Friday Group Ride #243

Friday Group Ride #243

December is a funny month in the bike industry. Everyone knows cycling is a seasonal endeavor, and as goes the riding, so go the sales. Years ago, December was a welcome winter respite for weary retailers who had watched sadly as their cash registers fell silent in October and November.Now, the reality is somewhere in between. On-line retailers have taken the lion’s share of seasonal spending out of the shops, leaving them to flog late-season inventory at greatly diminished margins and cold weather maintenance services. The entire fat bike movement is, perhaps, born of the need to have a bike to sell at the LBS in December.

In the past, the local bike shop was the car dealership, THE place to go to buy a bike, get it serviced, see the new parts, the accessories, but as the internet surged in with low rents and no sales tax, margins eroded at retail. The role of the LBS changed. It is not uncommon for a customer to bring a part, purchased on-line, to a shop to have it installed on their bike or to skip the shop altogether, sourcing and installing parts themselves.

Self sufficiency is a good thing, and so are low prices, but what is the cost and who is paying it? On-line retailers can provide manufacturers higher volumes than single shops, but who will ultimately service the parts once the home mechanic’s expertise is exhausted? And why should the shop work to sell products they are being actively undersold on by their suppliers? And why does the local retailer have to charge sales tax, when the out-of-state on-line store doesn’t?

It should be clear by now, that I am biased towards bike shops. I work with them every day. I see their struggles.

I believe the counter arguments run something like this, though. The staff at the local shop is rude and unprofessional. I know more than they do. Why should I pay more just so they can stay in business? It’s more convenient to have things sent to my house. I’m too busy to get the store, and their hours aren’t convenient. Their selection sucks. They don’t have my size.

All valid statements in my experience, or at least potentially valid. There are some really great shops out there. There are some…uh…less great ones, too.

I wonder, though, do we want the LBS to turn into the local service station, nothing but tubes and lubes? My greatest fear is that, in prioritizing price over community, we’ll lost that community and further, that we’ll lose these hubs where beginners become the initiated. For all of the charms of say, Competitive Cyclist, no one is going there to become a cyclist.

This week’s Group Ride asks if you’ll be buying ANY gifts at your local bike shop this season. Or, are you primarily on-line shopper? Are  you cool with how bicycle retail has evolved? Am I just being a retro-grouch? Or is cycling on the shoals of ruin at street level? This Group Ride is not about bad retail experiences or the evil of shopping on-line, but more about the proper role of these things in what we hope is a growing cycling community. What is important? And what isn’t?

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  1. Tom

    I think it’s a mix. My wife and I paid full retail for a tandem at a bike shop where we got instruction on tandem riding and the opportunity to test ride as many as we wanted. We also bought some accessories for that bike. But when it came time to upgrade the saddles and stoker seatpost, we ordered online. I’m more conscious of supporting LBSs than I was at one time, so I try to buy something when I go in one.

  2. Miles Archer

    I live in a town with a glut of bike shops. There’s a regional chain, a national chain, a small regional chain of sports stores with an excellent bike shop. There’s also a Rivendell store that I’ve never been in. (Can you guess where I live?)

    When I started out I shopped at the national chain. When it was going to be a week before they could even look at my ancient Cannondale to fix a problem, I asked the tech for a recommendation. She recommended a small shop down the road. The owner fixed my bike on the spot with parts that he had lying around for less than $5. He had a customer for life – at least the life of his shop. He closed down two years ago. Sad.

    Anyway, I mostly shop at the sports store. I buy my running shoes and camping gear there too. It’s full of people who actually use the things that they sell.

  3. Rob

    I haven’t had a bike serviced at a shop for 30 years, and I almost always buy used bikes/frames/wheels, but I do try to patronize my LBS for consumable items (tires, tubes, cables, chains, etc.). Unfortunately, I find it increasing difficult to do so. They typically won’t have what I want and I feel like a chump paying prices above MSRP.

  4. Kev Stevenson

    Bike retail has changed.
    Now the internet giants are here and venture-capital funds play amongst us…

    Many small businesses of all types are under the same pressure.

    But, I think there is also an opportunity – for good bike shops.
    The shops with enthusiastic, knowledgeable staff.
    An opportunity to do something that the big guys can’t do.

    Do what local bike shops always did best…
    Be the heart of a community.

    For a hundred years local bike shops did what they they were best at – serving their own communities of cyclists.
    From the the local shop selling to local folks – to the lightweight specialists favoured by club riders.
    Nowadays it’s called a niche – fancy… 😉

    Just try to be the best at whatever they’re already good at. The go-to guys for their niche in their local area. With the best advice they can give and the best mechanics they can afford. Be the heart of that community. Then sell what the community needs. Make sure they’d rather come to you . “They order the stuff and it gets sorted…”

    I have a feeling the general/beginners bike market is gonna become an even harder place for a smaller bike shop to survive…
    ‘Lifestyle’ and ‘Transit’ cycling were some of the few growth areas in US bike retail last year.

    “most bicycles are sold outside of IBDs. …big-box retailers, sporting goods chains and such alternative outlets as toy stores, skate shops and ski retailers —stores that may individually sell small numbers of bikes, but collectively represent a significant level of sales…”

    (I’m taking a stab that ‘Lifestyle’ and ‘Transit’ bikes are significantly lower-end low-profit-margin bikes…)
    As I said, many small businesses of all types are under the same pressure.
    Only the most agile will survive on an uneven playing field…

  5. Aaron Thomas Smith

    If you read this article and had a lot of questions regarding LBS v. Internet Sales, you should read Leading Out Retail by D. Perry. As a person who has worked in shops and continues to work in shops it’s a good look into what you can expect out of the shop that survive this major paradigm shift when it comes to bike retail sales (and retail sales as a whole).

    The market changes and we change with it. It just takes time, but it certainly is leading to some very rad, very good IBDs.

  6. Phaedrus

    I, too, have worked at a shop, but I now shop online. The internet has provided customers that are able to do their own maintenance affordable prices and endless inventory. While I like the idea of local bike shops, I’m not willing hand over their mark-up fees, when I can order the same part or bike cheaper.

    I’ve never heard Wal-mart complain about Amazon. Local bike shops that complain about online sales are really saying that they can’t or won’t adapt to a changing environment. Any business, that is ever successful for a length of time, has to evolve with changing demands from customers. It is basic economics. One must provide a product or service that people are willing to pay for, otherwise the business won’t survive. Vilifying online sales is just whining from business owners that don’t understand how to run a business.

    The LBS’s I see as most successful tend to have a solid community. They are places people hang out. Some of these shop capitalize on people hanging out by selling coffee and other consumables. There are couches. These shops usually have group rides that start at the shop and areas set aside in the store for people to commune. Places that are comfortable tend to make more money because comfortable patrons keep less firm grips on the wallet. People hanging out, eyeing coveted merchandise are likely to eventually buy said merchandise or tell their friends about the shop.

  7. Aaron

    I ride daily to and from work, regardless the weather. I’m lucky because a) the weather doesn’t get too dicey here, and b) I work not but one mile from the closest shop, still independently owned by a super nice guy, and more importantly, a great mechanic. I’m all for fixing your gear yourself, but when I’m at work, and there’s a problem that needs attention, I don’t have a set of great tools at hand to make them. So, I just ride on over, drop my bike off and Jeff fixes my ride up so that I can pick it up on the way home. It’s win win. I don’t have to get all messy at work, and I support the local shop. I’ve never bought a bike at Jeff’s shop, but I’ve bought numerous parts and replacements such as tires, tubes, chains, etc…And, he knows me and my bike quite well now. I recommend others go there. And, I still have my eye on the few Tommasini frame sets he has hanging on the wall – all steel and beautiful. Some day, I may get one & have Jeff rig it up for me.

  8. Quentin

    Shops are good for selling new bikes that cater to relatively mainstream tastes, and for their associated parts and service. On the other hand, in the process of purchasing more obscure parts online, I’ve lately stumbled into what appear to be local bike shops with an online presence that seem to stock everything imaginable via sites like Amazon. One example is Niagara Cycle Works in Buffalo, NY. As far as I can tell, they have a retail store, but they have a huge selection available online that I would never be able to find locally, for very good prices. I suspect the future will belong to shops that find a way to be good at serving their local community and possibly also catering to particular niches online.

    The next evolution of retail (not just in bikes) is going to be ordering direct from where things are manufactured (meaning Asia usually). In recent years I’ve occasionally bought something on Amazon and been surprised to get a package in the mail that originated in China. Eventually it’s not just going to be knockoff Pinarellos, it’s going to be just about everything. Even the online retailers will need to watch their backs. Obviously, there will still be a place for local retail, but small retailers will need to figure out what it is that makes people want to go to a local shop. Maybe that means amazing service, maybe it means becoming a hangout by adding a coffee shop or microbrewery or whatever.

    1. Paul

      I think this is the right idea. The strength of the LBS is mechanical service, fitting, and test rides. The strength of online shops is price, selection, and convenience. The smart bike shops should combine the two. Another place I see doing this is, which I (and many others I’m sure) learned of through DCR.

  9. Tom in Albany

    I do small things. I take the rest to a shop. I hate when LBSs don’t have the road tubes I need. I know inventory costs money but, it also gets you business. I have to go to one LBS for my road stuff. I have to go to another for my MTB stuff. Glad I don’t run BMX or I’d need a third shop!

  10. will

    I go to my LBS for some maintenance and all consumables. And, while I really like my mech, I its not my job as a cyclist to pay anyone’s salary. Also, LBS or online chain, real humans work for both. LBS’s are part of an industry that we all support, its up to them to adapt and make sure the role that they play stays relevant with consumers.

  11. Jay

    I use my LBS for 95% of my parts/hardware purchases. I mostly shop online for cycling clothing. I have yet to find a LBS in my area that has any sort of clothing selection, probably due to the cost of inventory. If my LBS has something that I want on hand, I will use them first.

  12. Shawn

    I’ve struggled with this lately. I want to support my LBS so that it continues to be there for my community. However, when I stop by to pick up basic supplies, I find it hard to pay over 20% more for the product than I would pay online. I can try to rationalize a higher price insofar as it supports a local business but there is a limit to which I feel I can go without feeling dumb.

  13. Jimmy Vo

    I bought my bike at LBS, but all the upgrades as well as cycling clothing, I’ve purchased online exclusively.
    It’s a pretty easy choise imo: no tax, better selection, plus cheaper

    I’ve learned how to maintain bike through reading and as well as youtube. There’s nothing more satisfying than working and learning about the bike on your own. I only go to my LBS for major issues.

  14. Andrew

    In the absence of any other point of difference, this debate always boils down to price.

    The LBS cannot compete on price vs the online giant. Simple economics, often as a result of scale and the OEM deals that many large online retailers can offer because they also buy parts on the basis of building their own brand bikes, which gives them even better pricing than the aftermarket costs levied on the LBS.

    So, the playing field is not particularly level, and the goal posts are not necessarily fixed. But this applies in many walks of life, and many small businesses manage to cut it. The thing that they all have in common is a point of difference other than price.

    That means many offer boutique brands not available online, combined services (often a cafe), convenient hours, great interpersonal service, fitting, knowledge and community building activities such as organised rides.

    I am a competent mechanic and have done all of my own building and routine maintenance for many years, so I shop online a lot. In fact, most of the time. But there are some things that the LBS is irreplaceable for. These things sit at either end of the complexity and price scale – high frequency, high volume, low value regular consumables and low frequency, high value, high involvement purchases such as a new frame.

    I don’t hold with the ‘LBS Good, Online Bad’ debate. Online retailers also employ people, not only in their own business, but throughout their supply chain. Sure they offer tough competition for the LBS, and there are many that have closed down as a result. But there are many that have evolved, know their target market, offer a point of difference and are thriving. As it has always been in business, and as it will always be.

    The emotion comes in because we are talking about a hobby, something that we do for fun, for enjoyment. And the LBS is generally run by somebody like minded. So we feel protective when some Goliath wades in to threaten our poor defenseless David. He is more likely to be an enthusiast first and a businessman second. And that’s half the problem. Wiggle wasn’t started by an enthusiast, it was started by professional retailers from Tesco. But as a result, it isn’t necessarily the best online retailer either in terms of emotional connection. What the best online and LBS retailers have in common is an understanding of what the cyclist wants, a clear point of difference, and a business intelect sufficient to bring that to market and sustain it. If the LBS doesn’t have that, then despite the emotional connection that we feel, he won’t survive.

  15. Jason

    I buy all my bike stuff at the local shop. They take care of me and in return I give them my business. I’ve found that my relationship with them frees me from hunting around the internet for the best price. Granted, they know me there, and I seldom pay full price. When I’m made aware that I do pay more than some online retailers, I view it as a fair exchange for the community that they promote, which I’m happy to take advantage of. By no means do I view online retailers as “bad”, I’m simply willing to pay a little extra for service and the relationships that I gain out of a bricks and mortar experience.

  16. Scott G.

    In my local club and pick up ride environment, people really don’t pay much attention to
    the bikes, they have a nice bike bought and serviced at the LBS. Very few riders do their
    own maintenance. Bike tech talk it limited to finding the most flat proof tire.
    Most people have one road bike, they ride it for 5+ years, then replace it.
    There are lots of LBS in town. Cincinnati, always 15 years in the past.

  17. Jim P.

    There was something I used to bristle at when I was a server and bar tender. When people would spend a good amount on food and/or drink (with good service), and leave virtually no tip. The common gripe was that, if you can’t afford to tip even adequately, don’t go out, or don’t go top shelf when you do.
    I really like my current work as a meat cutter in a local independent store. I work very hard to be honest with my customers, even get to know them. Being part of providing people’s food is to be involved in an intimate part of their lives, especially around this time of year when memories created around meals can be so much greater. Along with providing good product, good advice, and good service, what I’m trying to build is trust. When people trust me, they trust the food I’m selling them, and feel good about sharing it with people they care about.
    I want to feel the same way about my bikes. When I am riding, I am enjoying the hell out of life. When it’s with friends, be they new or old, the effect is even greater. Heaps of things can go wrong in our chosen activity. I want to have trust in the bike under me to not be one of those things. This is why I trust my LBS. Because he has earned it. I get from him the same things I try to give the people who trust me. It’s why I drive 20 minutes into the next town, where his shop is, for much of my needs. It’s why i decided, if I can’t afford to buy it from him, then I (usually/see below) don’t need it until I can. I’m having him build me a set of wheels for cross racing. It’s a bit unexpected, so I’m having to use a credit card since I won’t scrape the cash together until after xmas. I told him to up the price so that he doesn’t loose out on the extra percent that VISA skims off the top. This is the kind of loyalty that a good bike shop engenders.
    I’ve learned to never regret making good quality of life decisions. If I go to the faceless online retailer for that new thing, I may save money. I may even promote my own good quality of life. However, when I go to my trusted LBS, my decision effects both my good quality of life, AND his, and so on. That makes my rides feel even better.

  18. Aar

    I could be extremely verbose on this topic but will try to be concise here. I strongly support local small businesses and my LBS. I’ve purchased all of my bikes from my LBS. For a while, I even ordered parts, accessories and clothing through them at slightly greater expense to myself. Recently, my LBS has suffered from a number of marketplace factors, including loss of business to retail, and their ordering policies have changed such that it takes them longer to get orders in. They have occasionally failed to place recent orders. They have also stopped carrying brands that are sold online and I am not pleased with the quality of those products. Out of frustration and with regret, I have started ordering some items online.

    Fortunately, the relationship with my LBS remains strong. I make every effort to make large purchases with them, they do all of the service work I can not do myself and I continue to refer business to them.

  19. Adam

    I think Andrew summed it all up best.
    Shops will have work much harder to define themselves & build a community in their local area, or with the advent of social media even internationally. Last week I bought socks/cap/bottles from a boutique shop in the Pacific North West US & had it shipped up to me in Canada. It may not necessarily be supporting my ‘local’ but it is supporting a local business I believe in.
    Locally there is a only one bike shop out of at least 10 that stays open year round (seasonal resort town) & that is because of the great customer service & vibe of his shop and also the fact he has built a real niche having his own cnc machine.
    I count this as my local bike shop even though it is a 25min bus ride away vs all the other shops being 5-10 min walk.

    To be brutally honest the online world may be doing everyone a favour in getting rid of those retailers who aren’t up to a decent standard & able to adapt to the changing ways of the world.
    Sadly business is business, romance & dusty old frames won’t pay the bills.

  20. Tony

    And thanks to websites that provide product information and reviews, technical advice and ride route information I’ll never have to set foot in a shop again.

  21. Pat O'Brien

    The local bike shops get pressed from the wholesale side as well as internet retail sales. The big three, Trek, Specialized, and Giant make more demands on shops to carry their entire line or make large dollar orders. They are big corporations that expect growth and short term profit, and they continue to move as much production into cheap labor markets as possible.

  22. Andrew

    It’s interesting seeing in these comments pretty much exactly the same arguments playing out in the US market as have been used in Australia for years. Before online retailing Australian cyclists could take an Aust.$ retail price for bike gear, convert to $US and find the Aust. price was sometimes of the order of 50% higher than the same item in the US. The argument of US is a bigger market than Australia therefore the US importers get better prices was often the reason given. Essentially it points out that the manufacturers (or importers) are charging different cost prices to different distribution streams. Perhaps without intending to they are in effect helping choose who can succeed in modern bike retail?
    Another often unremarked factor is the bike industry’s predilection for rapidly changing tech-fashion and short tech lifecycles to increase sales by having something new and shiny every year. However this is also creating short-term obsolescence. (The great thing about standards is there’s so many to choose from.) All the technical innovations requiring new methods, new materials, different parts, different types of maintenance means rather than keeping a modest stock and being able to meet just about any customer’s requirements an LBS must now choose (by considered choice, or simply by default of what stock they get in to keep on hand) what customer requirements they can service. It’s becoming an increasingly impossible job for an LBS.
    The other complication here in Australia is our relatively high local real estate prices. A retail customer at an LBS is essentially helping underwrite the leasing costs component of the higher prices. There is a price difference even comparing a Main St, bricks’n’mortar LBS with an Australian-based online retailer. Same taxes, etc, just the difference in ability to choose physical location and thus that component of costs.
    After all it must be remembered online retailing is not new. It is simply mail-order with a new lease of life through the ability to do faster, more cost efficient catalog(ue) distribution and customer ordering over the internet, rather than via printing and the postal system.

  23. Rohit

    I have the privilege of living in an area with an abundance of amazing shops. I get 100% of my service done in one of two places, and I buy the vast majority of parts from them as well. I know I am spending a little extra. I also know my bikes always work perfectly, my rubber, steel, mineral oil, latex, and Ti (oh, so little of it is Ti) will not fail me…and I trust those guys with my life — literally.

    Bike shops are my happy place. When I’m in a new town for work or travel, I usually find an excuse to duck in to one. At a minimum dig through the sale bin, maybe buy a snack or two. Sometimes a shop t-shirt. About the only thing I buy online is clothing (in fact, i buy nearly all my clothes online)

    Shops are treasures, and the people that work at them are pretty amazing. I’ve never been treated poorly in an LBS…can’t say the same for the chains.

  24. SusanJane

    Hmm. I am reminded of a format that was used in retail for a long time. Shops had samples and fittings. The product was ordered to specifications. This was true for furniture, clothing, hats and shoes. Not just the 1800s either. The modern stores with stock in every size and flavor are not that old.

    Ordering a bike or shoes on line is one thing. But wouldn’t it be nice to talk to a professional first? Get proper measurements? Touch and feel the parts and pieces? Get accurate estimates on customization? This way inventory goes down and service can go up with better pay.

    Huge shift in impulse buying… but they go to the big box stores already. Do note that all those big boxes are doing a slow slide. Walmart has decreased sales every year. Home Depot is quietly closing stores. The winds of change.

  25. John Kopp

    Before the World Wide Web, on line shopping, there was the Sears catalog. You could order almost any thing and have it delivered, including a house. This well over 100 years old, so competition for local stores with on line merchants is nothing new. That being said, I prefer to shop local. I like to see and touch what I am buying. Often get burned when ordering a product blind.

  26. Stu

    from Stu
    Sales tax, boiled down, is a fee that supports the local public services provided to a business. Local government, up to and including states, don’t provide services to out-of-area catalog/mail/internet businesses
    Oregon, for example, relies heavily on income taxes to fund local government. It doesn’t extend its income tax to non-residents who derive no income within that state. Washington has a hundred or more separate sales tax collecting governments, and sales tax can range from 6.5% to 9.5% within a casual bike ride. It is a nightmare for any national retailer to keep track of each sales tax rate by ZIP code within the state.
    That said, I’ve shopped locally when possible (not all mfgs have local distributors) for going on 70 years now and doubt if I’ll change my habits soon

  27. Rich

    Shoes and helmets are, for me, the things to buy at shops above all else. Trying them on is worth paying retail markup. The trouble comes when the shops carry little or no stock, and charge the full (non-refundable) price to get something delivered to the store. When it doesn’t fit you’re out of luck.

    I wonder if distributors could make it easier for smaller shops to offer try-before-you-buy.

  28. Author

    Let me just throw this out there, because much of this conversation is about price. People, in general, object to paying full retail price, so much so, in fact, that almost no one ever does. And yet, the LBS pays a wholesale price based on that retail. Because the manufacturers by and large do not enforce retails, many of them actively advertising discounts that the LBS will need to honor, the margin available to the retailer on paper are usually a lie. If they are promised 40 or even 45 points on a product, they will usually end up getting something more like 25-30, all the while sustaining higher overheads than on-line shops who buy larger quantities and so get even better wholesales.

    What if, the retailers simply said, “We’re not going to sell or service products than can be bought below retail on-line.” You might view that as greedy petulance, or you might view that as a sound business decision. Why should they sell and service something on which they’re being undersold by their own supplier?

    One more thought here, if suppliers don’t enforce retails, then retails mean nothing, which means the value of nearly everything we’re buying is being inflated to create the illusion of discount where no discount actually exists, at least not from the supplier, only from the retailers (brick and on-line), so that only those with lower overheads can afford to continue.

  29. bryan

    I just bought 2 24″ wheeled bikes for both my kids at my LBS. I could have bought something different at a lower price through a connection, but would have had to pay shipping. I like the folks at my LBS, their bikes had better features that were more applicable to my kids needs, the 2 bikes were on sale and in the end I wound up spending exactly $7 less than I would have through my “deal”. I’m glad I bought local and helped keep their lights on.

    Back when I was in college in the late ’80s my boss at my LBS always hired me on again for a few weeks over the holidays. We were slow but it allowed me to earn a few bucks before heading back to school and my other bike shop job. He didn’t have to do that and I always appreciated it.

  30. Author

    @Thesteve4761 – No. The suppliers should set real minimum retails that all the players respect and those who don’t respect the rules should be closed. In my opinion, price shouldn’t advantage one group over another. They should compete on value and service, right?

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