Salsa Cycles Fargo Page

Saturday, February 04, 2023

Hard Times Straight Ahead: Part 2

From an email sent to me recently.
Last week on Saturday I posted concerning the upcoming tsunami of sales, possible foreclosures, and fallout due to the after-effects of COVID induced demand/supply chain issues. 

Since then I have seen several more reports on the situation from media and You Tube accounts which are cycling-centric. I've started seeing ads, (today's image being but one), touting deep discounts and lots of stock on hand. 

It's true that some categories are still in short supply, but if what I am reading and seeing is any indication, the entire supply chain and warehouse situation will be full to overflowing by the end of Summer. In other words, deep discounting looks to be the name of the game for all of 2023. 

Here are my short thoughts on what that means going forward:

  • Good For You! If you've got the money there will be good deals. Yes- maybe the discounts will only bring your price back to 2020 pricing, or near to it, but the bottom line is that you will not be seeing price increases for the short term. AND- If you wait longer into the year, my bet is that the sales will become even more attractive as brands get more desperate for cash. Sadly, going out of business sales will become more commonplace as well, only adding to the bargains available. 
  • Bad For You! And there is a big problem looming on the horizon. That being that when this is all over, there will be less bicycle shops, less brands, less choice, and eventually, higher pricing as a result. The industry is pumping the brakes HARD on new production to help clear out the glut of inventory being seen now. So, feed while the feeding is good, because this won't last. Plus, you'll have a brand new landscape to deal with once this is all said and done, and for many, that will mean less service, less availability, and less community driven cycling opportunities because there will be fewer shops. I do expect more single-brand, corporate, consolidated shops in bigger cities to emerge as a result of this.
  • The Used Bike Market Will Blow Up: I expect that the bikes bought during the pandemic will become available on the used market when the deep discounts hit and buyers look to upgrade or jump on new technologies. I already am seeing a huge bump up in mid-tier MTB, Gravel, and Road bike offerings on Facebook Marketplace. (What's the deal with all the Surly Ghost Grapplers for sale?) I expect that to continue onward and upward in numbers as the year wears on. This will drive down used bike prices, so good deals may become available here later in the year. 
  • Shimano - The "X" Factor: Shimano is heavily rumored to be bringing out a sweeping change in group sets in about a month. What they do may disrupt the high-end market and if that happens, I look for this to have a ripple effect on retail bike sales, the used market, and bike shops in particular. Why? Because if, let's say, Shimano significantly changes a standard, like road bike wheel spacing, it will automatically make every new unsold road bike, and every used road bike for sale, worth less money. I'm not saying this is what Shimano is doing, I'm merely speculating to illustrate a point. But Shimano holds the trump card here, and depending on what they throw down on the card table in March, we could see a big wave in terms of the industry's and the retail market's reaction. 
  • Turmoil In The Electrified Bike World: There is growing concern that the Federal government is going to have to step in and regulate the electrified bicycle market. Too many unregulated and non-class-compliant models are causing issues in terms of safety. Whether this is in the form of battery standards or over-all standards set to regulate the entire electric systems of these vehicles is yet to be determined. But make no mistake, something is going to happen. In my opinion, the Fed sees electrified bicycles as not so much of an equivalent/alternative to automobiles but as a recreational vehicle. Therefore, in my opinion, the "fix" will be applied with a hammer and much as we saw with mopeds in the 1980's, there will be regulations put in place which will push electrified bikes off the public roadways. How this affects the traditional LBS electrified bike market is yet to be determined, but since most of that is off-road, MTB related, I don't see a lot of issues here besides making the prices higher yet. 

Just as an aside, I had to source some repair parts for my job at the Cedar Valley Bicycle Collective recently. My observation was that stock levels have ballooned significantly since late last Fall. For a while there in 2022 I couldn't find any inner tubes, for instance, and when they did come in stock, the prices were far higher than I remembered. Now? There are literally thousands of tubes in stock in any given size and the prices have relaxed a bit. This follows with many items once deemed scarce to non-existent over the past three years. 

So, by every metric I can gather, this year will be one to remember for far different reasons than the past two to three years were in the cycling business. I expect some more, major, even shocking cycling related news stories to drop throughout this year. Stay tuned! It's going to be a bumpy ride!

4 comments:

  1. No matter how this goes, someone needs to put the Craigslist and eBay yahoos in their place. The highly inflated pricing on new, used, or "OE" components is ridiculous. I find it concerning when the ads are listed as if the item is sold by an individual "oh the bike is not my fit" on multiple bikes in series. Obviously, a business getting over with fake price increases and zero warranty liability.

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  2. Over in my corner of the industry its been really slow so far this year. I'm in the shipping department and there has been a lot of sitting around the last couple of weeks. Concerning.

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  3. @ teamdarb - Most certainly there are charlatans trying to profit excessively on those channels or that are on there masquerading as private individuals when in reality they are retailers. But I think no matter what happens, you'll always have some of that. Hucksters and snake oil sales people will never be totally eradicated. Caveat emptor!

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  4. @Daniel - Ooof! Let's hope that things pick up for you soon!

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