Opinion: What is Happening?
This is the first of three articles in an opinion series submitted by Dan Hensley.
Like it was yesterday, I remember an industry friend who was in manufacturing telling me to order as many tubes and cables and brake pads and consumables as I could before Chinese New Year 2020. Fast forward six months and I am on the phone with a rep buying the last eight bikes in their warehouse. We had over 140% sales in 2020, and 2021 certainly didn’t calm down.
Now, we are flush with products but demand is low.
Employees are moving out of the industry, finding quality help is getting more difficult, and keeping good people is getting even harder. This is what my other friends in the industry are telling me, and with the latest Bicycle Retailer survey I believe this is spot on. Most of what I am saying is common knowledge, but I feel like the majority is not looking broad enough to see the future and how we can be successful going forward long term.
The massive sales growth during the pandemic is playing out exactly as I expected. It is just like gym memberships on New Year’s Day. How many new cyclists did you see walk into your door to buy their first bike since they were a child? How many people were on the fence with buying a new bicycle and found the pandemic to be the perfect time to make this purchase? Have you been watching the used market fluctuate in both volume and prices that launch a belly laugh throughout the shop?
The explosion of new cyclists joining our ranks gave everyone hope for a brighter future.
But just like everything in life, when the pendulum swings heavy it is going to sway to and fro until there is balance. What we need to weather is this oscillation, and it is going to be a bumpy ride friends.
This is the future we are on the precipice of: this summer and into next summer the used market is going to be flush with barely used bikes while the shops, wholesale warehouses, and manufacturer’s warehouses are packed to the gills. That extra 40% of people that purchased bikes back in 2020, how many rode those bicycles for a while only to let them sit idle in basements, garages, and on the side of the house rusting away just like barbells in an empty gym on April 1st.? Really makes me wonder what Black Friday is going to look like this year? Have you educated yourself on deflation and its causes? You might want to. Just saying.
Now, let’s keep the pedal to the metal in this dramatic drive into the great abyss by adding that the dollar is not looking so promising in the decade ahead. Countries around the world are looking at changing the currency they use for international trade from the dollar to the yuan (or other currency), which will have quite the impact when payment is due on 2024 PO’s. Grocery prices are climbing and gas continues to only get more expensive. New house construction is tanking, there is massive fear being sewn about the economy, and people are clutching their savings while beginning to worry about the next recession. Oh no! What are we going to do?
Well, for the twenty or so years prior to the pandemic, opening and operating a bicycle shop was not that hard, let’s be honest with ourselves. So many enthusiasts opened shops because they liked bikes and what bikes had done for them, and they did well.
Now it is getting hard, and it is only getting harder. (Deeper into the abyss we go… and it is getting dark.) More and more shops are up for sale, more are closing or selling to Trek or Pon Holdings, and more and more people are looking for an exit strategy. Don’t believe me, ask your local sales rep.
What this looks like to me is basically what happened in the auto industry when GM, Chrysler, and Ford started buying up all the small manufacturers and closing them while at the same time buying up railroads and shutting them down. This resulted in the public having to rely solely on those three companies for almost all transportation. They were smart then, they are smart now, and they are capitalists. If we don’t make major changes in the IBD/LBS, it is only a matter of time until we see the same thing happen with our beloved cycling industry. If we don’t start working on it now, it won’t be long until the only places to buy a bike are corporate owned stores with marketing departments pushing the latest and greatest change in colorway and the addition of one more gear.
Now that we are in the darkest of realms, pumped full of fear and anxiety and worry, let us look to the sky for a little sunshine and good fortune.
With gasoline prices climbing, grocery and utility costs on the rise, more youth choosing to not own automobiles, obesity and bad health rampant, environmental concerns finally being realized, the drive to reconnect with nature, and the joy of simply riding, we have a really good shot at success here. But the competition is tough, well funded, and really good at marketing. I know there are eyes rolling and shoulders shrugging and those of you laughing at my prose as if I have no clue what I am asking of you and our beloved industry. Terms are due, we’re down to one mechanic and no one is answering our ad, the incessant precipitation will not relent, and Shimano just told us about CUES which antiquated so much back stock.
First off, the future is always uncertain and I am not a fortune teller. However, human nature is predictable and this is where we can make the largest positive impact. There are a massive number of ways we can change in order to keep the big businesses at bay and secure the local bike shop as THE place to feel true passion and excitement; and I also know we need to start focusing on some of them right away.
The two most important ways we can change are:
I have so much to say about these two subjects, and I also have solutions as I am no one to cry wolf without the means to slay the beast. However when I was asked to contribute an article to the NBDA, they asked for a thousand words. Right now I am well over 1100, so we’ll have to end it here. If they even see fit to print this AND see fit to give me another thousand, we’ll dig in and start looking at how we can save the most important part of the bicycle industry, The Local Bike Shop.