Golden Era or Flash In the Pan?

After witnessing such heady exuberance within the bike industry during last summer’s “bike boom”, it’s no surprise that few could foresee the current industry downturn, probably brought on by lower gas prices and the deepening recession. Those who were prudent should weather the winter, but it’s going to be a tough road for those dealers who were carried away by the promise of a new golden era of cycling and over-bought for the coming season.

From the New York Times:

After a summer of their dreams, bicycle store owners are facing a grim reality this winter.

Big increases in business this year led some shop owners to think that they were largely insulated from a slowing economy. But the economy has continued to spiral downward, taking bicycle sales and much else with it.

The question now is whether all the bicyclists who appeared last summer will be back next summer.

“This is not like the rest of the recessions we’ve been through,” said Jay Graves, who owns six Bike Gallery stores in Portland, Ore., the first of which his father started in 1974.

Business skyrocketed last summer along with gasoline prices, Mr. Graves said, especially sales of hybrid bikes that can be used for recreation and transportation. So Mr. Graves ordered plenty of cold weather gear for what he believed would be legions of new bike commuters.
“We wished we hadn’t gone in quite as heavy,” Mr. Graves said. “Business is not growing at the rate it was earlier in the year.”

With no end in sight to the economic crisis, the best the industry can hope for is another spike in gas prices like we saw last year. We all know higher gas prices are coming back; the question is whether they come in time to save the small retailers who overcommitted for ’09.

Read the full story in the NYT

16 Responses to “Golden Era or Flash In the Pan?”

  • Kevin Saunders - KGS Bikes says:

    I noticed a huge drop off of $10,000 bikes but demand for $20,000-30,000 bikes is still strong. There are still a huge number of successful people that can be introduced to the sport. The cream will rise to the top. It always does.

  • Thom says:

    A couple of points in relation to the issues raised here. First, I believe there should be a clear distinction made between the operation of the bicycle industry (even small local shops) and people’s use of bicycles. So maybe people aren’t buying the over-priced winter bicycling gear or the over-priced accessories, or the over-priced component upgrades, but that doesn’t mean they’re not riding.

    Second, one change that more people on bikes is going to bring to the industry is a customer base less obsessed with accessorizing and fetishizing the bikes themselves. I think the bicycle industry, like a lot of other American industries, is going to have to re-tool a bit both in terms of what is offered and what it costs. Any shop owner or industry analyst who thought they were immune from trends in the larger economy was clearly not paying attention to the very impulse that drove (no pun intended) people to take to the bicycle in the first place: thrift.

  • Thom says:

    Sorry, just noticed Kevin’s post as I posted mine and wanted to say one more thing. As the article points out, it’s not the “sport” that people were drawn to over the summer, it was transportation, and a few rich enthusiasts aren’t going to prop up the whole industry. And rather than looking at $10,000(!) bikes as the low range, maybe we should try looking at shops that sell reconditioned used bikes and actually affordable commuters, city bikes, etc. I’m guessing they’re still doing okay. Also, let’s look at tool sales; are more people doing their own work on their bikes? Even just changing a tire? I’d bet they are.

  • Thom says:

    No really, last one: lines like “a few successful people”; “cream will rise to the top” seem symptomatic of the very snobbishness that kept ordinary folks away from bike shops for years. I had hoped the “boom” over the summer had started to change this attitude. Indeed, it’s going to have to change if the industry is going to survive. Sorry if I’m misreading Kevin’s comment, it just sounds a touch classist to me.

  • Alan says:

    It’s a little hard for me to relate to a $10,000 bike, much less a $20,000-$30,000 bike – I guess I’m a lowly 2% milk fat, no cream kinda’ guy.. ;-)

    Seriously, I’m interested in bikes that are used to replace car trips. My guess is that bikes in the $10,000+ range are being carried to their riding destinations on top of automobiles and kept within sight of their owners at all times – not very practical for everyday transportational cycling.

  • Kevin Saunders - KGS Bikes says:

    Hi Guys,

    Thanks for the thoughtful comment. I see your position and would like to add another. I disagree with adding “classist” to bespoke and espensive. I know that not everyone wants a bike like I offer but I would ask you to consider a couple of points:

    1) I like bikes. Nice bikes especially, but not exclusively.
    2) With my talents and lack thereof, I realized that I am only good at high end and cannot compete with the masters of high volume retail who already occupy those niches.
    3) I have a full time job working with people who like bikes on this level and I take great pride in being able to perform well enough in fitting and execution to have people return agan and again.
    4) I won’t sell a bike that I wouldn’t ride personally. Knowing statement 1) above, that can make things a little more focused.

    I wouldn’t be caught dead saying someone has a crappy bike, because they have – a bike! I hope this message is taken with the spirit that it is intended. There is room for everyone and just because not everyone is my customer doesn’t mean that I am down on cycling. It’s my bread and butter!

    Thanks for letting me respond.

    Kevin

  • Kevin Saunders - KGS Bikes says:

    Alan,

    I wanted to respond to your post. You would be amazed at how many nice bikes are ridden to rides and ridden to work. If people like their bikes then they will ride them. I am just glad that people have choices.

    Kevin

  • Alan says:

    Thanks Kevin; I appreciate that you took the time to clarify your position. Best of luck in your business and have a prosperous ’09!

    Alan

  • ubrayj02 says:

    This analysis in the Times reflects a bike industry perspective, but does not take into account the social movement that has grown around cycling as both a practical and a symbolic counterpoint to the consumer culture of 20th century America.

    As a social movement, bicycling is a part of what is coming next in America. “Growth” will not be praised so much as the actual, real, value of labor and commodities produced here, domestically. Large collections of digital and paper money will slosh about with less vigor.

    This is not necessarily a better, Utopian, world we’re collectively headed for, but it does carry with it benefits. Bicycles will have a place as durable goods, not as mere consumables. As such, bicycle sales & service and the manufacture of bicycles and bike components will be a vital part of the business of innumerable small towns and cities in the U.S.

    Politically, the interests of cyclists align quite nicely with those of local merchants looking to corner local markets and cut out competition by preventing travel over great distances to have “discounts”. So, bicycles stand for an end to entitlement programs that build and support suburban development.

  • beth h says:

    Entitlements of any stripe die hard in this entitled capitalist culture.

    Those of us who eschew car ownership, ride bikes for primary transportation and dare to dream of a future with few or no personal-use cars and daily lives lived on a much more local scale are in a tiny minority indeed.

    It is a challenge to go to work every day and keep my emotions — and my personal values — in check for a public who doesn’t get it yet. But this is what I have to do in order not to scare off people who are looking for an affordable bike to keep in their time-share or on the rack of their RV. (Because there are still plenty more of those folks than there are of me.)

    That still tinier minority who really get it now will become a source of knowledge to people who will need to get it in a big hurry later on. It’s about being patient, and even charitable, with folks whose minds are simply on other things for the time being.

    There are a LOT more of us thinking these thoughts and currently working in the bike industry than the average bike customer could imagine. I met several dozen like-minded folks at Interbike in September, and even if it didn’t change the future it certainly made me feel a little less isolated. On some level we are all hanging on for a paradigm shift, whether we are willing to admit it or not, and bicycle transportation simply HAS to be part of that future. That’s what keeps me in this business, and I expect it will until I’m done working for a living.

  • David Hembrow says:

    There is a big difference between people cycling because they have to – high fuel prices etc. – and because they want to – convenient, pleasant etc.

    It’s not enough to rely on cycling being forced on people, as they’ll still give it up as soon as they can. It has to be made very very convenient and very very pleasant. That is when cycling becomes a choice, not a chore, for most people. Not just for us bike-nuts.

    So long as cycling remains akin to an extreme sport in most people’s eyes, participation rates will remain at the same level as an extreme sport.

  • Kevin Saunders - KGS Bikes says:

    Great point, David. This is why I support making cycling more fun as one has to enjoy it to do it. I am a big supporter of claim your lane, riding with competence and confidence as well as the 100.00 utility bike in another country as much as my $30,000 flagship.

    Cycling is cool at all levels and I really remember my bike racing days when I was the elitist bastard that people write about now. I poo-poo’d poseurs and did all the stuf that we have to learn not to do based on experience. Who would have thought that my passion would shift from racing to working exclusively with people over 40 who have had success in life but are wanting to re-discover cycling as a lifestyle?

    I am all for broadening our scope of cycling and accepting that it “takes all kinds to sing in the choir”.

    Thanks for posting such a thought provoking article.

  • Erik Sandblom says:

    ubrayj02, there’s a lot in the NYT article to support your position. The summer bike boom was driven by repairs more than sales of new bicycles. And the number of bicycles sold may surpass sales of motor vehicle this year, the first time since 1974.

    That points to a social movement toward transportational bicycling like you say, and that in turn is great for the bicycle industry in the long term.

    David Hembrow, the rate of cycling in the USA is tiny, less than one per cent. That tells me it’s an attitude thing as much as an infrastructure issue. Cycling was on the national news over the summer, so that must have helped change attitudes.

    I agree that cycling facilities are important, I just think that right now the attitude change is even more important in most parts of the USA. Half of all people in the USA live within five miles of their jobs. That’s about a 20-30 minute ride.

  • Alan says:

    @Erik

    I agree Erik, attitude definitely plays a role in limiting the bicycle share in the U.S. For example, I live within .5 mile of a large grocery store, and I’m sure most of our hundreds of neighbors shop there, yet I rarely see anyone cycling or walking to the store (other than children or our close friends who also happen to be environmentally conscious). The route from the neighborhood to the store can easily be made on quiet back streets and paths, so infrastructure isn’t the limiting factor. I think most people in the U.S. simply don’t think of walking or bike riding as “transportation”.

  • Randy says:

    My hope is that using my bike to run errands serves as reminder to those seeing me that it is a viable option. My trailer instructions told me not to haul more than 45 pounds, but that still allows for me to do most of my grocery runs. I get lots of “I should . . .” or “I would if . .. ” comments from others, but have only encountered 3 others (in the past year) using bikes for grocery errands. While I’d like to see more, I also like having uncrowded bike paths. On the commuter front, however, I’ve seen considerable growth. Even on the below-freezing days, I’m encountering 10-20 bicycles on my commute (and I should add that my 20-mile morning commute usually occurs 0430 to 0545). In past years, I rarely encountered any, and only 2 or 3 at most, under the less-than-ideal conditions.

  • Josh Lipton says:

    There seems to be a tendency, in the various discussions of the challenges facing utility cycling, to argue that a particular issue is the primary issue, whose resolution would uncork a hurricane force that would shuttle bicycling directly into the mainstream. These issues are, in my general approximation, all of equal importance to the development of utility cycling.

    These primary issues could be boiled down as such:
    The Development of our Cycling Infrastructure (as discussed in David, Erik & Alan’s comments)
    The Bicycle Industry’s Focus (as discussed in Kevin, Thom & Alan’s comments)
    The Public Perception of Cycling (as discussed in ubray, Beth, David & Randy’s comments)
    (and to somewhat less of a degree) The Media’s Portrayal of Cycling

    The roller coaster ride that was 2008, at its height gave our utility cycling movement a great sense of optimism as cyclists took to the streets, bike shops thrived and the media took notice. The natural slowdown of the Fall, slowed further by our new found thriftiness and the drop in gas prices, has since dampered this sense of momentum and we are entering 2009 with a mixed bag.

    Despite the current and possible continued slow down for the bicycle industry, there are plenty of reasons for optimism for the utility cycling movement. The momentum of last summer will continue to spill into 2009. Last year many people took those tenuous first steps, getting back on a bicycle. It will be much easier to dust off the bike again this spring (for those who aren’t already riding through the winter). Beyond just those new to cycling, the momentum of last summer has undoubtedly built up throughout our cycling communities. With the spring thaw, this momentum will spring back from our bike advocacy groups, online bike communities, bike shops, etc. etc.

    While the motivation of high gas prices has diminished, the motivation of finding ways to save money has grown tenfold. Cyclists who took to the streets last year to save on gas will be joined by many more who are looking for every opportunity to reduce daily living expenses.

    The fortunes of the bicycle industry are swaying back and forth with the violent tidal flows of the economy. In the current state of affairs, many cyclists are looking for low-priced solutions to their cycling equipment needs. In the immediate future, this will probably not help to grow the revenue of the bicycle industry.

    Beyond the more basic persuasion of the bicycling industry’s current revenue, the utility cycling movement is poised to continue welcoming an influx of new cyclists. To seize the moment, we must develop a flexible, all-inclusive approach to the previously mentioned challenges of infrastructure development, industry focus and public perception. We must develop a keen awareness of the joint-reliance and interconnection of these issues. Where possible we should facilitate communal efforts that join the momentum of projects working towards solutions to these various challenges.

    2008’s roller coaster ride has demonstrated that opportunities can quickly rise and fall. The utility cycling movement can and will thrive in the year ahead if we can appreciate the full spectrum of issues, while applying solutions tailored to fit the opportunities that are arising.

    I’ve submitted this post at Spoke And Word. Follow this link to vote it up if you enjoyed it as well: http://www.spokeandword.com/story.php?title=a-utility-cycling-renaissance

 
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