Monday, March 27, 2017

Industry Blues Makes For Odd Times

If you believe the hype, this is what will "save" the bicycle industry.
I have been reading a lot of news of late concerning how far off the business of bicycles is and has been over the past year plus. It isn't just a little off either. It is waaaay off. Like double digits of percentages off.

Anyway you look at it, the statistics are showing less money at retail, less money at wholesale, and manufacturing is actually taking the biggest hit. Imports are way down, unless you are talking the kids sidewalk bike category, and the meager numbers of "e-bikes", (In comparison to the rest of the categories, e-bikes are one of the smallest overall.)

Yep, these are the bad old days. It doesn't look like they are going to get better anytime soon either. Oh, and by the way, this isn't relegated to just the bicycle industry either. Many segments of retail are down over the past year as well. But I'll just keep the focus on bicycles for this post. I just wanted to point out that you may be hearing "loud sucking sounds" elsewhere in the economy.

So, I am thinking that while we know businesses are down, I have noticed something else on the rise over the past year or so as well. That being how many oddball, strange ideas are surfacing claiming to be the greatest thing since sliced bread. It started out with a few categories and products, but of late, it seems that things are getting really weird.

You could argue that a fat bike based cargo bike is another big reach for the industry, but this is Surly after all!
The industry is in what appears to be desperation mode. The proliferation of gravel everything is one such indication. There is no denying that gravel events are one of the only growth segments in cycling today. More people are doing more events on gravel every year. The industry is trying to cash in. Gravel specific clothing, (yes- it is a thing), suspension forks, dual suspension gravel bikes, gravel wheels, tires, and on and on are being shoved digitally down our eyeballs at an ever increasing rate in response to the rise of gravel riding. But that isn't the only thing, not by a long shot.

There are more oddball ideas than you can shake a stick at. Mountain bike specific bell mounts, bent wire saddle suspension that relies on how fore and aft the saddle is set to accommodate rider weight, electric bikes that look more and more like motorcycles than bicycles, and there are more.

So, if it seems that the bicycle industry has lost its mind again with some new idea, standard, or bizarre product intro, just remember, they need to find a cash flow solution and fast. Otherwise we may see a lot less of even good ideas in the future. This downward trend cannot be sustained much longer without a lot of collateral damage.


9 comments:

Ari said...

Less interest in cycling?
More available bicycles?
I wonder what is triggering all this
Ari

GSoroos said...

I think we're on the verge of a huge bike industry shakeout. I predict that 10% or more of brick and mortar shops will close in the next couple years. (we may see an uptick in shops opening "to fill the void", but they will fail within 5 years themselves) We're going to see bigger mergers and acquisitions in wholesale and manufacturing. I think this is going to happen no matter what is done in the short term by the industry. There just isn't enough "market" to support the amount of players in the game.

Mobile repair and other "non-traditional" models will rise. The good ones will stay around. They just need to adapt to their particular market.

In the long run, the industry as a whole NEEDS to invest in getting the younger generation to ride. To ride for transportation. For fun. For fitness. And for competition. Of course infrastructure is big. But also getting into schools at a young age to educate kids on how to ride. The industry can set up a bike share program from elementary schools to allow students the option to ride a bike home and use it as transportation. Teach the kids how to maintain the bikes themselves. Give them after-school classes on riding. When they are older help foster and nurture ones that want to compete into the NICA program (with grants and loaner equipment - money is a huge barrier, even for middle class families). If kids are used to thinking of getting on a bike to get somewhere when they are young, that will stick with them.

Obviously, there are a lot of other things involved and can be discussed. But the industry isn't going to be on the upturn anytime soon.

STF_ill said...

I agree that some of the more gimmicky eBikes such as the cruiser you show are not going to save the industry, but like the car industry, it's usually the "loud" vehicles that garner attention, leading the way to purchasing of more sensible vehicles. Nissan makes the GT-R, but their bread and butter is the Sentra, for example.

From all the eBike industry news I see, volume of eBike sales does not come close to regular bike sales, but the year over year uptick is astonishing. Far beyond any of the other niche bike markets like Gravel, MTB, or whatever. This momentum isn't sustainable obviously, but I feel like such a tidal wave of volume increase might bring eBikes up to a level footing with regular bikes such that it can be maintained and not remain a fad.

Do you see any eBike sales at your shop, GTed?

Rainier Wolfcastle said...

I live in a bubble (Minneapolis) so I can only ramble on from local experience.

Vehicular cycling is on the rise. You don't need the best new things for that.
People are moving back to cities from the suburbs. If you don't need to bike far you can get away with worse stuff on your bike.
Gas is cheap again.
There's a movement for people to spend money on experiences rather than things.
The internets lets people learn how to wrench on their own and shop on their own so LBSs aren't as necessary.
The LBS model of shaming people into paying more money to get the same thing from their shop, even as wages remain painfully stagnant, is pathetic and deserves to die off along with any shop that practices this.

Guitar Ted said...

@STF_ill- We have sold a few Trek e-bikes (pedal assist), but the market demand here is low and the reaction to the prices is most often negative.

Evan Baird said...

It's really not a surprise that the bike industry is diversifying in the face of stagnation at the competitive end of the market. Cargo and transport bikes continue to become more mainstream, which makes sense with the improvement in battery design. The root of the mater is most people aren't interested in bike racing and don't particularly like riding a bike. That's why brands like Public have so much more potential than legacies like Specialized and Trek. They're like Microsoft in the late 90s when the internet first started eating their profit centers. If you're not willing to relocate your assets away from your traditional verticles then you'll be vulerable to cultural shifts that disrupt the market.

Daniel Lemke said...

Some of these weird gimmicks coming out are kinda funny. The TT cargo bike and the aero fat bike are cool in a weird way. They must have been fun projects to work on.
I don't understand e-bikes though. Just get a moped. What is that motorcycle you put in your blog post. It looks like an old Indian or something.

Smithhammer said...

Two segments that actually ARE growing - gravel/all-road bikes and hardtail/short travel plus bikes - indicate what the bike industry should be sitting up and paying attention to, imo. Both of these niches suggest that a lot of people want to get back to a truly versatile, fairly simple bike that can take them to lots of different places on a variety of surfaces. A bike that is fun for day rides, and that is also fully competent to load it up for a few days and explore and camp. I think this is an encouraging trend.

I would also agree with Evan's sentiment above regarding racing. While there is no doubt trickle-down development that results from high end racing and that some of it benefits general bike design, racing has for far too long dominated what most people think they should be aspiring to in a bike, in components, in apparel, etc. And the industry, not surprisingly, has been perfectly happy to cater to this short-sighted notion, happy to sell endless accessory upgrades and quivers. But it really is silly, and doesn't serve 98% of people riding bikes well at all. Sure, some of those riders will continue to re-invest until they finally arrive at something that really works for them. But many others will not enjoy the uncomfortable experience of trying to adapt to a race bike, and will eventually find a new hobby.

I think the recipe for re-invigorating cycling again isn't that complicated, and it doesn't involve $6000, 16lb. road torture machines or downhill bikes with 18" of travel that can't be pedaled uphill. It involves putting smart minds to the task of developing truly versatile bikes again, that are reasonably priced. Based on the trends noted above, this is what a growing number of people want to get back to. It doesn't mean sacrificing performance (though it may mean redefining the word with a dose of practicality) - it just means bike companies need to start thinking like normal people again...

Daniel Lemke said...

@ Smithhammer
The cycling industry is weird. Its like like if the automotive industry only made sports cars with stiff suspension and 2 seats and no room for cargo and then wondered why people with families weren't buying their cars anymore. Its because its not what the people want/need.
I have a Niner RLT9 Steel. Its the perfect bike for me. I can load it up and go camping one day and the next go on a long century ride and the next day commute to work. That's perfect. I don't need some 16lb road bike with $2k wheels and an integrated stem/bar that is 7% stiffer and 4% more aero then last years version and has 53-11 gearing. I think some of the industry is finally figuring that out and is trying to figure out ways to sell a different kind of bicycle to various degrees of success. It will be interesting to see what the industry looks like 5 years from now.