2018 Interbike Impressions: The Bad and the Ugly
Last week, we summarized the best trends we saw at the annual Interbike trade show: cargo bikes, adventure bikes, bikes made-to-order, and efforts to raise professionalism standards among bicycle technicians.
Unfortunately, not everything about our industry is uniformly encouraging. There are many things that could use improvement, and a few that need an overhaul. So, without ado…
The Bad and the Ugly
Like many others, the cycling industry is in the midst of trying to adapt to a shifting marketplace. Not only have we been mired in a long period of stunted growth, we are facing a tremendous challenge in the form of new tariffs on almost all products (helmets being the notable exceptions) coming from China. We can debate all day long whether relying on Chinese imports is good or bad. Perhaps we should work to change it, but —at present— it’s simply the reality of the American marketplace. And anything that leads to increased pricing in an industry that is less than booming is a cause for grave concern.
Not enough cohesion
So, in my naivete, I was kinda hoping for the bicycle industry to come together and rally around some common causes. Personally, I was encouraged that, after decades of being staged in Vegas, Interbike finally relocated to Reno, with quicker and better access to recreational areas of unsurpassed beauty. How disappointing that the vast majority of the industry’s major players elected to sit out! Trek has long stopped attending trade shows. But absent this year were virtually ALL major bicycle companies, including our mainstay Kona.
Not enough true support for the Independent Bicycle Dealer
I can’t help but conclude that these companies simply don’t place enough value on their relationships with those of us who actually sell their products to consumers. True, a number of those companies, including Kona, host dealer events at their own facilities and on their own dime. However, such events (a) require retailers to travel to several different locations at different times, rather than having everything under one roof, and (b) are often by-invitation only, and smaller shops often get bypassed in favor of larger-volume players. We are expected to project our purchases for the upcoming season, taking considerable financial risk, without the opportunity to preview the products we’ll be selling.
Too much money being pumped into e-bikes
E-bikes are clearly a growing market that’s here to stay, but there are way too many players fighting over what is still a relatively small slice of the pie. E-assist is a terrific option in some applications, especially cargo bikes. However, the industry is making the “me-too” mistake of adding e-assist to virtually everything, which results in skyrocketing number and variety of products pumped into the marketplace, before a solid customer base to support those products is in place.
This is bewildering not only to consumers, but to bicycle store personnel as well, and makes it difficult to know which products to stock and recommend, and which of the rapidly proliferating companies are going to be around in a few years to continue to offer support for their product.
… and “enthusiast” categories.
Actually, this “me-too” approach is nothing new in the bike industry. While it makes sense that new trends (fat bikes, gravel and endurance racing, bikepacking, etc.) drive innovation, the enthusiasts who fully participate in those categories and purchase high-end products are relatively few. Nevertheless, such trends result in rapid proliferation within those enthusiast product categories, while the needs of everyday and lifestyle cyclists go largely unmet. This is why I believe cargo bikes and bikes for everyday adventures have been so well-received: they answer the needs of individuals and families who are not looking to enter races or endurance events, but simply seek to do more of their transportation and recreation locally and without a car.
Not enough emphasis on kids bikes
For an industry that’s always crying about dwindling ridership, the bicycle industry does a woefully pathetic job of developing, showcasing and promoting children’s bikes. With the exception of a handful of specialty companies, such a Cleary, Frog, Woom Bikes and the like (for whom it may be financially prohibitive to exhibit at Interbike), few bicycle manufacturers give more than passing attention to developing future riders (riders, NOT racers!). Unfortunately, partly because of economies of scale, and partly because of quality, these few specialty companies don’t deliver products that meet most parents’ expectations of what kids’ bikes should cost. On the other hand, the large established bike companies seem more interested in chasing and investing R&D dollars in the uber-enthusiasts, who arguably represent only a minuscule segment of the cycling public, rather than on fostering future generations of every-day cyclists.
We would welcome at least a portion of that investment going instead to developing lighter, and still affordable, children’s bikes with more attention paid to proper fit across a wider range of ages, particularly for pre-teens who fall in the uneasy area between 24” juvenile bikes and adult bikes, and for whom it is notoriously difficult to find a well-fitting, well-priced bicycle.
Deplorably poor marketing of the value of the bicycle
Finally — and this goes back to the splintering of the industry I mentioned at the beginning — we seem to be more interested in promoting particular agendas than in coming together as a whole to promote common interests of the industry.
I have worked in the bicycle industry for 25 years, and tried to (and watched many others trying to) maintain a viable business at 35% margin on bicycles. Almost everyone in the bike industry agrees that this margin is not sustainable, particularly since most independent bike shops can’t make up for low margins with higher volume, and since many bikes end up being sold at a discount. So we supplement with accessories, parts and labor, all of which command higher margins. In the end, and under the best circumstances, those who keep a neat house can make a living wage and a small profit.
However, there’s a problem with this model. The cost of living has gone up, while the same is not true of bike prices. With the rise of online selling in particular, manufacturers who distribute bikes through conventional channels scramble to compete on price and drive the average price of a bicycle down. It doesn’t take a math whiz to figure out that 35% margin on a lower price bike yields fewer dollars than the same margin on a higher price bike, and we’re not selling more of the lower priced bikes to make up the dollar shortfall.
As a result, we’re trying to sustain our businesses with lower margin dollars (on average), while the cost of virtually everything — rent, utilities, wages, insurance, credit card processing, etc. — has gone up. In know I’m repeating myself when I say that, yes, bike manufacturers continue to produce higher priced bicycles for the enthusiast, but we have not done a very good job of convincing the everyday consumer and the novice rider of the true value of a quality built and quality assembled bicycle. Almost every day during the season we have turned away a consumer looking for a <$300 bicycle.
The solution is NOT making more <$300 bikes. That is simply an unrealistic expectation of what a safe and durable bicycle should cost, and what a reputable bike store can sustainably sell. No one expects to buy a $100 full-featured smart phone. Similarly, the average consumer should be aware that a respectable everyday bicycle should command the price of somewhere between $750-1000.
Yes, it’s a hefty price tag. But consider that a quality bicycle is a versatile, environmentally friendly vehicle for both pleasure and utility, an exercise machine, is supremely economical and efficient to operate, and, in the era of planned obsolescence, is remarkable for its sheer longevity. Marketing something based on its lifetime value rather than the newest technological innovation may not be sexy, but marketing on value and setting proper consumer expectations may result in not losing those consumers to Walmart, or turning them away from cycling entirely.