Friday, December 26, 2008

On The Wrong End Of The Stick?

Looking around, its hard not to see that we are witnessing a huge contraction in our economy. Call it what you want- recession, depression, or even a huge sucking sound, it's there and it is for real. There are indications that sales for the holiday season are way off. Folks either don't have the money, or are unwilling to let go of it, even though retailers are "giving away the store" to get them in to spend it.

So, if you recall, the bicycle industry warned us all throughout 2008 that prices were going to go up.....way up! Things like tires were supposed to end up being astronomically expensive due to oil and materials prices. We saw early '09 bicycle releases go up as much as 15% over '08 pricing. Now there is an economic downturn. I think it's time to revisit the situation in terms of bicycles.

In my opinion the market I see isn't going to support these price increases the bicycle industry instigated over the course of the latter part of '08. If the "whatever ya callit" economic situation continues, (I'm favoring depression these days) I just don't see folks buying into where the industry has set the pricing. (Pun intended) At this point, I think the high end will suffer the worst of it.

It seems as though the bicycle industry has found itself on the wrong end of the stick economically. In a time where, if anything, prices should be staying the same, or even going down, we find prices going up. Not a good scenario for keeping sales, or increasing them in this sort of economic climate. Not as far as I can tell it isn't.

I know a lot of folks in the cycling industry are optimistic, saying cycling will be okay through these times. That the depressed oil and gas prices won't affect the consumers motivation to cycle. I'm saying that, while that may be true, increasing pricing on bicycles isn't helping the bicycle industry weather the storm. And the thing is, a lot of these prices are locked in. There isn't much, if anything, that can be done in the short term.

Time will tell, but I think the situation is a bit more serious than the cycling industry pundits are letting on.

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