Does the credit crunch hurt the local bike shop?

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Monday, December 08, 2008
By Yokota Fritz


Mike in Washington, DC writes:
The current economic crisis is hurting many businesses including local bike shops. These local businesses will not receive government bailouts like the Wall Street Banks and auto companies. If these small business go under, they may not come back. You will miss them in the Spring when they are not there, so support them this winter as you do your holiday shopping.
Read more at his blog. Chris-the-big-bike-company-guy has his thoughts on the credit crunch and the bike biz as well:
Does anyone else think [the bicycle industry] sounds like an industry that could get hit with problems like the car dealerships are facing now? Dealers full of inventory that isn’t moving (because the orders were placed 6 months prior at no cost), and the oversupply hits at a time when that inventory should move, but might not because of an economic belt-tightening (springtime). There is an assumption that bike stores in the spring will sell bikes at similar quantities/prices as to what they sold last spring. I think that is a particularly dangerous assumption.
What do you think? What have you seen at your bike shop?

See also the good discussion on this at Cozy Beehive.


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Comments:
Many bike shop are high-end in the same way whole foods and starbucks are. $6K carbon bikes have a limited market. Face it, 80% of the public, when they need a bike, go to Wal-Mart.

Bottom line, this will not be pretty and we're going to lose lots of shops. Strong, well run shops have a good chance at surviving, but I would guess the fundamentals will pull down lots of them also. If there is not enough business, you just can't pay your rent.

With the amount of shared pain across the economy, I sincerely doubt that a "buy something now to save the LBS" is going to make much of a dent. Hope I'm wrong.
 
"Many bike shop are high-end in the same way whole foods and starbucks are. $6K carbon bikes have a limited market. Face it, 80% of the public, when they need a bike, go to Wal-Mart."

I think this is the reason they won't survive. A lot of the shops I've been in seem to cater almost exclusively to this market. Which makes me, a daily commuter, feel like it's not a place for me. If I, a guy who rides my bike EVERY DAY feels out of place in a bike shop, how do you ever hope to convince would be Wal-Marters to come in?

I think more needs to be done to teach people the difference between a Wal-Mart bike and a real entry level bike.
 
Fritz,

Some additional comments to this topic are here. Thanks.
 
Thanks Ron; I've promoted that link to the article also. I saw the original discussion then forgot about it for this post.

BTW, you're doing a wonderful job with Cozy Beehive! I'm very impressed.

Anon & Tony: I'm seeing some efforts to draw the "regular" person by some bike shops, and in California there are bike shops that have always catered to the commuter. In my town, my LBS caters mostly to the high end and the owner says business is still running smoothly for him, though commuters and cruiser sales are up for him. Another LBS owner I know in an affluent part of Silicon Valley that caters to the very high end road cyclist, though, grumbles that sales are down significantly for him.
 
It was great this year to see so many new folks on bikes thanks to gas prices going wild. I think we've won those folks over in the sense that many of them will continue to drive less even though gas is now as low as we've seen it in almost a decade. On the other hand I doubt as many new riders will be brought into the fold as fewer people will be frustrated by the cost of driving.

The other loser here will be manufacturers of high-end bikes who depend on "regular people" (= me) buying their gear to stay in the game (I'm thinking Cervelo in particular here but I'm no expert in bike-onomics). I fear those kinds of people are less likely to splurge on crazy-high-end bikes, and the companies that benefit from the amateurs who like to look like pros will take a nasty beating in all this.
 
...what a dichotomy...back in the summer we were told that prices for everything across the board, bikes, parts, clothing, whatnot, were going to increase 20% to 25% due to higher fuel costs...

...now, here we are in the middle of the most serious economic crunch in 30 years...people are concerned about both short & long term finances...the industry prices were "set" before this present situation revealed itself & now, shops w/out a real background may be on some very shaky ground...
...& yes, fuel prices have dropped to the lowest we've seen them in years, but is it a case of too little, too late...
...dealers (shops) arranged & bought at higher prices for at least christmas & springtime & i doubt the manufacturers are gonna "bail 'em out" w/ rebates of any substance...

...& while the bicycle biz is resilient, it's fingers crossed for the "little guys", the heart& soul folks that got into the biz because they believe in the bicycle...
 
I keep hearing and reading that so much of the recession is psychological, and that people are cutting back more than they have to. If this is true, then I'm afraid that people will stuff bike shops in the "expensive boutique" category, Wally World and Kmart will continue their clever marketing towards "saving Christmas," and ... welp, we'll help keep the Chinese economy going.
 
What I see in my town, bike shops are seeing a slight increase in demand due to bike to work campaign and local government supported move to revive biking culture.

But that's what I see at glance, what happens in their bookkeeping I don't know.

but I do hope "bike will find a way"
 
Because our shop has always focused on the commuter (since 1986!) and tried to stock bikes in an affordable price range (new bikes now start at 400.00 and used/refurbished bikes start at 275.00 here; plus we sell lots of used frames and parts for the DIY'er), I remain cautiously optimistic that our shop will not only weather the recession/depression, but that we may prove to be a great example to those of our customers whose lifestyles must change more drastically as a result of the economic downturn.

Most of us who work here don't own cars; we live simply and we've created lives for ourselves that don't require a fancy wardrobe or far-flung travel. We've also created lives that don't require hyper-consumerism, so when times DO get tough and the money gets thin most of us will be okay. We're building stronger local economies of scale (through barter, shared food and knowledge and cooperation) and proving that this approach is a key solution to the excesses of our having "lived large" for too long.

Yes, the high-end shops will take the hardest hit. Ys, the shops who cater to racing will also be hit hard, and some may not survive. I believe that those shops who, like us, sell bicycling as part of a larger vision of a simple and sustainable way of life will fare better.
 
Beth, your LJ page says you're in Portland, OR. Which bike shop?
 
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