Shut Up and Drink the Kool-Aid!

It ain't all doom and gloom...

My post from the other day, on 3/26, may have inadvertently painted an overly pessimistic picture of what I think is happening in the cycling industry. For sure, the industry faces some very real and serious challenges in the coming year (or more). All of the reasons I pointed to in the post- rising costs of goods, extended leadtimes, a shrinking US economy, etc - are very real and are not going away over night. However, I do see hope...

Historically speaking, the cycling industry has ridden out massive changes in the US economy over the years. If the economy dips sharply or even climbs dramatically, the US (and global) cycling industry tends to plug along at roughly the same level of strength (that's both good and bad). We tend to simply float along down river without hitting too many rocks- regardless of the water level.

Here are a couple scenarios;
Good economy- People buy expensive bikes because they have more disposable income. During the dot-com boom, many shops found out that they could actually make some money selling high-end road and mountain bikes. It was a good time for shops that catered to a more affluent crowd. At the same time, many people were beginning to "think green" and the bicycle has always been a favorite of that crowd. More city bikes were beginning to crop up all over the place. Commuters were becoming an important part of the business for many retailers and manufacturers. Then there was that Lance guy who had a penchant for winning 3-week long races in France in July. His first win was in 1999 and it helped to catapult the US road market to new and unheard of heights (even though the mountain bike market didn't do quite as well). The folks at Trek can tell you how good that was for them... and it was good, in case you're wondering. Overall, during a strong economy, the bike industry draws in a few new riders to the fold and the regulars have a little extra coin to spend on a new bike or a few fancy upgrades or accessories. Basically, things plug along nicely and maybe a few folks make a nice little profit, but things don't go up too dramatically.

Not-so-good economy- During a flat, weak or faltering economy, the US bike market doesn't do too much differently than when things are good with the economy. Some of the regulars are no longer in a position to buy an expensive new rig, or maybe make the mega-upgrades so they end up making more conservative upgrades or maybe buy a new pair of $175 bib shorts instead of the $325 bib shorts and a new pair of super-nice carbon-soled wonder shoes. But, in their place walks in the consumer who is maybe giving up on the idea of getting that new Escalade or H2 and still wants to get themselves something unique and special... maybe something like a new full carbon bike with that new SRAM Red group and new Zipp wheels. Still cheaper than a luxury SUV, gets better gas mileage and even feeds the need to lose a few pounds. On that consumer's heels walks in the person who is so mad about gas prices that they have chosen to ride a bike the 5- 10 miles to work. Or maybe they're a starving college student without enough spare money to burn on gas, especially with tuition climbing and books getting more expensive. Essentially, the industry doesn't fall apart and business for a few shops is better than ever while a few others might have a harder time than their competition.

So see, it sounds pretty similar either way. Here's the thing- the industry always gets a few new shops each year and loses a few shops each year. New consumers enter the market, for various reasons, and some of the regulars depart. New strong niches show up all the time and the ones that have become saturated with too much product fade out of popularity. It ultimately stays roughly the same, regardless of the major economic swings.

Our challenge now is to draw in more people from outside of our existing customer bases. We need to embrace more commuters and Average Joe riders- there are far more of them than there are those guys who are going to walk in and spend a ton of money on a high-end bike. We also need to reach out to the aging population of Baby Boomers. We all know that they represent a huge mass of consumers and they want to remain fit and active. Cycling represents a great activity for them- low impact, great aerobic benefits and something that can be done in small or large groups. On top of that, many people are getting more and more concerned about the health of the planet and the impacts of global warming. Cycling is once again an ideal way for people to help the planet while helping themselves by saving money on gas and improving their health at the same time. BUT... and this is critical... we have to help them find safe places to ride. Without safe roads to use for their commuting needs, many folks will give up on cycling the first time a Starbucks-wielding, cell-phone-talking, distracted driver buzzes by inches from their shoulder.

The cycling industry, though faced with numerous challenges, has many ways to grow its health, even while the US economy staggers along like a drunken and penniless frat boy after a night of binge drinking. Sobriety will come in the form of figuring out how to cater to those who still want to buy our products, reaching out to new consumers, embracing the less glamorous commuters/ tree-huggers and working to provide more and safer cycling infrastructure for all. Sure, it won't be easy and it won't even be free, but it will lay the foundation for a stronger industry that can grow even further when the economy does eventually turn around again. "This too shall pass..." But we can do more than simply surviving through the usual status quo- we can grow and create a better future.

Tim Jackson
Chief Kool-Aid Dispenser

Labels: Hard Times Ahead, Health of the Bicycle Industry, Silver Linings

Posted by Tim Jackson at 9:34 PM