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Alternative Retail Channels Capture Cyclists

Published June 13, 2008

BY MATT WIEBE

SANTA CRUZ, CA—A perfect storm is building of people who cannot afford gas, who realize they have to change their lifestyle to save the planet and believe bikes are the answer.

The storm wind should be blowing these new consumers into the nation’s bikes shops at a dizzying rate, but that is not happening.

“Bikes are huge,” said Tim Parr, Swobo’s president. “People are riding everywhere. Kids are lining up to get on a bike because they are cool, they save gas money and save the world by riding a bike. But these new customers cannot find the product they want because it’s not an enthusiast’s bike.”

Urban Velo publisher Jeff Guerrero has noticed more of his co-workers becoming interested in bikes at the non-profit he works for, and a few have begun commuting to work. But he needs to help them find a shop.

“Given $500 is the upper limit of what they want to spend, I find I have to help steer them to shops that can help them get the bike they need. A customer for a $300 to $500 bike doesn’t get a lot of help,” Guerrero said.

The independent channel excels at delivering enthusiast bikes to enthusiast riders, but the enthusiast market is not where the growth and excitement is now.

Shimano hoped to tap new interest in bikes with its Coasting program. Coasting’s launch received a windfall of media excitement pushing many first-time buyers into retail shops. But the program floundered when enthusiast sales staff could not connect with first-time bike buyers.

High-end road and full-suspension sales have delivered profits to shops, and as a result shops have increased their focus on high-end enthusiasts. The flipside is that family or entry-level bikes shops are a smaller part of the bike shop mix.

Add the stranglehold Specialized and Trek have over most bike shops and the increasing pressure they put on dealers for floor space and deeper commitments that blocks the door to other suppliers. Thus many shops lack the flexibility to adapt to consumer trends.

“Major suppliers are all over the Handmade Bike Show trying to find out the next big thing—be it paint or some style trend or whatever,” said Wayne Thompson of Kind bikes.

“But what major suppliers are totally ignoring is their business model. None of those builders have a storefront, all sell over the Internet. They are selling $10,000 bikes to people who may never have seen the bike in the flesh. It is a totally virtual bike business and it’s working so well they have waiting lists extending from months to years,” he added.

For the thousands of new customers looking to buy bikes for transportation or lifestyle reasons, bike shops are not a good option. Alternative retail channels are connecting customers with the product they want.

Increasing numbers of skate and surf shops sell bikes.

Licensed products—John Deere, Cadillac, Honda—are selling through other retail channels. Brooks saddles are sold in Taavo Somer Apparel, a store seemingly more at home with custom clothing than bike gear.

But the big change will be Internet-direct sales.

“It’s a sad state of retailing when dealers are looking to grow their business but refuse to use the Internet to connect with normal customers online. The Internet is revolutionizing retailing but because of the stance of a few major suppliers, bike retailers are being held back,” said Dan Bon, Nirve Sports’ president.

Bon said Nirve allows its bikes to be sold online with strict pricing guidelines, but only a few of the company’s retailers sell online.

Thompson’s Kind bikes target socially and environmentally committed customers with bikes built in Asian factories with audited employee benefit programs and environmental records. Thompson said few retailers are interested in his bikes even though Kind’s Internet site receives lots of requests of where to buy them. He plans to go consumer direct.

The expanding bike market is not all Internet driven; brick-and-mortar stores are contributing. In addition to the 200 or so bike shops that cater to non-enthusiasts, skate, surf and fashion boutiques are adding bikes to their product mix. Given the lack of bicycle sales data, the size of this out-of-channel bike business is difficult to determine.

Culver City, California’s Sporteve is a sporting goods store that targets women. Bikes share the 3,000-square-foot sales floor with kayaks, snowboards, swimsuits and running shoes.

Owner and avid cyclist D’Lynda Fischer started the store because she didn’t want other women to feel as poorly served by bike shops as she did.

Fischer carries Biomega shaft-driven bikes because the clean look and low maintenance requirements are appealing. And she is investigating folding bikes and some Pashley models because she is seeing increasing interest in bikes for short errands.

“I see my bike customer as someone just starting to ride around the neighborhood who needs a helmet, and enough stuff to change a tire. I really don’t want to become a big time bike shop but I do want to be able to support the needs of urban commuters,” she added.

Shop Gentei in Baltimore, Maryland, is a high-end Japanese lifestyle store that carries skate decks and clothes and sells Japanese track frames and custom anodized and powder coated fixed-gear components.

“I get a lot of clothes and parts from Japan so at first I started bringing over the fixed gear stuff because it was easy. But sales are growing quickly, online and in the shop, and it is a big part of our business now,” said Oliver Jones, Shop Gentei’s owner.

Just as skate shops connected with a new generation of snow sports consumers with snowboards when ski shops ignored the movement, skate shops are hopping onto the urban fixie trend in a big way.

“We carry stuff like neon toe clips and components in all sorts of colors—pretty much everything a normal shop wouldn’t. And we don’t carry derailleurs or any road or mountain bike stuff, so we get along with local bike shops just fine,” Jones said.

Skate and snowboard brand DC Shoes worked with SE Racing to develop a DC branded 24-inch quadrangle cruiser. Skate and snowboard designer Benny Gold, who has worked with Burton, Huf and Nike, is currently working with Montana’s Freeman Transport bike company on a new head badge.
And Gabe Morford and Mike Martin’s skate influenced Mash SF movie that celebrates San Francisco’s fixed-gear culture is reaching a wide audience. Its movie DVDs are sold through a variety of retailers.

Santa Cruz, the major mountain bike powerhouse, comes out of the skate brand that shares its name. And while Rob Roskopp, Santa Cruz’s vice president, sees his suspension bikes making big inroads into the enthusiast market at bike shops, he also sees teenagers and city kids connecting with bikes in new ways.

His sense for where the market is heading was the reason he joined Tim Parr to create Swobo bikes.

“Only a handful of people surf, but look at the market size of Quiksilver and Billabong who are selling the surfing lifestyle—they are huge. Urban fixie culture is starting to turn into a sizable lifestyle market,” Roskopp said.

This lifestyle market does most of its shopping online and Roskopp expects a big jump in online bike and clothing sales, as well as increasing bike sales through stores that cater to the fixed-gear lifestyle, whether they are bike, skate, surf or another retail concept.

Cadence Clothing is a small bicycle-specific clothing company that eschews moisture management and sublimated European company logos. Growing out of the Seattle messenger scene, owner Dustin Klein is finding increasing interest in his limited production runs of cycling hats, shirts, packs and other items. Almost all of his business is consumer direct.

“There are more people getting into cycling in the past year and people are searching me out for clothes. People don’t really go to bike shops to buy clothes like mine so online sales are great for me,” Klein said.

RVCA, a quickly growing surf brand, has joined forces with Cinelli to produce a limited run of bicycles. Showcasing the artwork of RVCA ANP artist Barry McGee, the bicycle will be available in three frame sizes, 54, 56 or 58 centimeters, and will come as a complete for $3,700 or as a $2,100 frame kit. The bikes will be sold through RVCA shops and will be distributed by BTI to authorized Cinelli dealers.

Southern California design firm Paul Frank offered its first bikes seven years ago through its own retail stores. The project began as a marketing exercise but bicycle sales have remained strong and the company has expanded its offerings.

“Every good brand wants to leverage itself to expand, and bikes are fun. Lots of people outside the enthusiast channel remember how much fun riding is and now Paul Frank is known for its cool cruisers,” said Nirve’s Bon. Nirve Sports manufactures Paul Frank bikes.

But Bon contends that bikes remain a better fit for a bike shop than a clothing boutique. The challenge is for bike shops to reach out to mainstream consumers.

“Bikes are not really a good fit for a Paul Frank boutique which would probably rather sell something in a poly bag that you can hang,” Bon said. “So their success with bikes shows you the appeal of bikes if you can get them out in front of normal shoppers.”

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