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Distributors Stock For Rise in Repairs

Published July 8, 2008

BY MARC SANI

BLOOMINGTON, MN—When Steve Flagg reviewed his inventory reports recently, one item jumped off the page—27-inch tires. “We were totally unprepared for the demand in 27-inch tires,” said Flagg, president of Quality Bicycle Products.

Wayne D. Gray, vice-president of KHS/FreeAgent Bicycles, noticed the same trend. “We’re seeing a lot of demand for them. It’s people taking their old Schwinn Varsity out of the garage and to a shop for new tires and a tuneup,” said Gray from his Southern California office.

While no one thinks 27-inch tires are staging a comeback, retail demand for them is anecdotal evidence that consumers are behaving differently this season.

And, from the standpoint of some of the nation’s key distributors, that’s good news.

Distributors are enjoying a strong uptick in orders for a variety of parts and accessories, particularly tires, chains and derailleurs. But, they caution, the sales picture is mixed due to erratic spring weather, especially in the Northwest, the Rockies and parts of the tornado-plagued Midwest. And in mid-June floods ravaged sections of Wisconsin and Indiana.

“We can see the effect of weather on sales,” said QBP’s Flagg. “We’re not experiencing an economic slowdown, but we are seeing glitches that we attribute to the weather. When the weather gets nice we see sales rebound.”

Another factor affecting regional sales is the housing industry meltdown. Distributors report weaker sales in areas like Las Vegas, Florida, parts of California, Phoenix and Denver—areas hit hard by the subprime mortgage crisis.

“It’s a mixed bag according to where you are,” said Chuck Hooper, president of Seattle Bike Supply. “But I’d have to say service and repair is way up. It seems people are bringing in their bikes to get fixed, and that’s pretty consistent with the economic downturns I’ve been through in the past,” he said.

In talking with dealers, Hooper said he finds most have a positive outlook on the year, but they are cautious when ordering products.

Steve Hawley, president of The Hawley Company, echoed Hooper’s comments. “Some shops have told us they are doing well, but that’s not typical across the board. It’s in pockets,” said Hawley, whose fast-growing distributorship is in Lexington, South Carolina.

“Our sales are up, and we’re definitely having a strong year, but some of that growth may be coming through expansion,” he said.

Still, along the East Coast, particularly Florida’s coastal plains, sales are off. “It seems wherever subprime mortgage defaults are high, dealers are having a rough time,” Hawley added.

On the other hand, Hawley said his brother’s store in Fort Bragg, North Carolina, Hawley’s Bicycle World, is doing a booming business as troop rotations speed up from Iraq.

“Shops in cities with military installations are having a great year with more troops rotating home. They have money to spend, and they want to spend it,” Hawley said.

Distributors said several factors are driving P&A sales. The downturn in the economy has sent some consumers into the garage to dust off old mountain bikes, hybrids or 10-speeds. Some of them plan to stick around home this summer and recreate locally.

Others, faced with gasoline trending toward $5 a gallon, figure they can spruce up their old bike, ride a few miles to work or to the store, come out ahead on their bicycle repair bill and save money on gas.

And some distributors report more interest in parts and accessories for commuting items sold to core enthusiasts. These are cyclists who may not have taken commuting seriously in the past, but who have the fitness level and cycling knowledge to easily make the transition to a regular commuting schedule.

These sales, they say, are driven by more complex dynamics—a desire to be “green,” a desire to stay fit, and a desire, perhaps, to save a buck or two at the gas pump.

“There’s a trend toward a sense of ‘green’ and that’s influencing people’s bicycle riding. People are digging out their old bikes, converting them to urban commuters,” Flagg said. But he added that this group of cyclists is motivated by environmental issues and not the price of gas.

“I still consider this industry a growth industry—wellness, energy, fitness, traffic congestion—all these issues bode well for cycling,” Flagg said.

KHS’ Gray said that from his perspective the industry is healthy. “It seems that enough weak retailers have left the business and that those still in it are strong business people who understand the need for margin. I think we’re a lot healthier today than we were a decade ago,” Gray said.

As for sales of KHS bicycles, Gray said he currently faces more demand than he can supply, particularly hybrids and low-end road bikes. “That’s where all the growth is right now,” Gray said.

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