Saturday, April 26, 2008

A Twitter exchange

An interesting exchange between me and one of the folks I follow on Twitter.

Twitterpeep: "Assembling a new bike for Mr6 - I better make sure everything gets screwed on tight!"

Me: "You have to assemble a kids bike? Isn't that the job of the retailer?"

Twitterpeep: "From a bike shop sure but this was purchased from Toys-R-Us and I trust myself more than I do their staff."


Question? If consumers don't trust big box staff, why do they trust their products?

So what holds folks back from purchasing from an IBD? Is it only price? Is it convenience? Is it just shopping habit? Or is it us?

It can't be convenience, because there are more IBD's than big box retailers, we are usually around the block somewhere. Price? How much is a consumers time worth? Is this a calculation? We deliver the bike to consumers assembled to standard and with a higher quality which saves them both time and sometimes frustrating effort. It can't be habit, consumers show very little brand or retailer loyalty these days....maybe they don't trust us either.

Posted by Phil at 9:25 PM 7 comments

Thursday, April 17, 2008

Feeling gassy?

In recent days, weeks and months many conversations have been had about the current state of the US economy (and the global one for that matter) and the pressures put on Joe Consumer by the high (and climbing) prices of gasoline. Here in California, gas has been over $4.00/ gallon for weeks now and some experts believe that $5.00/ gallon gas will be here by the summer driving months. For stressed out wallets and budgets, that might just mean making some serious decisions about driving habits.

Here's the thing though: the current high gas prices are not the answer to the cycling industry's prayers. Not yet anyway.

US consumers are far too used to driving their cars. They practically live in them. We have all kinds of luxuries built into them. Our cars have become our sense of self for many of us. $4.00+/ gallon gas isn't going to change that any time soon. There are too many barriers to getting people out of their cars and onto a bike.
  • Lack of infrastructure- this one always raises quite a bit of debate, but in many cases people will not ride their bikes to commute- even for a very short commute- if they do not feel safe. Bike lanes are not the end-all answer, but they sure do help and address the major concerns of most people. This infrastructure applies to public/ mass transit as well- many people live far from their work (I live 40 miles away) and need to combine some form of mass/ public transit with their bike commute. Which means that we also need more commuter stations with lockers, racks, etc.
  • Lack of support- there are tax incentives for people to carpool or take public transportation, but none for cycling to work. Plus, how many of us have access to showers at our place of work? Not many, according to most studies I've read.
  • The dreaded retail experience- this one raises a lot of debate as well, but the majority of non-cyclists find the Bike Shop experience to be intimidating or downright unpleasant.
  • The price of gas isn't "that bad" yet. It is going to take gas prices well over $5.00/ gallon to really make people uncomfortable pumping gas into their cars. It will take gas prices, I believe, nearing $10.00/ gallon for us to reach that critical mass needed to tip the scales in favor of more people commuting.
  • The Gub-ment. The price of gas is such a sensitive issue and politically charged enough that it is in the daily discourse of the power holders in our capitol. Even John McCain, the presumptive Republican candidate for president, is talking about putting a temporary hold on the federal fuel tax over the summer to keep gas prices down. Driving is such an important part of our nation's economy that the politicians want to protect driving... not discourage it. The US car makers wield amazing power as well- they have successfully lobbied against legislation to improve fuel efficiency of their cars. We'll reduce federal taxes before we force car makers to improve fuel standards? Insanity.
  • The cycling "stigma". In the US at least, bicycle commuting is still widely viewed as something only poor people, convicted drunks with no driver's licenses or "losers" do.
I see plenty new large vehicles like Escalades and Hummers driving on the southern California freeways every day. The economy may be hurting, gas might be expensive and "going green" may be getting more popular... but people sure do love their cars. And our government likes it that way.

Those folks who are already on the fence, already considering bicycle commuting, might now have the needed incentive to begin commuting by bike. Maybe. An increase in gas prices is not going to be enough to drag the masses out of their heated/ air conditioned, rolling office/ entertainment centers. Not nearly.

There is hope though. There are more bicycle commuters now than there have been since the gas crunch of the late 70's. More and more manufacturers are embracing the product category. More communities are getting behind initiatives to get residents onto bikes. More companies are providing incentives to employees to ride their bikes by supplying lockers, showers and bike racks. The lobbying efforts of the industry and advocacy groups are beginning to get the attention of the check writers in DC.

All in all, things are improving. But... this continued talk about higher gas prices saving the industry from the throws of a bad economy (and rising costs) or being the catapult to move it into a post-Lance renaissance is foolish. We still have a lot of work to do and we still need to find new and better ways to reach out and pull in new consumers (non-cyclists). Otherwise, no amount of high priced fuel is going to save us.

Feeling a little gassy? I know I am...

Tim Jackson
Chief Kool-Aid Dispenser

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Posted by Tim Jackson at 9:46 PM 15 comments

Sunday, April 06, 2008

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

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Posted by Tim Jackson at 9:34 PM 3 comments