By Tom Demerly.
“Support Your Local Bike Shop” has been a battle cry of hipsters, struggling shop owners and condescending vendors for three decades. The emergence of this flaccid anthem corresponds with the rise of e-commerce, Amazon.com, e-Bay and a host of technologies that make consumer shopping more convenient.
My first bike shop went out of business after 17 years because I wasn’t a good enough businessman to compete in an evolving market.
I deserved what I got. It’s that simple.
Like every business that relies on discretionary income- from computers to boats, skis and electronics, specialty bike retail has had to evolve to survive during the last 30 years. Some dealers have survived, many have not.
But the pouty little bike shops still beg for support, as if they are some quaint, soulful charity instrumental to the sport of cycling itself. Save the whales. Save the harp seals. Save the local bike shop, because they are incapable of saving themselves, again and again. Statistics prove that.
The rough n’ tumble natural selection of capitalism has been as hard on the quaint little bike shop as evolution was on the dinosaur. That’s not all bad.
A whopping 2,140 bikes shops went out of business in 13 years from 2000 to 2013.There were 6,195 independent bicycle retailers in 2000 but only 4,055 shops in 2013 according to bikeleague.org. That’s a 35% decline in independent bike dealers in 13 years.
“During the same time cycling grew across several specialty segments there was a 35% decline in the number of bike shops.”
During this same 13 years cycling grew across a number of categories including women’s cycling, triathlon, charity rides and other categories. The National Bicycle Dealer’s Association wrote, “The overall size of the industry has remained fairly stable since 2003, with sales between $5.8 billion and $6.1 billion each year”. In England the BBC World News said, “More than two million people across the country now cycle at least once a week, an all-time high. For businesses in the cycling industry this means booming sales. Sales [at some retailers] were up 11% in the year to 27 March 2015.”
Why did so many small bike retailers close when the sport remained stable and some segments grew so fast through the recession?
The answer is simple: most small bicycle retailers are great bike enthusiasts, but rotten businessmen.
Ask me about Jacques Anquetil’s bike position, the dimensions of a 2010 Cervelo P3, the ergonomics and battery life of Di2. I can orate on these topics with expertise.
Ask me about E.B.I.T.D.A., business valuation, tax strategies, inventory turn rates, just-in-time fulfillment and the discrepancy between net and gross and you’ll get a sideways puppy stare. I’m a five-time state cycling champion and Ironman triathlete, not a Harvard MBA.
That describes most small bike shop owners; long on enthusiasm and short on business acumen.
The surviving bike retailers have divided up the growing pie of cycling sales with new distribution channels that include big-box national chains like REI and Performance Bicycle along with sophisticated brand specific online retailers like Rapha cycling apparel and ultra high performance niche bike brands like Dimond and Canyon. And there are the thousand-pound e-commerce gorillas (or guerillas) like Amazon.com, Alibaba.com, e-Bay and others.
Some surviving (formerly) independent retailers have aligned with major bike brands to reinvent themselves as brand-specific stores, surrendering most of their autonomy and uniqueness to the perceived strength of a national brand that does their marketing, inventory planning and merchandising for them. They’ve given up their identity to “The Man” but garnered some big-brand marketing inertia in return. They are the “McBike” shop. Not all of these have prospered, with some stuck in the lethal “no man’s land” between unique independent business and massive national chain.
It would seem, in business, as in war, there are two distinctions in bike retail- the quick and the dead.
“Traditional bicycle retail lacks the sophistication found in other retail categories and is historically reluctant to benchmark new strategies outside of its own category.”
I love bicycle retail. It is one of two industries I have worked in. The other is war. In the past two decades I’ve noticed a set of similarities emerge between fighting a war against a rising insurgency and selling bicycles in a rapidly changing marketplace. One dictum prevails in both: To survive on the changing battlefield and sales floor you must be highly adaptive and willing to do things differently.
Three years ago I partnered with industry insider Scott Parr to open a new retail store, The Bike & Tri Shop, in Livonia, Michigan.
Before I made the commitment to go back to bicycle retail after my own business failure I needed to know what would be different about this new business.
Parr is a businessman. A spreadsheet guy. His background is diverse and he is a veteran executive of brands like Oakley, The North Face and Jansport. His expertise is in strategic and tactical business planning. He spends long hours merging data fields into analysis, analysis into budgets, budgets into projections, projections into business plans and then business plans into executable strategies. That is where I come in. He plans the operation, I execute the plan.
We aren’t a local bike shop. We’re not a brand store either, although we integrate brand merchandising into our business from several vendors. We’re a hybrid, specialty retailer in the road and triathlon category with a concentration in service, bike fitting and specialty product mix. As a result our customers drive past ten other bicycle stores for more than an hour to visit us, and those that don’t drive here interact with our social media and buy from our website. Our focus is narrow and deep.
Since we opened the Bike & Tri Shop our growth has followed Parr’s business plan and projections with a degree of accuracy that exceeds models from major military intelligence agencies. Scott planned our work, and we worked our plan. And while the first casualty of any operation is the plan, our combined industry experience, willingness to adapt and commitment to work have prevailed over hard Michigan winters, election year uncertainty and the normal volatility of a Midwestern economy.
Before Scott Parr opened the Bike & Tri Shop he conducted a thorough surveillance of the regional retail landscape, including intelligence gathering on brand distribution, proximity to intersecting north/south interstates and access to local cycling venues. He even collected intelligence on the locations of active local triathlon clubs and began liaising with them in advance of opening to assure the support of indigenous triathlon and cycling enthusiasts.
When Scott Parr opened the first Bike & Tri Shop location in Livonia it was in a half-empty strip mall across from a major automotive manufacturing facility. Since then the store has more than doubled in size and become a destination. This growth is contrasted against the backdrop of the automotive collapse in neighboring Detroit, and the city’s own sensational bankruptcy and descent into ruin.
But Parr has beaten the odds, and that’s not an accident.
Other retailers in our region who have also gone beyond surviving and grown during the past two decades of contraction in the bike industry include one of the oldest businesses in Dearborn, Michigan, Jacks Bicycle & Fitness. Founded in 1935 the family-owned business has navigated changes in the bike industry through WWII, the bankruptcy of Schwinn and the emergence of e-commerce. A current specialty of Jack’s is industrial bicycles for moving freight inside the automotive factory facilities of the southeastern Michigan. Jack’s has constantly adapted and reinvented itself. They have also taken a conservative financial approach to the industry, a factor partially responsible for their continued growth. Instead of begging for local support, Jack’s has explored untapped markets like industrial cargo bikes. Their innovative approach and focused product concentration has been rewarded with continued growth.
Jim Potter at Vecchio’s Bicicleteria in Boulder, Colorado is another example of an independent bicycle retailer who has strategically employed social media to deliver a well defined and unique brand message across a wide frequency band. Even though Potter’s store is a small business in the overcrowded bicycle retail landscape of Boulder he has differentiated himself by integrated retro-themed reverence for cycling’s history with a level of expertise in service unmatched even in the crowded Boulder market. Potter’s Vecchio’s Bicicleteria delivers on both the sizzle and the steak. That’s not an accident. He has also sought ought unique brands with limited distribution that he can maintain margin on so he doesn’t have to go head-to-head with Amazon.com.
There is a place for the independent bicycle retailer in the changing recreational sporting goods and consumer discretionary products landscape, but it isn’t for the traditional bike shop model of 30 years ago. The successful specialty bike retailer of today has evolved to focus on niches of niches, makes themselves appear larger than they are through social and contributory media and expands their reach using this media. They are light, fast and adaptive. They are also willing to put in long hours while maintaining meticulous attention to process and planning and staying laser-focused on business that turns a profit while ignoring the “shiny things” that distract from this critical priority.
These adaptive, fast moving, hard working bike specialty shops don’t ask for support, they earn it fair and square. And they never spend time whining about someone “saving” them for old time’s sake.