Retail Bicycle Industry Observations

January 8, 2015

Happy New Year!

To kick off 2015, I thought I'd summarize a few of the trends I've been seeing over the past year while working with retail bike shop owners across the country.

First, more and more shops are looking for creative ways to differentiate themselves from other shops. While this isn't new, it's clear that Internet sales have caused many shops to realize that if they do not expand or enhance their service and product offerings, they will not be able to compete for commodity buyers. There will always be buyers who only care about price. Personally, I have dealt with this for 21 years in my business, and have found that they are seldom worth pursuing. Bicycle shops, in my opinion, should avoid getting caught over-serving this buyer and focus more on those buyers who appreciate the services and understand that value you actually deliver above and beyond the product.

I think shops should instead focus on ways to set themselves apart that highlights the added value they bring. For example, I have seen shops doing many off-site product demos (Salsa, Trek and Specialized come quickly to mind). Prospective customers like this becuase they can ask the product reps a lot of questions and be in a position to ride multiple bikes for comparative purposes. I just attended one, and felt it was a great service offered by our LBS. Others are continuing to do off-season indoor training/spin classes. Some are hiring certified coaches. A few are looking to add additional training classes including weight training and nutrition advice. (Be careful here. If you do this, be sure these instructors have professional liability insurance policies in place if they are providing "higher level" of training advice.)

I am also seeing retailers looking to sell bikes on consignment. While a decent way to expand your product offerings, there are added risks and considerations of which you should be aware. I've found that retailers often aren't aware of these. It seems many shops, especially larger ones and Trek retailers are hosting MS/Breast Cancer Awareness rides. Other types of charitable or fun shop rides are common as well, and most shop owners seem to assume they have insurance coverage but often don't. Be sure to ask your agent beforehand. While our retail bike shop insurance program includes shop ride liability coverage as part of the basic policy, larger charity events require additional coverage. And if you're not insured under our program, you likely don't have coverage for your small shop rides either.

Mobile repair shops and fitting services continue growing in prominence. Low overhead seems to be an impetus, along with the growth of urban bike commuting. I see this as a potential threat to the bricks and mortar independent bike dealer. QBP continues to require a bricks and mortar presence before allowing them to open an account, but other wholesalers do not. Some of these wholesalers don't even require proof of insurance. So, the playing field is not level.

In the near future, look for a bicycle leasing component to be introduced to the industry. This will be backed by a major bank. You may have already heard about this. I have had a couple companies contact me regarding the possibility of insuring an IBD that specializes in leasing high-end bikes. It's an interesting business model that parallels how an automobile/motorcycle is leased.

Here's to a prosperous 2015 for the bicycle industry, cheers!