Where Have All The Bike Shops Gone?

Where Have All The Bike Shops Gone?

There is something both complex and profound going on at your neighborhood bike shop. Several somethings, in fact. They’re not apparent up close; not visible within a single shop or city. To see what’s happening, you have to look at the national level. And almost no one is looking there, not even longtime industry boffins.

The first something is this: bike shops are dying.

Suppose you live in a medium-sized town with three bike shops, and one goes out of business. No big deal, right? But it’s a very different picture when you realize that in the last fifteen years, more than one bike retailer in three has already shuttered the doors and walked away.  And bike shops continue to die, year after year, with no relief in sight.

Well, that’s not quite right. If the present trend continues unabated, out to about  2020, that number won’t drop anymore. Because that number will be zero. that number will drop below 3,000 in the next eight years.

Number bike shops 2000-2015

Fully 38% of American bike shops have gone out of business in the last fifteen years—almost 2,500 brick-and-mortar storefronts—since the retail base peaked in 2001.  Or, to put it another way, we’ve gone from a high of just over 6,250 in 2001 to 3,950 today

That’s a lot of dead bike shops.

An interesting corollary to the downward spiral of bike shops is that bike shop revenues have remained relatively flat. You’d think the same value of sales split among fewer shops would actually mean more revenue per shop, not flat revenues. Same pizza, fewer slices, right?  Let’s take a look.

Units and dollars

The chart above left represents the number of bikes sold during the last thirty years. It’s not constant, though: at far left it shows the nationwide peak in the early Seventies, then skips about ten years, from 1973 to 1982. This was not just so we could skip the disco/polyester era, but because it’s all the data I have on hand these days.

You can see some other interesting things in that chart, too, like the mountain bike boom in 1982-87, and subsequent bust in 1988, followed by a comeback with the advent of suspension forks, and later, full-suspension bikes.

2000-2008 gave us the highest level of units sold since the early ‘70s, known in the industry as the road bike boom. (Some misguided observers have gone so far as to call this “The Lance Effect,” which seems a bit of a stretch considering the guy never won a single Tour de France.)  And you can see the downward spike where the 2009 recession took its toll on bikes, along with everything else except bonus checks for hedge fund managers.

But back to bike sales. Note this chart is for units (which you or I might call “bikes”), and then only the relatively high-end units sold through IBDs (Independent Bicycle Dealers). Thirty years is a pretty long time. So let’s zero in on just the last twelve of those years, 2002-2014. As you can see, it’s been pretty much up and down, with sales varying by millions of units year after year. But in aggregate, the past dozen years, much like the past thirty, turn out to be flat as a skillet sitting on a billiard table in the middle of a hockey rink deep in the heart of Kansas.

So much for units. Now let’s look at the dollars. That’s the chart above right with two lines on it.

The blue line is for industry sales (IBD only, and, in addition to bikes, this chart includes equipment, service, and so forth).  Although the line moves up in 2002-2005, it levels off (on average), the net result is that sales have been relatively flat over the past ten years.

At least that’s what shows on the bottom line as retailers do their year-end books, and that’s what the industry has been telling itself all this time. But when you adjust these figures for inflation, it’s a very different picture. The orange line represents adjusted-for-inflation figures and you can see the picture for yourself.

A dollar in 2104 was worth 24 cents less than in 2002. When we compare bike industry sales in constant (2014) dollars, a truer picture begins to emerge. In 2014 money, the industry has lost an average of 700 100 million dollars per year over the last twelve years; a little over three-quarters of a percent annually and a staggering total of almost eight and a half more than a billion dollars since Mario Cipollini was world champion.

That’s a lot of lost revenue.

So why are bike shop sales flat at the shop level? Turns out it’s not a case of same pizza, fewer slices. More like fewer slices, but a much smaller pizza, too. (Yes, there are fewer bike shops, but there’s also a lot less revenue over the past twelve years.) And accounting methods that work fine at the individual shop level have hidden this macro-reality from the industry for decades.

It’s the same for suppliers. Waves of industry consolidation in the early 2000s resulted in literally dozens of bike and equipment brands going out of business or being acquired. Or both—the brand died, its assets were purchased at fire-sale prices by the new owner and then brought back to life, a process usually kept from the sensitive eyes of the cycling consumer.

But in all cases, the bookkeeping is the same. And so are the results, once you adjust for inflation: smaller market, fewer players, and the illusion of stability. Pizza for everyone. Well, everyone who survived, anyway.

Of course the ultimate driver for the cycling industry is cyclists. So let’s look there, too.

Image7

In 2000, according to the NSGA (National Sporting Goods Association), we had just over 43 million Americans riding bikes (already a 23% drop from the peak year of 1995). Over the next 14 years, 2000-2014, that number dropped by 17% from 43 million in 2000 to just 36 million last year, a net loss of 37%. Or, to put it another way, seven and a half million cyclists have stopped riding bikes since the GW Bush administration.

I should mention that the NSGA  defines “cyclist” as any American 7 years of age and older who rode a bicycle 6 or more days during the year. The reason I should mention this is if you go to the People For Bikes site, they use a different definition of “cyclist,” so their numbers are different.

But wait, as we say in the marketing game, there’s more. Because, as with sales dollars, the loss of cyclists has (until recently) only been shown as static numbers. However, just as the value of money continues to shrink over time, the US population continues to grow.

When we correct for population growth, the percentage of Americans riding bikes in 1995 was more than one in five—21%. By 2000 it had dropped precipitously, to just 15%. From there to 2014, it continued to decline to 11%, or just more than one in ten. So it is absolutely correct to say that only half as many of us are riding bikes as twenty years ago. Or, to put it another way, on a per capita basis, half of American cyclists have quit riding bikes in the past 20 years.

That’s a lot of missing cyclists.

The only bright spot in all of this is the three groups whose participation has increased in the past fifteen years. The first, as you might expect, is white men aged 25-45. For us roadies, that’s the famous MAMIL designation—a term already so hackneyed it has its own Wikipedia entry—plus our colleagues on mountain bikes.

The second group is women, in more or less the same age groups. This is especially interesting and, depending on your sense of humor, even amusing.

Here’s why: in testosterone-poisoned industry rife with sexism yet frantically scrambling to come up with more women’s-specific products, it’s surprising the industry has yet to discover that 48.5% of cyclists in the 2012 NGSA report are already women. So when the industry wails about “bringing more women into the sport,” what they actually mean is “bring more women into bike shops where we can sell them stuff.”

Not that there’s anything wrong with that. The bike business, like any other business, is based on selling stuff. But they’re two very different goals. Here’s a newsflash, industry: women are already “in the sport,” and their numbers are effectively at parity with men’s. They’re just in it on their own terms, on bikes that come from someplace other than bike shops.  So, you want more women going to bike shops, you might start by reformulating the problem you think you’re trying to solve.

The third group showing growth is what might be described as middle-class-and-up—household incomes of $50,000 and above. In 1993, there were twice as many working-class cyclists with HHI (household income) below $50 thousand as affluent cyclists. Aided by the effects of inflation, those lines crossed in 2000, and by 2007, the positions had more than reversed. So while cycling participation has fallen very significantly overall, it’s also become more gentrified. Average price per bike has, too. Problem is, it’s still a zero-sum game. For every affluent cyclist gained, a working class cyclist has been lost. Worse than that, in fact, because the total population of cyclists now is 37% smaller in absolute terms—50% less per capita—than it was then.

I mention this because it allows us to finally see a more complete picture of what’s happening to the retail side of the industry. Fewer bike shops selling fewer products to fewer people but at higher price points. Fewer slices in a shrinking pizza, but with (slightly) more goodies on top.

If I had to guess, the anchovies represent helmet mirrors.

Some significant amount of those goodies are also being skimmed off by online vendors and high-end sporting goods stores (REI, Scheels, and others with IBD-grade bike departments).

Since most of those businesses don’t publish their earnings, there’s really no direct way to measure their impact on the rest of the business. There are, however, some indirect ways to get a peek at what’s going on. Instead of looking at what customers are buying from other channels, we can look at what customers aren’t buying from bike shops. The technical term for this is perturbation, which is one of those words that’s not nearly as dirty as it sounds.

Shop Visits

In the chart above, the terms “Enthusiasts,” “Moving Ups,” and so forth are categories based on how many times the customer rides per month, how much their most expensive bike costs, and how many times they visit their local bike shop.  The names are pretty self-explanatory except “Moving Ups,” which refers to riders whose habits indicate they’re somewhat likely to get more involved in this whole bike-riding thing and might be easily enticed into buying their first set of high-end stuff.

As you can see, visits from all groups are down an average of 59%. Except that’s just an average of the percentages for each of the groups. If you think about it, Infrequents are the smallest group; there may be more of them, but they make the fewest visits to bike shops in the first place and, when they do come in, they spend the least money. So if they’re down 78%, it’s not such a big deal.

On the other hand, the 53% and 68% drops in the Enthusiasts and Moving Ups, respectively, are where it stings the retailer. In theory, we’re buying higher-priced stuff more frequently.. But the problem is, we only came into our local shop four times in 2014 as opposed to (almost) ten visits during 2000.

That’s a lot of lost visits.

And it’s a lot of lost sausage off the top of the retail pizza. Of which an unknown but presumably sizeable portion is going to online retailers.

A couple years ago, a “reader survey” poll by a large online mountain bike magazine which shall go nameless here indicated that more than half its readers “always” or “mostly” made their purchases online. Now, that’s not exactly a statistically valid methodology (it was one of those multiple-choice “click the button” things and obviously applied only to one magazine’s online reader base), but between this information and the shop visits data above, there is certainly a strong indication that some large serving of pizza toppings are ending up in the mouths of businesses who are not traditional bike shops.

Here’s the bottom line: the number of cyclists is plummeting. The cyclists who remain are coming into bike shops less than half as often than they did fifteen years ago and buying some seven hundred million dollars less each year. Not surprisingly, bike shops are failing at an alarming rate nationwide in consequence, and the ones that survive are struggling just to keep their noses above water.

Here it is again with some numbers plugged in. Over the past fifteen years, cyclists (actual riders, not riders per capita) are leaving the sport at a rate of 1.5% per year. Bike shop revenues are dropping eight-tenths of a percent per year in real dollars. The net result is that bike shops are closing their doors at a hair over 3% per year. And that leads us to the single most important question for those of us who like to ride bikes:

Is all this just a normal business process, no different than what’s been happening to grocery stores and hobby shops and all kind of other businesses, or is there something unique and special about what’s happening to bike shops?

That depends on how unique and special you think bike shops are.

, ,

55 comments

  1. Don DiCostanzo

    No mention of any growth segments such as electric bicycles?
    Declining sales in any product mean catastrophe for profit margins due to increased competition.
    The only chance for survival for an IBD is to become part of a branded store program like the ones being offered by Giant and Pedego.


    1. Author
      Rick Vosper

      Hi Don,

      Electric bikes are indeed a growth segment, and a much-needed one. For RKP readers who don’t follow the European industry news, e-bikes represent a double-digit market share there, although that number is no longer growing the way it was a few years ago when half of new bike sales in the Netherlands were electric. Still, in China, for instance, there are more ebikes on the road than cars.

      Here in the USA, not so much. Currently electric bikes represent just 1.6% of US bike sales, according to the LEVA (Light Electric Vehicle Association) and NSGA stats. Their potential impact on Strava rankings is as yet undetermined.

    2. Geooff

      Great article indeed. But forgot to mention a very very big problem that is contributing to these stats. It goes like this: middle aged guy always wanted a bike shop cause he always liked bikes. He now how money from hedge funds and other streams of probably unethical sources and decides to open that shop he always wanted. Well, as the truth would have it, it’s a tough market and he soon realizes that it ain’t easy. So he does the subsidy thing and discount the crap out of product and pays the losses out of his own pocket. With a multi year lease signed he will do this for quite a while. Meanwhile, the guy down the road without the piggy back can’t hold on for long and decides he’s had enough and closes up for good. We call them ” gentleman owner” they usually don’t have a clue about bikes or the industry, they just want an expensive hobby. Just a hunch.

  2. Rob

    I think some of this is industry-driven. As a long time cyclist, I’ve seen bikes, parts and accessories become wildly expensive–definitely outstripping inflation–and it appears to me that many people are put off by what they perceive as a very high entry cost into this sport. Couple that with a lagging economy, and I don’t think disappearing bike shops should be a surprise.
    As far as online retailing goes, I’m sure that’s a factor, but mail-order has always been a factor, especially with parts and accessories. When I started riding seriously (30+ years ago), all the guys I rode with bought their Campagnolo stuff from mail-order companies like Nashbar because it was sooo much cheaper.
    One other thing I’ve heard about from bike shop guys here in NYC, is the impact that Bike-share has had on the casual cyclist/commuter end of the business. Why buy and maintain a bike when you can just grab one whenever you want or need one?


    1. Author
      Rick Vosper

      Well said, Rob. Onliest thing I’d have to add is that while equipment prices have gone up very significantly, bike shop profits have not, at least according to the data.

      No argument that cycling is an equipment-intensive sport, just like skiing or bass fishing. Good points about the commuute/transpo market, too.

    2. Timbo

      It’s going to be interesting to see the long-term trends in bike share cities. With absolutely no hard data to back me up, it seems that the easy accessibility of bike share systems should lead to more adults getting on a bike for perhaps the first time in years. And as those folks become more comfortable riding in traffic, navigating their cities, and generally re-learning that bikes are ok, they might eventually upgrade to their own get-around-town bike and/or pick up a road or mountain bike for the weekends. Plus, there’s the added benefit of more people riding on the streets making those streets even more welcoming to more returning cyclists. Rinse. Repeat.

      At least that’s how it plays out in my head.

    3. steve

      Rick had said “equipment prices have gone up very significantly, bike shop profits have not” I just wanted to share my thoughts. Sticker prices are high but bike shops aren’t getting these numbers out of no where. For example, If you have a $5000 TT bike on the floor. It probably cost $3000 to purchase. Also, with new technology, these bikes are time consuming to build. You pay a mechanic 8 hours labor to build the bike and then your held responsible for cables settling in which require quick checks and usually a free first tune. Best case scenario you sell the bike for the $5000 and, or else due to lack of customers you sell it on closeout for $4000 and make only a couple hundred dollars.

      Yes it is an expensive sport but those numbers don’t translate directly into sales dollars. It’s different for a running store, they get a pair of shoes for $50 and sell them for $100 and its profit. BIkes have many other costs. It’s just not that cut and dry.


    4. Author
      Rick Vosper

      Hi Steve,
      Yeah, I probably should have said it’s “margins” which have not gone up. And for sure it’s not that cut and dried.

      If you’d like to know a little more about the profit centers in bike shops, the first article in this series (this is the third and last) talks about that stuff in some detail.

    5. JohnE

      I agree regarding the cost of new equipment, which is one reason I maintain my cars, bikes, appliances, etc. and keep them as long as I reasonably can. (My newest bicycle is a 1988 top-of-the-line Schwinn mountain bike; my oldest is a 1960 top-of-the-ilne Austrian road machine.) I am no luddite, but since I ride for transportation and recreation, and friction shift and steel frames work just fine for me, I have no compelling reason to shell out big bucks for something newer and lighter.

  3. John

    Fascinating information. And disturbing. I have shared it with several people in the bike industry.

    Thank you for taking the time and thoughtfulness to present it.

    A few mistakes (I think): The last chart has the years mixed up. Blue should represent 2000, orange should represent 2014. The third paragraph after that chart lists percentages in the first sentence that don’t correspond to any percentages shown in the chart.

    Also, it’s minor and I’m sure most people understood the true intention, but higher up in the story is a reference to year 2104. Probably meant it to be 2014.

  4. John

    In my experience, despite all the difficulties faced by the IBDs, the “bike shop attitude” not only still exists but seems to be thriving. My town is a major mountain biking destination so we have far more bike shops per capita than is normal, so you’d expect the increased competition to make for better service. Not so. What passes for typical customer service in one of our local shops would put any business out of business.

    If my experience here in common elsewhere, I would imagine that this poor customer service is having a large negative effect on bringing the Infrequents, Casuals, and the Moving Ups more into the sport.

    Then there’s the very high cost that Rob alluded to above. Not just the initial bike cost either, the durability of componentry has diminished as the costs have gone up, leading to more expensive bike maintenance and repair. I put the blame here on the component companies (Shimano, SRAM, Campagnolo) who have placed a premium on lighter weight and more gears at the expense of durability and affordability. Once again, it seems like they are focused on getting a bigger slice of the shrinking pie.

    If I was first being introduced to the sport today, I’d probably go find another sport instead.

    1. daveeckstrom

      John, I agree about the durability of components. I have always taken good care of my bikes and ride a lot of miles. Back when I started cycling in the early 1980s I would wear out components. Now, they don’t wear out, they break. I have an ancient Trek 500 with the original Suntour Cyclone components on it and they still work great. I know this because I’ve been riding it around while my primary road bike is out of commission, having wrecked the second Ultegra rear derailleur in the five years I’ve owned it.

    2. JohnE

      Daveeckstrom is spot-on regarding durability of components. My 1960 Capo Sieger has its original Campagnolo hubs and derailleurs, Weinmann brakes, and Agrati cranks and pedals, and everything still works great. Same with my 1981 Bianchi and its Campagnolo hubs and derailleurs. Friction shift is rugged and trivial to adjust and maintain, and you can mix and match gear ratios and brands of components very freely. Chains, chainrings, and cogs all lasted much longer in the days of 2 or 3 x 5 or 6 (or sometimes even 7 or 8) transmissions. This is in marked contrast to today’s automobiles, which easily go 200K miles, well beyond the proverbial 10 years / 100K miles of 1970s cars.

    3. Ed

      Actually, SRAM is offering a Road product with less gears. If you take a look at Force1, it’s a Road group with 11 sequential gears.

  5. Another Rob

    In my opinion, it’s the industry itself putting brick & mortar bike shops out of busines. If I need a headset, or some replacement spokes, or a bottom bracket, none of the local bike shops even bother to keep such things in stock anymore. & I live in Vancouver, BC, where I’d hazard to guess we have more cyclists per capita than anywhere in North America. When the industry insist on pushing so many standards down our throats, the lbs simply doesn’t have the space or resources to keep every possible size/permutation in stock. Instead, they have to order it from a distributor, who may or may not also have the required part in stock. Total order time can often be two weeks. On the otherhand, I could order the required part mail-order, have what I need in time for the following weekend, & never have to leave the house.

    1. JohnE

      Don’t forget that we used to have five distinct thread-and-diameter standards for bottom bracket cups. Lots of shops which stocked ISO 1.375×24 cups did not carry 36×24, unless they sold Italian bikes, or 35×1, unless they sold French bikes. If you had Swiss 35×1 (LH threaded fixed cup) or the old English 1.375×26, your LBS probably did not stock it.

      However, in other parts of the bike I agree with you.

  6. Tom in Albany

    o, where are all of the hobby shops? They’re inside Target and WalMart or part of Michaels and such. Kaybee toy and hobby is a waning figment of my memory. Used to be you’d buy your kid’s first ‘cheap-o’ bike from the bike shop and they’d comply with a few different colored Schinn’s or Ross’s or whatever. When kid went in there, he could see all the shiny, new stuff he could aspire to/save for. Those bikes are now being sold out of Toys-R-Us, WalMart, Target, etc. So, the base business is gone from the bike-shops. Like hobby shops, that business is serviced from inside the big boxes. And, the bike shops will not get that business back because they can’t compete on a price basis.

    Add to that the premium placed on our time now-a-days, because we’re helicopter parenting, or going to all of our kids’ activities, or helping our aging parents, or don’t have any money, why wouldn’t you try to score a deal on the internet? It’s cheaper and you can do it any hour of the day and, wait for it, THEY DELIVER!

    All that said, I do go to bike shops for some service and will try to find parts when I have the time. However, I haven’t bought a new bike for myself since ’01. Bikes can be of such a high quality that all you are ever doing is replacing parts. My Ti frame will long outlive me. I’ve kept decent care of my Al/Carbon mtn bike and replaced parts as needed. Maybe the bicycle industry needs some planned obsolescence? But that won’t grow the market. Only increase sales – or not.

    So, sadly, the number of bike shops will continue to decline to a level that the market can support. So, how do you increase the size of the market? Hopefully the recent trend of younger generations moving back to the cities, where a ‘car-first’ attitude isn’t required and the bicycle will be sufficient transportation for a significant number of kids. And, the parents of those kids allowing them to ride to the corner store ON THEIR OWN, in order to gain the sense of independence that a bike first gave to me 40-something years ago.

  7. Scott G.

    The internet effect, you sell your old stuff thru forums, craigslist and if all else fails ebay.
    My last new bike was in 2005, from a frame builder, the groupo on the bike is just now needing
    replacement. I have bought 1 bike from a LBS in 19 years. Rideable bikes in house 5, +1 frame.
    Another LBS problem, bikes last way too long. who wants a 1986 Mac ?, my ’86 Ellis Briggs
    is still a great ride. Note, the bikes have mostly new parts from the LBS.

  8. Pingback: Cyclelicious » San Jose Bike Train tomorrow, and a roundup

  9. Brent

    Where I am it seems the old model of business hours is killing the in person business (I am looking at you Edmonton). I can buy all I need from my couch but when I want to go a shop their hours suck. Closed on Sunday’s for shop rides? I get that but really? The two days a week us working schleps can visit and you close on one of them? Brilliant. Then all the other days of the week you give me an hour post work if I am lucky to get to you before you close. Brilliant again. I have this same gripe with any retail store that isn’t open outside of work hours.

    So hey bikes stores. Here’s an idea: be open m-f 2pm to 10pm, sat sun 9am to 8pm. Put some lackey behind the counter for the early late hours or have your “experts” there for specific hours but please, please make it easy for me to give you my money or I will continue to enjoy shopping from my couch at a significant discount.

    1. LateSleeper

      Gotta agree with Brent on hours. I get that shop employees want their time on the bike too, but the net effect is that the only time I can visit the shop is Saturday from 10 to 4, when I’d rather be out riding MY bike. So do I skip my big ride on the chance that my LBS actually has what I need in stock? Or do I just order it online so I can get both my miles and my parts.

      Two local bike shops do get my business. One is a locally-owned shop that has 5x the clothing inventory of anyone else and is open 7 days a week. The nights and weekends staff are mostly college students, but they are friendly and always offer assistance within 10 seconds of walking in the door. Also, if you walk in with a broken bike they will try to fix it NOW. The day I trashed a rear derailleur on my ‘cross bike, they got me back on the road (with a new hanger too) in 40 minutes.

      The other shop is a well-known online retailer that happens to have a local showroom. Although they keep banker’s hours, a visit to their store is never wasted because they have a deep inventory that I can check online in advance. My typical purchase there is about $200.

    2. Micho

      Give me convience or give me death! Glad you don’t expect anyone else to have a family life or time off!

    3. Padraig

      This would be where we remind readers, especially those new to commenting here, that we would prefer you check your sarcasm at the door. This space is meant to be one for constructive conversation. For anyone not clear on the ground rules,
      please read this.

    4. AC

      Totally agree re hours. If I were opening a shop, it would be open until at least 8 pm on weeknights, and open at 7 am. on Sat and Sun. What is the point of being open during hours when your customers are at work and can’t visit your store? Shops will continue to die off until they figure out how to maximize the things they can do that mail order can’t. Until they, I’ll buy online and do my own wrenching. Shops need to understand that doing a special order and selling at 10% over cost to match mail order isn’t a loss – it’s incremental profit where there wouldn’t have been any (and yes, it’s a different story for parts that are in stock, where the markup should cover overhead).

      Bike shop professionalism is another issue. Hire qualified staff and make me want to shop there. If I come in and know more about your products than your staff, why should I pay your overhead?

  10. focus503

    “Fewer bike shops selling fewer products to fewer people but at higher price points”

    There was quite a bit of chatter a couple years ago about the hollowing out of retail categories across the board; clothing, home furnishings, food etc.

    That is: fewer and fewer choices in the mid-market segments and an explosion of growth in cheap stuff in the ‘value’ segments as well as at the high-end.

    It mirrors the changing income distribution pretty well.

  11. Steve Reynolds

    When I was a kid we used to ride our bikes across town to the local “Mom and Pop” bike shop. We used to stare at the shiny parts in glass cases, watch the owner magically bring bicycles to life from piles of bearings and parts and tubs of grease spread randomly across his old wooden work bench; occasionally we would have enough money to buy a sticker, which he always took the time to help us pick out. It was in this space I fell in love with bicycles; the smells, the sounds, the language of cycling. Unfortunately this is something the next generation will never experience.
    At 14 I started working at the local bike shop, at 30 I opened my own. We were a 2k square foot high-end shop catering to road cyclists and triathletes. It was an open concept floor plan. We had an espresso machine and a café atmosphere. Customers were encouraged to “hang out” to stay, to have a coffee and chat with me while I assembled a 6k custom Serotta right in front of them. We ran rides twice a week from the shop, let customers clean their bikes in our bike wash, use our tools, establish a community; we became a destination. When our customers needed something easy like a chain, or a tube, they came down and bought it from us instead of going online. It felt as if I were finally able to give back, to share with a new generation of adult cyclists that feeling I had as kid; that love of bicycles.
    I recently moved to the Bay area. There are 5 shops in my general vicinity. I am a firm believer in supporting local business, so I have been to them all. From the multi store chain retailer to the local hole in the wall my experiences have all been similar: a mechanic who was “too busy” to simply acknowledge me standing in front of him waiting patiently to purchase a brake wire, a young woman aggressively attempting to sell me a mountain bike while I was purchasing a tube, a condescending and dismissive “yeah, I’d take you up riding with us, but all the trails are secret so…” when I asked if there were any good mountain bike trails in the area. I won’t mention the consistent rolled eyes, sighs, and lazy walks to the cash register because a tube purchase was barely worth the time.

    I now purchase everything I need online.

    If you own a bike shop, or work at a bike shop, and are reading this…you are the problem.


    1. Author
      Rick Vosper

      Wow, Steve. I have nothing to add to that other than “all the trails are secret” is code for “all the trails are poached.”

    2. winky

      Rings true with me. The lack of attention, too-busy mechanics and dismissive attitudes of our nearest shop became a running joke between my wife and I. We both had numerous experiences over a year-or-two of walking in with cold, hard cash in our pockets, ready to spend….and then walking out some time later, ignored, un-served and frustrated. I ended up emailing the owner. He responded with an apology and a gift of a $250 store credit (which we never cashed).

    3. Robert Sullivan

      There are still bike shops like that. Not sure about the bay area, but in Chicago there was an article in Inc about a do-it-yourself shop. Get your hands a little dirty, have a cuppa.

    4. Jackie Gammon

      That’s a lot to assume there Steve! You’re making an incredible assumption that we all operate in the same manner, some do… but others do NOT and I am one of them. So while you are criticizing every shop out there; why is it that you are shopping at other shops when you used to own a shop?

  12. Jeff

    Hey Rick
    What is your take on the recently announced Trek Connect initiative? Be interesting to hear what you have to say. Maybe you need Part IV to this series of articles?


    1. Author
      Rick Vosper

      Hey Jeff, funny you should mention it. Look for the piece on this very topic about Interbike time.

  13. Robert

    speaking from Brooklyn we have great LBS’s that are friendly and provide lots of free service to their sold bikes (Bicycle Habitat, Sid’s Toga, etc) plus a Rapha store that has take more money from me than I care to imagine, plus some smaller independents (MagliaRosa we love you) that I hope can make a go of it.

    I think demographics always play a part, boomers are aging out, the birth boom did not resume till the Millennials afaik so give them a few years and they might come along to spur the growth again. Then again they don’t like to own things they like to share.

    The Mamils all went for running and cycling in the last 10 years, but I think there are fewer of them since they were GenX and GenY.

    Another factor is the loss of the middle class- and this is perhaps bigger. The last 10 years have seen significant stagnations in wages, benefits, all while the cost of living, housing, food as gone way up. There are just no jobs, for average working folks, and families with kids on middle class earnings are probably stretched way thin.

    Those are my two: demographics and middle class stagnation.

  14. Bryan

    It is certainly disturbing, looking at the decline in bike shops, it seems like a scary trend.

    This conversation has revolved around bicycles sold, that interesting premise, I think it may be where we are missing the mark.

    How many shops make money on bikes? As someone pointed out a shop invests a good chunk of capital in bicycle inventory, margins are generally 30-40% so a $5k bike they are tying up at a minimum $3k in the bike and as much as $3500. If a shop has $100k in inventory on the floor they have either invested $60k-70k or took on a liability that large.

    Many times freight cost is added on top, someone had to be paid to order it receive it and build it (the little margin that is here is disappearing fast) Let’s assume by the time you pay for the bike, the build, ordering, a sales man to sell it, etc best case you make $1k on a $5k bike and if you discount it to recoup your money before it is out of date, you likely did all that work for zero dollars.

    Most shops are spending and tying up way too much money on product that doesn’t pay back, the bikes themselves. Then they give that bike free adjustments for a year etc and the margins are gone.

    This gets compounded by big bike brands forcing more and more product into shops even when they know the shops can’t support it because the brands have their own prerogatives and protecting an LBS isn’t on of them.

    If we looked at a breakdown of HOW shops make money I bet most bike shop owners would be surprised to find that the majority of actual income comes from P and A (especially helmets shoes and clothing that SHOULD be tried on first) and service. Yet there capital is primarily tied up into the bikes themselves.

    I don’t have any firm data to back this up and that is why I think it would be a great addition to this article or future piece. How do bike shops make their money, maybe the question shouldn’t be where have all the bike shops gone? But where have all the bike shops gone wrong?


    1. Author
      Rick Vosper

      Hi Brian,

      Wow. So much great stuff in that comment, I’m not sure where to begin.

      As discussed in the first piece in this series, bike shops are lucky to break even on bikes. For sure they have some anciallary advantages, like driving equipment and service revenues, but they’re basically a wash. And yes, the majority of bike shop profits come from PARCS (labor is barely a two-digit contributor to gross profits).

      The question of how much dealer capital bikes tie up gets really complex really fast. At the most basic level, the majority of bikes are on preseason dating programs, so in theory the bikes are sold before they have to be paid for.

      The reality, of course, is rather different. The number of variables is very high, and 100% of the risk is assumed by the retailer. And remember those extended preseason terms? The bike brands certainly aren’t paying for the cost of carrying hundreds of millions of dollars of credit; those costs are built onto the pricing structure to retailers and, ultimately consumers.

      Some other time I’ll explain why this isn’t as bad a thing as it sounds like.

      Cheers,

      –rick

  15. Pingback: San Jose Bike Practice tomorrow, and a roundup | Posts

  16. LesB

    Years ago I was listening to a caller on the radio who was from out of state, and he was bitching about the weird people in this state. For example, hardly anyone smoked.

    Yeah, that’s us weird Californians, hardly anyone takes a stick of rolled leaves, sets fire to one end and sticks the other end in his mouth.

    I don’t know how the data you present pertains to Caly, but to my observation cycling is on the increase. I witnessed how in one year the bike traffic on the SoCal bike path went from occasional to flush. Mostly cruisers, but still the 2-wheeled contraptions. In the Palos Verdes Peninsula or, or in the Santa Monicas, or commuters in urban streets, there’s cyclists aplenty. Just my observations, but I’d be surprised if cycling is down in Caly.

    And to my experience, another weirdness here is the bike shops. I am quite surprised at the poor bike shop conditions described. As far as hours, friendliness, and just good business practice, almost all I’ve seen has been quite positive.

    The only shop closing I know of is when the owner of the Palos Verdes shop died, and the shop died with him.

    Los Angeles and other cities are encouraging cycling while spending cash on bike infrastructure. There is certainly encouragement from government entities. A couple of times a year city streets will be blocked off for a day to create a path for a citizen bike event called CicLAvia. Cars be damned on those days.

    I see increasing numbers of homeless on bikes, and I don’t know if that population is reflected in the rider statistics you quote.

    Maybe it’s in cultural attitudes. People here generally have a positive attitude toward cycling. To my experience. Sure, we bitch about the occasional driver who vents his repressed anger at us on the road, but they are the exception. People I talk to think it’s cool that I ride.

    1. winky

      Yep, my un-scientific observation is that cycling is booming here in Vancouver. Near bike jams on the bridge on my morning commute. Newly expanded bike lockers at my office are now often completely full. Queues for the showers at work. About 75% of my small team (8/12) commute by bike regularly, if not religiously. Saturday and Sunday mornings on the popular bike routes are now so crowded with bikes that motorists are choosing alternate routes at these times. Significant investment in bicyle infrastructure (well more, anyway – still microscopic compared to spending to accommodate cars), in spite of a lot of highly vocal and predictable opposition from motorists. More bike shops than when I moved here 8 years ago. Schoolkids on bikes aren’t common, but this may be partly because I live in a hilly area and many are discouraged by this; and partly because helicopter, snowplough, scared, paranoid, “don’t trust the man in the big white van”, stranger danger, irrational parenting styles.

  17. Trey

    A part of this is upsetting, but another part is not. In the last 20 years there has been a massive shift in how retail outlets operate in general. Even more so in the outdoor and other recreational industries. The small sporting goods stores are all but gone, the hobby shops and toy stores as well. The problem however is not just all the graphs and numbers, (they are as much of a harsh reality check of the results of how things have unfolded).

    Since we’re talking bike shops, I’ll reference those. One of the single biggest mistakes is that small retailers always try to work things from the top down. They look at the limits…. lets say a box (for visual purposes), their suppliers, banks, land lords etc and operate based on staying inside that box. Sure, they act on what the demand in their area requires, but the limit their potential to expand and grow because of staying in that box.

    Now, WHY do they stay in that box? Because they have defined in their mindset of what a “Bike Shop” is and they expect their suppliers, banks, landlords…. and worst, THEIR CUSTOMERS to follow that mindset. Most dealers I hear complain about MAP, buy local, internet, chains, big box, etc, are making the mistake of feeling entitled. I don’t mean that as an insult, but they’re sitting still waiting for a massive industry to come in and save their asses all while that massive industry is using its more prevalent resources to GO OUTSIDE THE BOX and make the necessary changes to grow. Trek selling online (to get more “clickers” to buy Trek first…. THEN go to the LBS).

    Despite how good a shop it is, their customers are going to continue to buy online more and more, and the up and coming generation is going to do it that much MUCH more.

    So how can less shops be better? Sure, that sounds horrible, but it not about us. Its about what the consumer demands. There are a lot of shops that closed simply because consumers didn’t see what that shop could do for them any longer. If a consumer can buy the same thing from their couch cheaper (not going away), learn how to adjust a derailleur on youtube, and use social media to organize rides there are few reasons to go to a shop. However, the shops that ARE more forward thinking and spend more time adjusting their business model than they do complaining for the industry to change are the ones staying open. THIS IS THE GOOD PART OF ALL OF THIS. These shops are creating a new standard/business model of how future shops should run, and when more and more people decide to open a shop, it will be base on a newer mindset that operates based on how the CURRENT industry ticks. It may get worse before it gets better, but it will come around again.

    OUTSIDE THE BOX:
    I shouldn’t make a statement without giving some examples.

    – Retailers need to look outside the walls of their shops and generate local partnerships. For example: Think of cycling being a healthy lifestyle and who could benefit from it. Okay, just about everybody. Now think of organized groups that also promote a healthy lifestyle. Health food stores, gyms, (yes, gyms including those crossfitters), CORPORATE WELLNESS PROGRAMS, etc. You know what ALL of these and their participants love? More knowledge on how to have a healthy lifestyle… especially if it can be fun. Doing simple ON SITE presentations just before the season starts, party invites (see below), etc can produce surprising results.

    – Get involved with a cause. If your shop isn’t involved with a cause or charity, shame on you. Consumers LOVE events that involve goals, social gatherings, (have a kegger for heaven’s sake!), and A TEAM ENVIRONMENT.

    – Party! Have at least 2 parties a year. Just for the hell of it. Get companies and reps to donate swag (which many will), have lots of boos, and something like gold sprints to give the crowd something to laugh at for weeks.

    The shops that operate like this and don’t let the things they can’t control hinder them are the ones not only surviving, but GROWING.

    1. Quentin

      I’m surprised I had to go this far down in the comments before someone pointed out the fact that this phenomenon is hardly unique to bike shops. You can add book stores and record stores to the list of the types of local businesses that have been squeezed. I’m sure there are similar blog posts out there somewhere with similar charts illustrating the decline of all of those businesses as well. My guess is that most of the shift in how retail is done has played itself out, and the dire looking declines in all of those charts will level off over the next few years.

    2. winky

      Yep. The future of storefront retail is to sell experiences, not things. It is more efficient for people to buy things online. Experiences are experienced in person.

    3. dave

      I think local shops need to stop pretending they are missing out on sales just because ‘the internet is taking them’ and start stocking product they believe in, they will definitely need, and sell it to customers that need it now. Programs like “Buy local” that make customers think that they are able to buy from a local shop just confuses customers who want to purchase something now. Do you know how frustrating it is to see something available on my local bike shops website only to find out that they don’t actually have it in stock, I can’t have it today and I could have had it faster if I just ordered it online?

      The other thing that is frustrating is the absurd shops that get so upset that you purchased something online that they won’t even service your bike. This is more common than I can express and I would be willing to bet that half these shops have owners with an amazon prime account so they aren’t strangers to online ordering!

      If shops focus on curating the correct product for their store and provide friendly service in their store regardless of what the customer is bringing in and combine that with community outreach they can be successful. If not, then there are alternatives and customers will find the path of least resistance to get their products.

    4. jorgensen

      I can only comment about LA and SB California. In both places the numbers of “regular” folk I have seen riding bikes is up.
      While anecdotal, it is noticeable. I have looked at what they are riding. Older bikes or big box store brands are the lion’s share.
      Bikes do last reasonably well. The big box bikes have become better, that has hurt the separation that local bike shops used to have, enjoy and exploit. It would be a challenge I think to be a Schwinn dealer today with the binary distribution.

      I was asked to help select a few bikes recently for acquaintances. I reviewed what was around, and made my recommendations.
      No bike shop had the bikes in stock, multiple brands, multiple shops. One multipoint dealer had ONE but it was a 40 mile drive. Not a lot of interest to order the bike either. My guess they were collectively afraid to have a bike end up sitting on the floor.
      So, plan “B”, Craigslist. I found two bikes, both “used” but barely used I might add, and at about 30% of what a new bike would cost. Done. A bit of my help to set them up to size and verify the mechanicals.
      I think the above data presented in the article is more of an indictment of the local bike shop business model from the data available than the segment as a whole.
      Trek and Giant exploring direct sales and set up at a bike shop is a reaction to the dealer base not being able to inventory the brand’s range effectively.

  18. Pat O'Brien

    When you dismissed the “Lance Effect” I wondered if Trek would agree that Armstrong had no affect on their sales. The guy hasn’t won any TdF today, but he sure had during that time. Did you contact Trek to see if they got their money’s worth from sponsoring him and the team? Subjectively, I have not researched this, I think I observed a marked increase of sales of bikes and riders on the road during that time in SE Arizona, especially Treks. I am curios if other RKP readers agree that those years, 200 through 2008. The business practices, especially moving all production off shore, has caused me to quit buying any bikes from the big three. Only one Trek in the garage, an older 520. New bikes these days are bikes built in my LBS from components selected by me with their help. It doesn’t cost much more, sometimes at the same price, than a comparable big three bike, and you get exactly what you want. They even built the wheels for my last bike purchase, a SOMA ES model with 105 groupo, except for BR-650 long reach brakes and Cane Creek headset.

  19. Stephen Barner

    The comments about Lance are really off-base. He did, indeed, win the TdF seven times, and much later had those wins taken away. The effect of the latter on the industry happened long after shops and manufacturers benefited from those wins. To deny that Lance put fresh life into the road bike market is to rewrite history in a very inaccurate way.

    I entered the bike business in 1971 and, while I have been out of retail since 1987, I have continued to follow it. I live in Chittenden County, Vermont, which has a population of only 160,000, yet supports seven bike shops, not including a Dick’s Sporting Goods (apologies to the two mechanics there, but I just can’t count them as an LBS). In the past twenty years, we lost two–one LBD and the closing of the bike section of EMS. The shops that remain range from “getting by” to “busy as hell,” and this is in an environment that lacks bike infrastructure, has a short season, and offers challenging terrain. Most, but not all these shops have other products to carry them through the off-season, such as skis or exercise equipment. Both road and mountain segments seem equally strong.

    I don’t know what the secret sauce is for the bike biz in this area, but I suspect that some of it is the prevailing environmental mindset, and some is due to the fact that, when you live in an area this small, you quickly learn to be nice to people because you are going to be running into them again and again. People seem to get the sense that their local shop is there to support them, so they don’t hesitate to go back.

    I wonder what came first, the loss of the shops or the loss of the customers. Most of the people who frequent bike shops are those with little experience and/or ability to fix their own bikes. That’s a good thing, because the industry has structured itself to shut the dealer out of the profit side of selling bikes. I regularly visit a few shops that sell primarily high-end bikes, and they tell me the same thing, they are not compensated for their work in selling bikes of any price range. Their profits are in parts, repairs and clothing, for those shops that sell soft goods successfully. If the shop isn’t there, the entry or mid-level customer isn’t going to have a place to buy a bike, and they’re not likely to travel in order to do so, or take the leap to buy a bike online. They’re just going to go do something else.

    The real value of shops to the sport is getting riders started, supporting them, and making riding fun. Most riders will never become enthusiasts, but the shop can have a lot to do with them not leaving the sport, entirely. Part of the fun part is making sure the customers believe they are getting good value. It has been my experience that almost all customers like to think that they are getting a deal, and so the more advanced cyclists are not likely to be purchasing high-end components from an LBS, unless they have so much disposable income that they understand the value of the convenience, expertice and support that the LBS provides. To build respect for the shop requires knowledgeable, experienced staff–a guy who thinks his Seven is going to be clamped into a repair stand by a 16 year-old is likely to seek out an alternative. A customer whose bike is ridiculed by a shop rat is not having fun. The key for shops to retain profitability is for them to be inviting places where customers know that they will be treated with respect and where they get the feeling that the shop really cares about their positive experience. There are certainly areas where the local culture just won’t support an LBD, there are poorly sited shops, there are poorly managed shops, and there are shops that fail to be dynamic and change with the market. We cannot expect them to survive. On the other hand, well-run shops in receptive markets can do a lot of good for cycling as a whole. What really needs to happen is that manufacturers need to restructure pricing so that the dealer receives a reasonable percentage of the overall profit.


  20. Author
    Rick Vosper

    Re the Lance Effect: yes, the remark was ironic, Yes, there was a huge increase in bike sales fueled by LA’s popularity, which I refer to as the road bike boom–which it undeniably was–out of personal preference. Yes, Trek profited greatly from the boom, probably more than any other bike brand. They also did a very professional job of disengaging from the relationship once it became obvious their star was not what he claimed.

    1. AC

      They did a rather unprofessional job of siding with their star when he was pissed at their former star for calling him a doper. And perhaps I’m just cynical, but I viewed their disengagement not as withdrawing due to surprise of his deceit, but rather distancing themselves from getting dirty after what had been a productive relationship. Regardless, he sold a lot of bikes and I would argue had a net positive effect on the cycling industry.

  21. Kevin Wallace

    We have three stores in Canada which helps us get a handle on certain trends.
    We opened our business in 1987 and have benefitted from both the Mountain and Road Bike booms.

    We started noticing a decline in Road in 2012 and had to adjust our business model. We contribute some of the declining factors to Lance’s retirement, many shops getting into road too late which created fragmentation of the market and manufacture oversupply which continues to perpetuate the current buyers market.

    Our customers are on average very well established, well educated people who can source information and value quickly either on-line or through their fellow cyclist. It is definitely getting harder to buy bikes at full wholesale and expect to make a decent margin therefore to survive in this market we are always looking for opportunity purchases to service the market demand for quality and value.
    We are looking at electric as our next growth segment and forecasting that electric may have the same growth trajectory as road and mountain in the past.
    The casual lifestyle clothing opportunity to go along with this category is also compelling.
    The opportunity of electric bikes is exciting as we potentially can introduce a new demographic into our sport but the cost to finance the critical mass inventory that is required to be profitable for an average bike shop could be a barrier.

    I believe the bike industry needs to embrace the electric opportunity to backfill the decline in these true numbers presented in this article.

  22. Gene Sanders

    When I wanted starter bikes for my kids, the local bike shop folks were too busy discussing the group rides my children couldn’t possibly do to help us. Eventually, we walked out and headed to the local Target/Walmart where a crap bike was purchased. Components were maladjusted and/or broke way too soon. Bottom line: my children rapidly lost interest in cycling, and as adults don’t. 20% –> 10% –> ?
    How important is customer service, even toward those who don’t look like your immediate profit generators? Well, we’ve lost a whole generation if my children are an accurate indication.

  23. PedalRon

    And with Trek starting direct sales to customers, things could get worse!

    Also, I know I’m in the minority, but my city of 250,000 has three established shops and another one just opened. That’s just in the downtown alone. If I hit the burbs I have a local/area chain, then if I head one city over, I’ve got a bunch more independent shops, plus Performance. I know, I’m lucky, not trying to rub it in at all.

    The crazy thing is that at one point, around four years ago, when the local chain moved from downtown to the burbs, we had ZERO.

  24. gmknobl

    Apologies for missing a post that made this point already. In my town, we’re fortunate to have more bike shops that we had in 2000. But I have noticed the increase in prices. So, I have this thought. Bikers have seen an increase in cost for bikes and equipment. So, the bike shops are charging more. If they aren’t making as much or their profits are flat, this means either they aren’t selling as much, which you mention but I’d be willing to bet they are being charged more by the supply companies such as Trek, Shimano, et. al., for their products. They try to pass on the price increase but in this economy, that’s hard. And why is that? Because individual incomes just aren’t going up at the same rate that prices are going up. Now, why is that? Most know that this is due to our current tax structure, taxes on corporations and the whole Anti-Keynesian view that’s run rampant on everyone’s pocket books. But there’s another factor as part of this. Trek and Cannondale, for instance, started out making their bikes in the U.S. At some point, they started shipping this labor out of the country, hurting both the local economy in such places a Bedford, Pennsylvania, and increasing their profit margin due to cheaper labor. Were those cheaper production costs passed on 100% to the consumer? I have my doubts. Also, are those cheaper production costs still there or were they all taken up in the previous decade+? It’s sort of a one time discount in that you can only do it once then there’s no other places to go to make things cheaper unless you can find more slaves and don’t think large corporations don’t try that. And to bring back production to the U.S. seems anathema even though that actually puts some dollars back into the economy.

    I’ve gotten tired of having new frames break by a simple fall so I’m out of a bike for now. Aluminum can’t easily be bent back into shape. So, I’d like to get a fairly light steel or titanium frame – say sub 20 lbs. for the whole bike. My local bike shop won’t sell me that for anything less than $4000. I can’t afford that. So, I’d thought I’d try a local builder, of which there are… one. 611 Bicycle Company won’t take emails and won’t return my phone calls. Either that company has too much business or it’s having other issues. But it looks like I’m going to have to go the used frame route vial eBay or Craig’s List. I don’t like that idea but I’ll probably do that when I can get up the scratch.

    I want to support one of my three local bike shops but I, the consumer, have been priced out so I must go bargain hunting. I’d love to hear others’ ideas and suggestions.

  25. Pingback: Interbike « The Professional Bicycle Mechanic

  26. Willie Davis

    I run a shop along the Great Allegheny Passage in the most visited state park in PA. We do very well for 3-5 months a year. Our biggest threats to our bottom line is the unpredictable weather, and the self entitled hipster/disgruntled cheap old hippie demographic. You can go totally out of your way to find them a bolt for their rack, thus saving their ass, but then try to make you feel bad for charging a buck, or you replace a spoke on the spot and they gripe about $20. Granted, I’ve received many a tip in the form of a $10-20 bill and or good beer/dank green, but those customers are very few and far in between. I actually had a group of Hipsters all on Surly Long Haul Truckers who didn’t know how to inflate their presta valves. It was an Oxymoron if I ever saw one, but took the time to show them how, and they scoffed at $6.36 per tube so they’d have some backups. I see both sides of the fence. Many shop employees have become so disillusioned by the demanding/cheap customer that they become a product of their environment. I still go out of my way, but if you’re a cheap ba$%#^d and treat a lowly wrench with disrespect, you will get the same attitude back, double.

Leave a Reply

Your email address will not be published. Required fields are marked *