Northbrook ,
IL
The Genie was out of the bottle and the third era of the
American bike shop business was off on a breakaway that has lasted for five
decades!
All things end, and we are simply at the transition point
between the end of the third great era of American bike shop retailing and a
new age…the fourth era of bike shop retailing that can be greater, better and
more profitable than anything we have seen previously…or not, because it’s
really up to the members of the American Bicycle Industry to determine how
prosperous the new era is.
The great news is that retail experts like Doug Stephens are
predicting a new Golden Age of Retail beyond 2015!
Why is the American bicycle business at the end of an
era of bike shop retailing – and why are we about to begin a new era?
This brief look at a portion
of the history of the last 50 years of American Bike shop retailing takes us to
the present – and the question of Why
we are at the end of an era for bike shop retailing – and Why we are about to begin a new era?
Over the last 50 years bike shops and brands controlled the
consumer path to purchase. Consumers
relied on bike shops and brands for the information they wanted to find out
about bicycle products – and in being the sources for this information, bike
shops and brands were in control of the retail path to purchase.
Just before and after the great recession, between 2008 and
2010 this control of the path to purchase slipped out of the hands of bikes
shops and brands – and they lost the control of this vital consumer “discovery”
and product research process.
Today – in 2015 and going forward, at the beginning of the
new fourth era of bike shop retailing – consumers are absolutely
in control of the path to purchase for new and used bicycles and all related
products and services!
Empowered
by the Internet consumers can purchase the things they want anytime, 24-7 and
have them delivered to their homes the next day!
Many bike shop owners and suppliers don’t understand why
the way we have operated as a channel of trade can’t just continue – and are
uncomfortable with the idea of change and having to disrupt the way they
operate their businesses.
However, they are also concerned about why shopper traffic
is down in bike shops, and why the struggle to make a fair and decent profit at
the end of each year is becoming, by degrees, harder and harder. Many bike shop owners also don’t want to
change as they near retirement and look forward to selling or passing on their
businesses after years of hard work.
Reality is bike shop owners have no real choice but to
change the way they do business to accommodate American consumers – who are now
in complete control of the retail path-to-purchase!
Bike shop owners counting on selling their businesses as
they near retirement probably won’t realize what they expect financially from
this objective…unless they change now to make their bike shop
consumer-centric and as friendly and inclusive as they can, because…the
consumers they serve, empowered by the Internet, can purchase the things
they want anytime, 24-7 and have them delivered to their homes the next
day! What they want and are demanding of
all retailers is the why and how retailers sell the things they
do!
Readers can find out more about becoming consumer-centric by
visiting our website and purchasing Podcasts of our past webinars wherein we
cover this topic in detail.
The New Fourth Era of Bike
Shop Retailing Could be the Greatest Yet!
Why could the new era of bike shop retailing be the greatest
era for American bike shops yet! We will
start with this Chart, which we have presented before, that shows U.S. live births from 1934 to
2010, covering part of the Silen t
Generation born 1925 to 1944, all of the Baby Boom Generation born 1945 to
1964, all of Generation X born 1965 to 1984 and all of Generation Y born 1985
to 2004.
In the middle of the two lines is Generation X, with
11-percent fewer Americans than the Baby Boom Generation to the left. The trough, in the middle with fewer U.S. consumers of everything including bicycles
- is where the U.S.
bicycle business is right now, in 2014!
This is a BIG and important reason why bike shops want to
invite EVERYONE to come in! The
Generation that is driving the U.S.
bicycle business right now – today – is at least 11% smaller than the previous
generation that drove the bicycle business during most of the last era! Unless bike shops change the way they do
business – they are going to attract, on average, fewer shoppers and customers
than they did nine to ten years ago!
Sound familiar?
Being inclusive instead of exclusive and inviting EVERYONE
in to your bike shop is a change that will set you on the road to growing your
business as the new era of bike shop retailing progresses, instead of watching
it decline and wondering why!
Another reason the new era of bike shop retailing could be
great are the New American Demographics that will be driving the Bicycle Market
in the near future!
What we are showing here are the three most important
generations of Americans to the bicycle industry and business. Generation Y is to the right, Generation X in
the middle and Baby Boomers to the left.
The range of birth years, total number of Americans for each generation
and the age ranges are all shown – making this a very busy table!
Look down to the last row identified as 2022 – 7 years from
now and you will see that all 100 million Generation Y will reach the age of
majority, and will all be adults! This
means the Sweet Spot or best customers for the bicycle
business and bike shops, at 30 to 36 years of age, will all be Generation Y –
and this big, multicultural generation will be in charge and driving the U.S. bicycle
market and business!
To make sure the fourth era of American bike shop retailing
is the best ever, bike shops need to change their business models to be all
about the consumer and shoppers and both Omni-Channel and inclusive to attract
all three of these important generations and eventually all five of the
generations that are now in the American workforce!
We have said in previous webinars that channels of trade, as we have known them in the past, are no longer
important from a bike shops marketing and sales standpoint…except as it relates
to being Local because the shop and buy local movement
that started with local produce and other food items has turned into a national
movement!
Localista is now defined in most dictionaries and the
buy local movement has generated community magazines, both hardcopy and online,
and all the available surveys show growing support among the generations of
American shoppers for “spend it here and keep it here!”
This is a huge advantage for local bike shops!
Eradicate the Problem…that
keeps the American Bike Shop Channel from becoming great!
One of the “no-cost” and immediate things American bike
shops can do to make sure the new era of bike shop retailing is the best ever
is…removing the biggest barrier keeping bike shops from really growing…the Exclusive
Attitude that keeps the American Shop Channel and Bicycling Movement from
becoming great!
Companies like Shimano and Industrial Design firm IDO have
done the research that proves the Exclusive Attitude not only exists,
but is a serious barrier to more consumers shopping from and buying from bike
shops.
The bicycle riding participation data we studied showed that
from 1990 to 2000 bicycling migrated from being an activity to a sport. And in becoming a sport the specialty channel
of trade also became an almost exclusive white male cycling enthusiast “club”
as did many bike shops.
This shift established the enthusiast “cycling culture,” and
the related attitude of exclusiveness. By itself, and as a segment of the
market, the enthusiast “cycling culture” has helped many bike brands and bike
shops increase revenue and profitability – but it has also become the
characteristic that has come to define the bike shop channel of trade, and in
so doing created a barrier to non-enthusiast and latent adult bicyclists even
entering a bike shop, much less shopping for a bicycle!
It was Jonny Carson who said (something like): “…if you buy
the perception…you buy the bit!” And the
perception too many American consumers have of bike shops is…they are exclusive
“Old-Boy’s” clubs that exclude everyone else!
The “Old-Boy’s” are primarily white, Baby Boomer males and
in some bike shops they are multi-generational white males…but in any case, if
being an exclusive club that excludes Women – the new majority in America, and
the ethnic diversity of your community is working for your business, so be
it.
However, for the majority of bike shop owners who are
wondering why business and store traffic have slowed down…we have probably just
found the biggest reason! The
demographics of your community have changed, but you haven’t changed with them!
The Basics include inviting everyone into your bike
shop to be greeted with a smile, a cheerful “Hello” and a fresh baked cookie…so
you quickly change the perception of your store brand as an exclusive club – or
further enhance your store brand as a friendly, welcoming place that consumers
in your community will want to stop in and visit – to hang-out and learn what’s
new and interesting in terms of the bicycling lifestyle in their local
community!
Bicycling in America
has a huge opportunity to be in tune and in-step with the new America ,
including the diversity of our country that came to national prominence with
the 2010 Census and the national election in 2012. Diversity and Equity are vitally important to
the future of bicycling in America ,
and to the making sure the new era of bike shop retailing is the best every!
This is a picture of the League of American Bicyclists
Equity Advisory Group.
These are all avid bicyclists who are dedicated to Diversity
and Equity in bicycling in America, and their activities and those of the
League of American Bicyclists should be followed closely for the leadership
they will show and bring to bike shops in this most important initiative to
bring the bicycle business and bike shops up to speed with the reality of
ethnic and gender demographics in neighborhoods and communities – in
other-words the bicycle markets of America – and take advantage of the growth
opportunities presented!
New-Wave and Outlier Bike
Shops
After the great recession a different kind of bike shop
emerged and stated to spread across America ’s cities.
New wave and outlier bike shops do four consumer-centric
things very well. First – new wave bike shops make it easy – and fun to shop
their stores. Clean and easy to navigate
and understand store layouts with knowledgably staff that are all focused on
making shoppers welcome and above all “comfortable” in the bike shop
environment.
Second, new wave bike shops understand and want to be
“sticky” – meaning that the open and easy to navigate store space that is well
merchandised is focused on keeping shoppers in the shop longer, because the
longer shoppers stay, the more they purchase!
Third, new wave bike shops work hard at becoming their
customers “third-place” a term first coined by Paco Underhill
As Underhill’s research shows – there is work, home and the
third place that consumers would prefer to be when they are not at the other
two!
This is all directly related to making shoppers comfortable
and satisfied and happy with their shopping experiences in a new wave bike shop
– that sets out to attract shoppers that
normally would not think of going into a bike shop!
Fourth, new wave bike shops stop the confusion that comes
with the “Tyranny of Choice” that most bike shops have been talked into
believing is what consumers want.
In 2007 and 2008, before the great recession the bicycle
industry in the U.S. was advised by some very good consultants (not the Gluskin
Townley Group) that the “product portfolio” and specifically the new bicycle
offerings, selection and merchandising in bike shops was confusing and
overwhelming to even the enthusiast sub-culture…and was responsible for driving
away “novices” who wanted to get back on a bicycle!
Too many price points for one model family and too many
model families are not only confusing to shoppers – but to your sales
associates as well, and in particular part-time associates.
New wave bike shops understand the merchandising philosophy
of Good, Better, Best and taking a good
hard look at your product offerings and simplifying the selection to sell more,
but of fewer Stock-keeping-units and increasing inventory turns as well!
New-Wave Independent
Specialty Bike Shops…that “get-it” joined, or helped create the new-wave
bike shop – because it’s all about customer service and understanding the
consumer now controls the path-to-purchase!
The example on the previous page is Zane’s Cycles in Branford , Connecticut
We recommend this book – because it is all about Chris
Zane’s core philosophy which is building customers for life! The picture at the bottom of the previous
page is the coffee bar in Zane’s Cycles.
Zane’s is just one example of Independent Specialty Bike
Shops that have embraced the New-Wave - and you will find others by reading the
extensive Bike Shop Tour features published periodically in Bicycle Retailer
And Industry News.
New-Wave Bike Shops…
This is the fourth location of Roll Cycling and it is
located in the Lincoln Park Neighborhood of Chicago…the other three are located
in Columbus, Ohio.
Roll Cycling represents a new wave bike shop that
understands the retail power of being consumer-centric and Zane’s philosophy of
building customers for life.
Roll has a uniform brand image and an appealing exterior
that isn’t that much different from a very good Independent bicycle dealer –
but when you walk inside there is no similarity to the mainstream IBD, or LBS[2] and
you walk into a retail environment that does all four things a new wave bike
shops does – and does them extremely well.
This new wave bike shop is covered in a print issue of BRAIN.
New-Wave Cargo &
Family Bike Shops…
Clever Bicycles in Portland OR is pictured below and is a New-Wave Cargo & Family
bike shop that has focused on what has emerged as the Family & Women’s
Bicycling Movement in the U.S.
Clever Bicycles stocks and sells a range of bicycle model
types, including Cargo and “bucket” bikes, and accessories including a variety
of child carriers, baskets, bags…that are not typically available from bike
shops – and which facilitate the Family & Women’s Bicycling Movement.
As we said, we see this group if new wave bike shops as
potentially the bike shop of the future and this business model has already
changed the financial model for a growing number of bike shop so that current
metrics will now longer be appropriate or viable.
New-Wave Bike Shops –
the Outliers….
This is a picture from BRAIN taken at Heritage General
Store, an Omni-channel new wave bike shop outlier that several years ago in the
Lincoln Park neighborhood of Chicago.
Many New Wave Outlier Bike Shops are independent specialty
retailers that combine the attributes of a bike shop with coffee shops, cafés,
juice and beer bars to attract
consumers that wouldn’t ordinarily enter a bike shop…and they are “sticky” and
become the “third-place” for many customers, who become clients for life!
This is picture of
the interior of Heritage General Store – hardly your typical American bike
Shop.
Look carefully at the sign at the top of this page – and note
the inscription that says: “Locally
Handcrafted Bicycles.”
This is another feature of the new wave bike shop outliers
that is cropping up around the country – not in great numbers yet, but does
represent a complete departure in customer service from the traditional and
current mainstream bike shop retail channel.
In the case of Heritage “locally handcrafted bicycles” are
not hand-made high end road bikes – they are middle range $1,800 to $3,000
urban and metro bicycles, as pictured above, that are aimed at the neighborhood
utility and commuter market and family bicycling – which sets Heritage apart
from all of its competition – essentially making the competition irrelevant!
New Wave Bike Shops…have embraced the Holy Grail of
Retailing – Making Competition Irrelevant and in so doing creating uncontested
market space!
You can learn more about the Holy Grail of Retailing by reading
the Blue Ocean
New Wave Bike Shops understand that Making Competition
Irrelevant and Creating Uncontested market space is about developing a
specialty bike shop retail concept that is so different and compelling that it
completely differentiates!
Being New-Wave includes being Omni-Channel…
There are some good bike shops that object to becoming
multichannel or Omni-Channel[3]
specialty retailers, and including an effective commerce enabled website in
their marketing and sales mix.
With the American Consumer in control of the Path to
Purchase…becoming and being multichannel isn’t about you or any bike shop owner!
It’s all about consumers and your customers – who want and
are demanding access to your store 24-7, or they will move on to other
specialty retailers, like REI who will give them access to shop anytime and
from anywhere they want to!
Being multichannel doesn’t mean you have to sell the world
from your website, and it can include both home delivery and picking all
purchased items up at your brick-n-mortar store.
It also means giving shoppers and your customers the 24-7
access to the relationship with your bike shop brand that they want…when they
want it!
There is another interior picture of Heritage General Store
on the previous page and making customers comfortable and making this retail
store environment sticky is part of the experience!
New-Wave and Outlier Bike Shops are truly Independent…
New Wave Outlier Bike Shops are evolving as independent
specialty retailers that combine the attributes of a bike shop with coffee
shops, cafés, juice and beer bars and even mobile service and makerspace.
Their business models are intended to attract consumers that wouldn’t ordinarily enter a traditional third
era bike shop!
And they are Omni-Channel
retailers giving shoppers and customers 24-7 access to their products and
services.
They also understand
that their brick-n-mortar store, website and social media are all perceived as
being the same specialty retail brand
in the eyes and minds of their customers!
New-Wave and Outlier Bike Shops are also truly independent
from the old broken bike shop channel distribution system and its economic
model that has and is disadvantaging traditional American bike shops.
This includes freeing New Wave Bike Shops from the
restrictions and constraints of the brand Authorized Dealer Agreements.
The down side for the traditional American bike industry -
is the fact that most independent New-Wave and Outlier Bike Shops don’t need
and are not interested in the traditional bike business or its trade
associations!
Bike Shops For Everyone…
In May 2015 the League of American Bicyclists announced the
availability of “Bike Shops For Everyone”
a 28 page report on how bike shops can better welcome women customers – a
demographic that represents the largest single growth opportunity for America ’s
bike shops! You can get a copy of the
report at www.bikeleague.org.
Here are two recommendations
from this LAB report along the closing comment:
"Shop owners must relinquish old models of bicycle retail that, by
their very nature, perpetuate stereotypes about bike users, and unintentionally
exclude new consumers to the market. The reality is, for bike retail to
continue, the industry as a whole must market bicycles for everyone. And, to do
that, there must be clear plans of action that shop owners can use to expand
their market base.
"Shops must proactively work to make people of all backgrounds feel
that bicycling is for them. That's contingent on creating a shop in which many
different people can feel comfortable.
"The only risk shop owners have at this current
juncture is do nothing at all."
As Bike Shops For Everyone recommends…more traditional bike
shops will have to do something significant about the internal operational
issues and embrace one of the new-wave models, or invent a brand new model…one
better suited to the fragmented, consumer-centric market they already find
themselves competing in.
As we have said, the new fourth era of bike shop retailing does not
mean the end of physical bike shops but rather a repurposing of brick-n-mortar
bike shops.
Given their ability to provide extraordinary hands-on and expertly
guided retail shopping experiences, physical bike shops have the potential to
become powerful Omni-Channel retail contact points, allowing owners to tell
their bike shop brand story, excite consumers about products and funnel their
purchase to the shop’s website or physical store or delivered directly to their
home, since consumers already perceive them as one-in-the-same retail brand!
We estimate that there were between 200 and 250 new wave
bike shops at the end of 2014. However, we believe this group will grow
to around 500 or more by 2018, and will grow exponentially thereafter, and will
become one of the bike shop business models and formats that will define the
bike shop channel of trade going forward from 2020.
What will a bike shop look like in 2025?
Ten
years from now - as some of the major brands integrate forward some bike shops
could be franchise operations or company owned or roll-ups, but no matter the
business model, bike shops will be, for the most part smaller and have kiosks
that allow consumers to order their own unique and personalized bicycle, just
like some can order a name brand automobile that is “customized” today.
This is called mass customization and is already employed in the automobile and
sporting goods businesses. There will be 3D printers and digital fabrication
right in the retail bike shop, just as there is in the leading edge sporting
goods stores today.
There
will also be bike shops selling “locally-made” bicycles from some of the name
brands as well as from local independent new-wave and bike shops. Some of
these smaller retail store fronts will also act as fulfillment hubs for online
purchases and may not have a service department. However, bicycle service
will be abundant and provided by mobile service trucks and through service
“hubs” central to several retail store fronts – and service work will be picked
up and delivered to consumer’s homes or offices.
Some
independent new-wave bike shops will incorporate full service food and others
will provide café’s and beer and coffee bars – all of which are intended to
make them “sticky” and consumers “third-place.” Both terms were coined by
Paco Underhill
Bike
Shops will begin to move back to smaller communities around 2020, if not
before, so by 2025 you will have real growth in the number of bike shops in America .
In the smaller communities a new-wave bike shop might sell new bicycles
via a kiosk or online and also might sell used bicycles. Service will be
a feature as will Makerspace and 3D printers.
Yes,
there will be pro-shops, tri-shops, MTB and BMX shops in markets around the
country and they will have combinations of all the retail features that will
make them relevant in their local communities. The same will be true for
ebikes – there will be ebike shops just as their will be recumbent shops where
they are relevant to their local communities and neighborhoods. There
will also be Urban, Family, Women’s and Transportation bike shops – and
bicycles and ebikes will be sold by some automobile brands as a part of a new
transportation mix for America .
The
American independent bike shop will survive the moves and strategies of the big
bike brands, what ever they are – and the new 4th era of bike shop
retailing will be exciting and dynamic as local independent new-wave bike shops
find their local market space and many of them also employ Blue Ocean
Strategies[4] that
make their competition irrelevant in their communities and neighborhoods.
I
am looking forward to the future!
#############################
[1] Frank Brilando was
promoted to Director of Engineering, Vice President Engineering and Senior Vice
President Engineering during a carrier that spanned almost 50 years.
[2] LBS means Local Bike Shop
and is a term used by the National Bicycle Dealers Association (NBDA).
[3] Omnichannel means a retail brand providing products through a
brick-n-mortar location or locations, a commerce enabled website, and / or
social media, catalogs, flyers and direct response marketing methods.
[4] Blue
Ocean Strategy: How to Create
Uncontested Market Space and Make the Competition Irrelevant by W. Chan Kim and
Renee Mauborgne, Harvard
Business School
