Sunday, October 11, 2015

We Have Come to the End of an Era of Bike Shop Retailing!

We Have Come to the End of an Era of Bike Shop Retailing!
Jay Townley

In 2015 we have come to the end of an era of bike shop retailing in America…and we are about to begin a New Era – that could be the best yet!     

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In 1962 the Fair Trade Laws that prohibited discounting of consumer products were substantially repealed…and that same year Kmart, Walmart, Kohl’s and Target all opened their first discount stores!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 Hazel Park Cycle Center and I had the privilege of working for Ray from 1966 until 1975 – and he was the visionary that established the modern bike shop channel of retailing and wholesale business models that have served the American industry so well over the last 50 years.

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, shown in this picture, in 1965. 

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 Silent 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 and given high visibility by Starbucks. 

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 and the owner Chris Zane has written a book titled “Reinventing the Wheel” that was covered by Fred Clements in his blog on August 25, 2014 and reprinted on the BRAIN website. 

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 Strategy – a book we highly recommend to bike shop owners that was recommended to us by a bike shop owner! 

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

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 in 1999 in his book Why We Buy and which have been employed by Star Bucks and others in the years since – and will be more fully embraced by the bike shops of the future.   

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 Press.

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