Sunday, October 11, 2015
We Have Come to the End of an Era of Bike Shop Retailing!
In 2015 we have come to the end of an era of bike shop retailing in
…and we are about to begin a
New Era – that could be the best yet! 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
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
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In 1962 the Fair Trade Laws that prohibited discounting of consumer products were substantially repealed…and that same year Kmart, Walmart, Kohl’s and Target all opened their first discount stores!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
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. Hazel Park Cycle
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, 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
and in cooperation with the Schwinn Bicycle Company opened the first Total
Concept store in , shown in this picture, in
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 Si
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
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
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!
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
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!
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
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
and given high visibility by Starbucks. 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
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. 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 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
Strategy – a book we highly
recommend to bike shop owners that was recommended to us by a bike shop
owner! 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 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
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
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
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
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 that make their competition irrelevant in their communities and neighborhoods.
I am looking forward to the future!
 Frank Brilando was promoted to Director of Engineering, Vice President Engineering and Senior Vice President Engineering during a carrier that spanned almost 50 years.
 LBS means Local Bike Shop and is a term used by the National Bicycle Dealers Association (NBDA).
 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.
Ocean Strategy: How to Create
Uncontested Market Space and Make the Competition Irrelevant by W. Chan Kim and
Saturday, January 11, 2014
Having studied the
bicycle marketplace for the
last decade, the Gluskin Townley Group has learned to respect trends as
powerful predictors of future business performance…and they also tell a very
important story. U.S.
We have followed this story for the half-century of our own experience in the bicycle business and concluded that it is time for the rest of the U.S. bicycle industry to tune in and really listen to the factual story that has led to the flat U.S. bicycle business that can now only grow if it changes the way it does business to get in step with the changing demographics and opportunities of the New America. Many industry stakeholders hear and feel the winds of change and there is a new level of concern for what is coming and what is already here, but not sufficiently understood.
After much internal conversation we recognize the time is right for us to embark on predicting what we are confident in based on our study of economic data, the American bicycling consumer, technology, and the demographic trends that firmly supports our findings. However, we also recognize that the world is in constant upheaval and presents different challenges and opportunities on an almost daily basis. So, we also present the following predictions with a level of caution that comes from the wonder of never-ending surprise and opportunity.
Weather will play an important and growing role in the American Bicycle Business in 2014 – but needs to stop being a whipping boy and given more than lip service! Weather has been blamed for all that ails the
bicycle business…but in
reality is only one misunderstood and misused factor that needs to be taken
into account in planning and forecasting.
While vitally important, Weather isn’t the only factor affecting the American bicycle market and business, and hasn’t been for over a decade. Yes, Mother Nature has her own time table and sense of humor when it comes to the weather, but global warming and climate change have made weather an important factor impacting the U.S. bicycle business and thanks to the federal government it is a factor that can be planned for with a higher degree of reliability than in the past. It will still cause inconvenience at its best and disaster at its worst. However, for outdoor activities such as bicycling weather is a constant that needs to be understood for what it is and taken into account in both short and long term planning.
The Federal Government has made vast improvements in weather forecasting and the bicycle industry, like the apparel industry, can and must make better use of these tools to forecast and plan for their businesses. Retailers can use these tools to plan their merchandising around local weather forecasts while suppliers and distributors can do so for their regional or national forecasts.
Where to look? You can begin by visiting www.noaa.gov through which you’ll be able to find weather forecasting tools and services that will help you plan for your annual product portfolio, allowing you the flexibility to change your product selection from season to season.
The American Bicycle Business continues to struggle with sales of new bicycle units in 2014. Retail dollars generated by the sales of new bicycles have steadily increased over the last decade, particularly in the bike shop channel, but we caution that 2014 might see the end to this trend as well.
In answer to Gronbach’s first question: “…are there enough of them?” Generation X, 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 ten years ago! Unless the bicycle business changes the way it does business – it is going to attract, on average, fewer shoppers and customers by continuing to do the same things it did ten years ago! The result has been the flat to declining
market for new bicycle units
that the industry has experienced since Generation X took over as the drivers
of the retail market from the Baby Boom generation. U.S.
In response to Gronbach’s second question: “…is their number expanding or shrinking?” there won’t be more Generation X’ers… they have all been born, and this is a demographic fact of the American Bicycle market, that has to be dealt with by the bicycle business changing the way it does business if it expects a different, or better result..
For both the supply side and retail channels this is a matter of reaching out and attracting more shoppers for new bicycles, and increasing conversions and close rates. In short…the bicycle business needs to become more inclusive and less exclusive and invite everyone to shop for a new bicycle so there are more conversions to an actual purchase!
Women become the New Majority in more aspects of the American bicycle market in 2014. Women currently represent 51 percent of the
population and were 53 percent of the voters in the 2012 Presidential election.
They also hold the purse strings and influence or make 80-85 percent of
household purchases. The American Bicyclist Study reports that women make up 55
percent of Generation X bicycling consumers. U.S.
With these four data points as background, it’s important for the industry to recognize and act upon the fact that women are fast gaining share of American bicycle riding participation and they are seeking, creating, and carving out their versions, not the mainstream bicycle businesses version, of their bicycling lifestyle in the communities in which they live.
The American bicycle business made a conscious decision to focus on the sport of bicycling and not the activity and to also leave unchallenged the Endemic Prejudice that has become pervasive throughout the bicycle business. The combination has chased some women away from both bike shops and bicycling altogether.
With women becoming the new majority on their terms, the American bicycle business needs to move quickly to catch up and learn to play a role, or it will be left behind and may be made irrelevant, in whole or part, by the new majority!
Minority-Majorities emerge as drivers of more local and metro-urban bicycle markets in 2014. Over the last two decades bicycling has become an activity of upper income, college educated, white, male Americans. Women are quickly closing the gender gap and having an influence on the bicycling lifestyle, but the “sport” of bicycling is dominated by upper income, mostly white American households. .
However, the American Bicyclist Study reveals that the profile of adult cyclists, living in the top 12 metropolitan cities, is significantly non-white. This New Coalition is most evident in metro markets that are currently or on their way to becoming minority-majority populations.
The American bicycle business needs to get its head around the new American Coalition and the fact that there is no longer one big market, but a multiplicity of neighborhoods and communities with diverse populations driving shop local and buy local movements. Here again, the American bicycle business needs to move quickly to catch up and learn to play a role, or it may find itself left behind and irrelevant.
Children and Juveniles will continue dropping out of bicycling in 2014. During the twelve month period from 2011 to 2012, 3 million Americans 17 years of age and younger dropped out of bicycle riding participation. If the current trend continues there will only be an estimated 6 to 7 million Americans 17 years of age or younger participating in bicycling 6 or more days per year in twenty years.
This is an urgent and negative trend that the American bicycle business needs to understand and determine a corrective, or at least a positive course of action within the near-term to attract younger riders and families to the activity.
Used Bicycles will continue to increase the stress on new bicycle forecasting in 2014. Used bicycles have been rising as a significant factor in the American market since about 2007. By 2008 several research firms reported used bicycles as accounting for 25% to 30% of bicycle ownership. Used bicycles represented 9.1 million, or 36% of bicycle ownership in 2012 and 7.6 million or 26% of bicycle ownership in 2013.
With this market penetration used bicycles have had a definite impact on the new bicycle portion of the American market and are a definite factor in the problems forecasters and planners are having in looking ahead and ordering closer to the right quantities of imported bicycles – which account for over 98% of American market consumption of new bicycles.
We see two distinct bicycle businesses emerging in 2014…one big, traditional and flat with no growth, and the other embryonic and small, but all about growing locally.
Janus, the Roman god of doorways and beginnings, is known to have two faces, looking in opposite directions – we imagine he is looking back at the past and ahead to the future.
Changing demographics and the resulting New American Bicycle Market have generated a wide disparity of responses from the traditional bicycle business…and from the new wave bicycle business that has emerged ”under the radar” and off the books as far as American bicycle business data and statistics are concerned.
What we see emerging in 2014 because of what we are calling the new wave and the differentiation between them are at least two distinct and definable American bicycle markets, each with their own economics and economies.
One is the established, traditional bicycle business that is clearly larger and well established, but is looking back to what was and the way it was. We predict that this larger American bicycle market will continue to struggle in 2014. One of the signs of the struggle will be the consolidation that has already started, and is a function of expanding market share by acquisition, but not actually growing the overall size of the American Bicycle market.
We also see the traditional, mainstream bike shop channel of trade continuing its two decade flat, no growth trajectory in new unit sales, with the possibility of a decline in both units and the retail value of new bicycles during 2014. Making a real profit on the retail sales of new bicycles will slip further from possibility for bike shops, increasing the pressure to make a fair profit and living on the rest of the typical bike shops retail revenue.
We look at the other face of 2014 – the New Wave Bicycle Business and Economy, and see it looking to the future and new and innovative ways of creating individual bicycling lifestyle solutions, and actually growing the size of bicycle market in cities and neighborhoods…in other words, on a local basis.
This emerging new wave business will remain small in 2014, and largely under the radar, but will begin to challenge the traditional, main-stream bike shop channel as cities become the drivers of the new American bicycle business. This isn’t to say that smaller towns and cities won’t grow as bicycle markets – but they will have their own shop-local buy-local flavor and response to providing individual bicycling lifestyle solutions!
For more information contact:
The Gluskin Townley Group
The Gluskin Townley Group
Friday, January 10, 2014
2013 will go down in the record books as an off year for the
bicycle business. The weather has been blamed for the results
this past year…but what if it isn't only the weather? U.S.
An online poll conducted by Bicycle Retailer And Industry News that was published December 5, 2013: “…shows that sales over this past weekend were down this year for most bike and specialty retailers, with 48 percent of participants reporting that holiday sales are so far slower than expected. Just 13 percent reported better-than-expected sales.”
The table below shows nine month YTD sales by
suppliers of new bicycles to bike shops.
This reflects the next step into the bike shop channel of distribution
from Imports to the wholesalers selling bicycles to bike shops. You will notice that new unit sales are down
just over 10 percent and wholesale dollars are down 6 percent – while the
average wholesale value of a new bicycle sold to a U.S. bike shop has increased just
over 5 percent through September YTD 2013. U.S.
September Total Units Total Wholesale Average Unit
YTD Units Value US$ Value US$
2013 1,887,686 $837,299,199 $ 443.56
2012 2,110,799 $887,328,578 $ 420.38
Variance -223,113 -$50,029,379 $ 23.18
Variance % -10.6% -5.6% 5.5%
Source: Leisure Trends Group, BPSA Top Line Data, GTG Analysis
There is no question that brand and suppliers sales of new bicycles to bike shops will be down in 2013 from the previous year, continuing a trend of a flat to down market consumption of new bicycles for the bike shop channel of trade. This no growth scenario has continued for the better part of the last fourteen years – since 2000.
We will also remind you that, according to the National Bicycle Dealers Association (NBDA) and our own analysis - the typical American bike shop has not made a profit on the sale of new bicycles for about two decades!
This leads to a vitally important question about the future….What if bike shops across
going to have to change the way they do business to accommodate changing
consumers with new and different purchasing behavior and buying habits? America
What if bike shops are going to have to start attracting consumers and shoppers that normally wouldn't think of coming in to a bike shop – or face the reality of watching the steady decline of their businesses?
The Sweet Spot is actually demographic and sales and marketing terminology for the “best customers” of a channel of trade. We submit that the Sweet Spot for New bicycles isn't big enough, and individual bike shops have to take action to increase the size of their local Sweet Spots in-order to break out of the “no-growth” and “little or no” profit cycle (please forgive the term) they have been trapped in for almost two decades! The good news…the great news is bike shops can be successful it making this happen!
Adult American Bicyclist Ownership of
New and Used Bicycles
2012 Compared to 2013
Adult Bicycle Owners 25,352,000 28,544,000
% New Bicycles
Total Respondents 90% 80%
% Used Bicycles
Total Respondents 36% 26%
Source: American Bicyclist Study 2012, 2013
The above table shows a comparison of Adult Bicycle Ownership in 2013 compared to the previous year. New bicycle ownership is the second line, after total adult bicycle ownership for 2012 and 2013. In 2012 90% of bicycles reported they owned a new bicycle, and this dropped to 80% in 2013, but because the total number of adults reporting they owned a bicycle, the actual number increased slightly.
We heard a quote from
Adam Micklin, vice
president sales for HP (Hays) that emphasizes the impact that Used Bicycles
have recently had on the American bicycle market and the bike shop channel of
trade: “Used bicycles are the Middle Classes’ New bicycles.”
In 2012 36% of adult bicycle owners reported owning a used bicycle, and this dropped to 26% in 2013 as did the actual number of adult owners of a used bicycle.
Because some adult bicyclists own both a new and a used bicycle the duplication was 26% in 2012, but this dropped to 6% of adults reporting they own both a new and a used bicycle in 2013.
The Middle Class is disappearing…under pressure from the economy, with the end result - for the New and Used American Bicycle Market – that Americans acquired fewer New and Used Bicycles in the past year!
Now, let’s take one step further in to the American bicycle market…going from bicycle ownership to bicycle riding participation. Overall the National Sporting Goods Association (NSGA) reports 170,000 more Americans 7 years of age and older rode a bicycle 6 days or more in 2012 compared to 2011, a total increase of 0.4%...that looks like this!
American Bicycle Riding Participants 7
Years of Age and Older
1995 to 2012
Source: National Sporting Goods Association, Series I Sports Participation Studies
Keep in mind that the above chart represents the U.S. bicycle market...because bicycle riding participation doesn't care if the bicycle is new or used, and it includes 20" wheel and larger bicycles.
U.S. bicycle market – including all channels of
trade - has obviously been flat, with no appreciable growth for the last six to
seven years – as the
population has grown…and changed! U.S.
The small 0.4% increase and flat market…masks some very big changes, which we have covered in detail in other White Papers and Webinars - as the demographic changes in America that became apparent with the 2010 Census and 2012 election have finally caught up with the bicycle market and business – representing another set of factors effecting the bicycle market and the bike shop channel of trade.
As we said, your best customers are known demographically as The Sweet Spot! Today the Sweet Spot for new bicycle sales is between ages 31 and 36, and for used bicycles the Sweet Spot is ages 30 to 35. .
Brands, suppliers and retailers need to look at their available consumer purchase data to find the Sweet Spot for their products!
Remember this quote…”After you determine the product or service you have to sell, you’d better find out who buys what you’re selling. What are the customers? How do you reach them? Above all, are there enough of them? And is their number expanding or shrinking?” from Kenneth W. Gronbach author of The Age Curve: How to Profit from the Coming Demographic Storm.
This is another BIG and important reason you want to take your destiny in your own hands and invite EVERYONE in to your bike shop! 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 ten years ago! Unless you change the way you do business – you are going to attract, on average, fewer shoppers and customers than you did ten years ago!
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 instead of watching it decline and wondering why!
We believe Diversity and Equity represent the keys to the future of bike shops and bicycling in
This is also a picture of the League of American Bicyclists Equity Advisory Group that just had its second gathering in
the first full week of November 2013 and which you can read about in the LAB
newsletter and on the website. 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! Washington DC
The perception too many American consumers have of bike shops is…they are exclusive “Old-Boys” clubs that exclude everyone else! The “Old-Boys” are primarily white, Baby Boomer males but in some bike shops they are multi-generational white males and 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”…so you quickly change the perception of your store brand as an exclusive club – and further enhance your store brand as a friendly, welcoming place that consumers will want to stop in and visit – to learn what’s new and interesting in terms of the bicycling lifestyle in the local community!
Hold open houses and in-store events and use social media and word of mouth to spread the word that your bike shop welcomes everyone in your community to stop in and visit and learn about bicycles and bicycling! Eventually redo your displays and the interior of your store to be less intimidating and more-friendly.
The MarketWatch Bulletin from December 18, 2013 announced the Federal Reserve forecasts faster
economic growth in 2014. U.S.
While good news for the country, we submit that it will make little or know difference to the flat to no growth trend in the U.S. bicycle industry – unless something changes radically – and it is up to individual bike shops to reach out to their communities and become more inclusive and less exclusive and take advantage of demographic and economic opportunities that will foster real growth!
At the risk of being repetitious, women are the new majority in America, and while women already have a substantial impact on the U.S. bicycle market, they are a long way from being recognized for the true economic power and growth potential they represent and being invited by the American bicycle business to really participate in the bicycle movement in this country…and grow the bicycle market!
You can change this in your bike shop and your community by staffing, by making your store a friendly place to shop, by merchandise selection and a product portfolio that meets the bicycling wants and needs of the women in your community…and by changing your bike shops culture to include bicycling as a women’s and family activity and not just a sport!
The bike shop channel of trade made a conscious decision in the early 2000’s to not deal with the Endemic Prejudice that excluded everyone who wasn't a fit athletic bicyclist and the industry moved toward making bicycling a sport and away from bicycling as an activity.
Here is a recent quote from a blog posting on the subject of the flat to declining
bicycle market: U.S.
“Shops bear some of the responsibility. I hear story after story from our clients about the poor treatment they received from not just one but multiple shops that they've had dealings with. The ‘core’ shop mentality, the arrogant side of ‘cycling culture,’ that treats the newbie customer like they don't rate because they aren't ‘real’ riders. Add name brand bike sticker shock to the equation and before you know it your local bike shop has created another Walmart customer.”
This is a situation and factor related to the American bicycle market and business that bike shop owners can correct quickly and at low or no cost!
Today’s bicycle market comprises a myriad of lifestyles, family and household composition, ethnic backgrounds and economic standing, all varying by community – making it difficult to influence who buys what…and in this retail landscape to identify your bike shops “ideal target consumer!”
Changing consumer attitudes have added to the difficulty, and the fallout of the great recession has been a pause and shift in lifestyles that for some has resulted in cutting back and budgeting and for others a change in the way we live.
In 2011 John Gerzema and
published Spend Shift chronicling the historic shifts in consumer
behavior following the 2008 financial crisis.
Their research highlighted a new American consumer who has become
infinitely more mindful and considered in purchasing behavior…and who has
anchored their brand choices – including retail store brand choices - to very
different values than in the past.
The traditional brand attributes of convenience, selection and price have begun to give way to new and deeper qualities like – kindness, empathy and lasting quality. Consumers, the research found, wanted to return to a time when they could actually like the places they shopped and feel good about spending their money there!
Showrooming, mobile technology and the Internet, are here to stay…but before tackling the opportunities of technology, bike shops need to concentrate on mastering the basics, including how to Craft Individual Bicycling Life Style Solutions, utilizing tools like mass customization and bundling to survive!
Bike shop owners seem to be caught up these days in beating the so called Techno-Economic Cycle including supporting MAP and MSRP and in the process are missing the biggest opportunities to stabilize and actually grow their businesses – mastering the basics of retailing and customer service and differentiating the value of their retail businesses to today’s consumer through individual products…and actually making a real profit!
Crafting Individual Bicycling Life Style Solutions and individual products – means being consumer centric, or focused on the consumer instead of being product-centric! Crafting Life Style Solutions is all about really listening to shoppers and suggesting the products that will deliver the bicycling experience they anticipate through their description in responding to questions – not just selling products, but providing a window into an individuals bicycling life style experience!
Mastering the basics – means providing an outstanding individual shopping experience to every shopper that visits your retail enterprise,
The foundation for your bike shop providing Individual Bicycling Lifestyle Solutions is Shoppers actually liking, and feeling comfortable in your bike shop and feeling good about spending their money with you!
In his book The Retail Revival Doug Stephens talks about the good news as “…an absolute bonanza of opportunity” because consumers have created a new era of retailing – where, according to Stephens, “size and scale of operation is no longer a clear advantage, deep pockets no longer a requisite for awareness. And brands no longer a guarantor of loyalty.”
Today the consumer is the one, as Stephens says, “…who if they feel your brand is worthy, has the power to broadcast on your behalf to their network and their possessive networks’ network, and so on.”
The consumer is now the most powerful force in the American consumer market and also the most powerful form of media there is – and is demanding 24-7 access to retailers that will listen to their wants and needs and provide individual lifestyle solutions…not just products, but solutions!
Weather: While vitally important, Weather isn't the only factor effecting the American bicycle market and business, and hasn't been since about 2000, the first year of the new millennium. The Federal Government has made vast improvements in weather forecasting, and the bicycle business, like the clothing industry needs to make much better use of the weather forecasting tools available in planning. This is a topic that is conspicuously absent, along with others we shall identify, from American bicycle business publications, meetings and conferences.
Demographics: There are at minimum four vitally important demographic factors that the American bicycle business needs to study, understand and include as key factors in its near-term and long-term operations and planning:
The 11% Factor: Generation X, the current driving factor in the American bicycle market and the Sweet Spot or best customers the business currently has, and will have for the next decade, isn't big enough to replace Baby Boomer bicycle customers one-for-one in the marketplace. For the next ten years, until Generation Y takes over as the drivers of the American bicycle market, the bicycle industry needs to reach out to larger numbers of Generation X with promotional messages that are invitations to experience the bicycling lifestyle.
Women Are The New Majority: The American bicycle business made a conscious decision to focus on the sport of bicycling and not the activity around 2000 and in 2006-2007 to also left unchallenged the Endemic Prejudice affecting women, so called minorities and non-bicyclists that has become pervasive throughout the bicycle business. Women are fast gaining share of American bicycle riding participation, and they also are seeking, creating and carving out their versions of the bicycling lifestyle in the communities they live in. The American bicycle business needs to move quickly to catch up and learn to play a role, or it will be left behind and may be made irrelevant by the new majority.
Minority-Majorities Are Becoming Drivers: The American bicycle business made a decision that was perhaps less conscious and more sociological, to become an activity of upper income, college educated, white, male Americans. Women are quickly closing the gender gap and having an influence on the bicycling lifestyle, but the “sport” of bicycling is dominated by upper income, mostly white American households. So called minorities are becoming the majorities in urban areas throughout
, and in communities within
the boarders of states that have traditionally been “white” in their ethnic
make-up. The American bicycle business
needs to get its head around the new American Coalition and the fact that there
is no longer one big market, but a multiplicity of neighborhoods and
communities with diverse populations driving shop local and buy local
movements. Here again, the American
bicycle business needs to move quickly to catch up and learn to play a role, or
it may find itself left behind and irrelevant.
Children and Juveniles Are Dropping Out of Bicycling: If the current trend continues there will only be an estimated 6 to 7 million Americans 17 years of age or younger participating in bicycling 6 or more days per year in twenty years. This is an urgent and negative trend that the American bicycle business needs to understand and determine a corrective, or at least a positive course of action within the near-term.
Perception is Too Close to Reality: While we don’t have a number, most in the American bicycle business will not argue with the statement that: the general consuming public perceives the bike shop channel of trade as a closed club that is trying to be as exclusive as it can be. The perception in this case is very close, perhaps too close to reality, and there are American bike shops that would like to be “exclusive” to its customers and simply not have to deal with or serve the “newbie” and people who aren't “real” bike riders. This bike shop culture is home to the endemic prejudice and does its best to drive off women and anyone that doesn't meet the individual shops image of a “real” bicyclist. The 11% factor alone makes this a very poor business practice, and the bicycle business needs to wake up to the reality that by being exclusive it has condemned itself to at least ten more years of struggling to make a fair profit – at least in the high-dollar value bike shop channel of trade. The simple business strategy of becoming inclusive and welcoming everyone to come in and learn about and enjoy the American Bicycling Lifestyle will yield positive results financially and otherwise and build the infrastructure to reach out to women and the rich opportunities presented by America’s multicultural diversity.
The Importance of Used Bicycles: Used bicycles have been rising as a significant factor in the American market since about 2007. By 2008 several research firms reported used bicycles as accounting for 25% to 30% of bicycle ownership. As we have seen in the second table, used bicycles represented 9.1 million, or 36% of bicycle ownership in 2012 and 7.6 million or 26% of bicycle ownership in 2013. With this market penetration used bicycles have had a definite impact on the new bicycle portion of the American market and are a definite factor in the problems forecasters and planners are having in looking ahead and ordering closer to the right quantities of imported bicycles – which account for over 98% of American market consumption of new bicycles.
All of these subjects are important enough to warrant being covered extensively by Bicycle Retailer And Industry News and being agenda topics for the IBD Summit, the Bicycle Leadership Conference and Interbike Seminars.
The Gluskin Townley Group