The death of the local bike shop


My college girlfriend and I loved walking to the local Blockbuster and browsing the shelves. We ghosted along the middle aisles of old videos, our feet shuffling along the thin blue carpet, and occasionally lifting a box only to have the other reject it with an evasive shrug. Now, of course, we’re browsing online, and Blockbuster has been reduced to a Twitter feeda lonely last outpost and a whiff of nostalgia for people like me.

When we want to buy a bike, we always go through a similar ritual: we go to a local store and wander the aisles. But recent shifts in sales and business models are changing the way we buy bikes, and some shop owners worry that if things don’t change, they could become a relic too.

Clouds have been gathering over the independent bike shop for some time. According to the National Bicycle Dealers Association, there has been a 42% drop in bike shops since the industry’s heyday in 2001, when a population infused with Armstrong enthusiasm stormed stores across the United States, requiring carbon fiber and spandex.

While a general increase in store size has kept overall revenue relatively constant, and every city with a healthy bike scene could indicate a thriving store, this trend doesn’t bode well. So any change in the buying habits of consumers looking for a new vehicle can cause the industry to look up stealthily.

And the storm brewing overhead sounds a lot like Canyon Bicycles, which is slated to enter the US market next year.

You may have seen the little Colombian ball, Nairo Quintana, win the Vuelta a España on a Canyon. You might have been salivating over testing the company’s MTB lineup. Over the past decade, the German manufacturer has increased its market share in Europe, growing by around 30% each year and claiming nearly $180 million in revenue for 2015. What worries independent retailers is that Canyon did it entirely through direct selling online. By bypassing the local store, Canyon is able to sell their bikes at a great discount to Joe’s Wheels and Deals prices. For many, the convenience and savings of buying online outweigh the benefits of test drives and a free tune-up.

Until now, bike stores have been somewhat insulated from the impact of online retail, largely because a typical store derives nearly half of its revenue from selling complete bikes, and manufacturers have made a strong commitment to selling through bike shops and keeping their bikes out of reach. digital baskets. But recently, in response to Canyon and pressure to adapt to a changing sales model, Trek and Giant introduced online sales.

The storm brewing above their heads sounds a lot like Canyon Bicycles, which is expected to enter the US market next year.

This is big news that has seriously worried stores that rely on these brands. To ease their concerns, both manufacturers have doubled down on their relationships with stores that carry their product. “I appreciate the bond these manufacturers are in,” says Erik Tonkin, owner of Sellwood Cycle Repair in Portland. “They try to do the right thing, but they have to recognize market forces. But they also don’t want to piss off their physical network, so they try to thread the needle.

Say you want a new Giant or Trek, but the store closest to you is across town and you really don’t want to wear pants. So you jump in line. You know your size and purchasing is as easy as choosing the model you want. Click, pay, done. Almost. You still have to put some pants on eventually, because rather than show up at your doorstep, the manufacturer shipped your new 15-pound rocket to your local dealer. The shop builds the bike, shakes your hand, and gives you this free tune-up. You get the convenience and the store gets almost the same revenue as if the bike had been in stock. For the consumer, this means that there are no discounts for bikes purchased online: instead, they benefit from convenience and a greater choice of models.

All of this speaks to the potential for positive symbiosis. If online sales increase, stores need to carry less inventory, reducing their overhead and their debt to manufacturers. Consumers continue to benefit from the shopping experience that Giant and Trek hope will keep riders loyal to their product. Stores are leaning more towards the service rather than sales model that builds a relationship with their community, and passers-by still catch a glimpse of their dream bikes through store windows. “I don’t think that’s a bad thing,” says Tonkin. “That’s the reality. Whichever company does it better, it just might pull in more bricks-and-mortar sales.

But there are some problems.

First problem: the online-to-shop model must respect the MSRP and the necessary margins for a shop to keep its doors open. If models like Canyon catch on, Trek and Giant can’t hope to match prices without cutting your local store. Of course, consumers may decide that they value store and brand loyalty more than price, but that’s pretty soft ground to build a home on. Just ask the defunct Borders Bookstore.

Second problem: because they have long avoided Internet sales, these companies have potentially already drilled into the hulls of their brick-and-mortar ships. Until recently, large manufacturers had responded to the Internet with a sort of retail land grab, maneuvering to dominate entire stores rather than share space with competitors. Instead of basing wholesale prices on the number of bikes ordered, brands have started basing them on the percentage of a store’s inventory that particular brand represents. If, for example, 60% of your stock is one brand, you get one price. If it’s 80%, you get a much bigger discount. The required percentage has increased every year. These days, the best deals only materialize when stores dedicate 95% of their inventory to a single brand. With margins as slim as they are, the incentive to essentially become a showroom for one brand is significant. This system, combined with stores buying on credit, nearly buried independent retailers in 2015.

“Most of the manufacturers canceled their commitments because last year was so bad,” says another store owner in Portland, Oregon, who asked not to be named. “The industry is unhealthy and not everyone we deal with has warned us this year. Stores that are still loaded up front won’t be around for long.”

This means that your mid-tier manufacturers, like Santa Cruz and Yeti, which were driven from the storefront by the big three, have a huge incentive to jump on the direct-to-consumer model. They haven’t done it yet, but if Canyon is successful in the US, brands like Yeti and Santa Cruz will likely follow soon. As more manufacturers bypass stores altogether and sell at competitive prices online, consumers’ sense of “what a bike costs” will diminish and stores will struggle to compete.

“Sell your shop now or go all bricks-and-mortar demise,” says Mike Romanco, CEO of Mike’s E-Bikes, in response to Trek’s online sales program. “You better work from home and just have a delivery van.”

Which, funny enough, is exactly what happens. From increased online sales and sidelined brands, the mobile mechanic has emerged, riding the wave of change in a tool-filled Sprinter.

Beeline Bikes and Velofix are at the forefront of this model, providing a certified mechanic and a full-service shop in a van, which comes right to your door, so dad can keep pulling raisins from his nose. child instead of schlepping a Schwinn dish at the store. With minimal overhead and a franchise model, both companies are growing rapidly. So quickly, in fact, that Beeline Bikes has now partnered with Accell, owner of Raleigh and Redline, to build and deliver their bikes – purchased online – right to your doorstep. Imagine what will happen if they install an espresso machine.

Will we, in a few years, remember the smell of new tires and the sound of an air compressor belching from the repair section? Are we going to chat with the mobile mechanic about how we used to disassemble the most expensive bike in the store and feel, even for a fleeting moment, what it would be like to own such a steed?

Here’s the bottom line: to retain local retailers, we’re going to have to forget about price and focus on experience. The question is: will we do it?

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