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Specialized, Trek Give Retailers Pep Talk

Published October 18, 2008

WATERLOO, WI (BRAIN)—Will bike sales grow against the economy next year as they have during past economic downturns? The leaders of the largest specialty retail suppliers, Trek and Specialized, indicated they think so in emails they recently sent to their dealers.

Both letters cite strong sales. Trek’s John Burke reported Trek’s sales this year were up significantly, by 10 percent in September alone. And he noted the commuter boom, increased spending on cycling infrastructure and high gas prices will continue to contribute to robust bike sales going forward. But retailers, not suppliers, are on the industry’s front line.

“Yes, I’m nervous about my business but I appreciate hearing John’s perspective on the economy and how it will affect the bike business,” said Brad Hill, owner of Goodale’s Bike Shops in New Hampshire. Hill also received the Specialized letter.

“However, here in northern New England the weather can be just as devastating as a bad economy. While we had a better year than last year, and I was short bikes during the season, I’m still not going be aggressive with my pre-season orders,” he added.

Tom Decaro, owner of Albuquerque Bicycle Centers in Albuquerque, New Mexico, also is coming off one of his best seasons ever, but he too is taking a cautious approach. “We had tremendous growth this year, our hybrid sales were through the roof. But I will be keeping a very close eye on inventory and probably running a bit leaner than I have,” Decaro said.

Fred Clements, the National Bicycle Dealers Association’s (NBDA) executive director, said reports from member retailers are mixed on how the season went, and this economy has not been good for everyone. Some shops report a large increase in business over 2007, while other shops report just as significant drops in sales.

“Whether a shop is doing well or not seems to be more a city-by-city report than any regional indicator. While I like to think that shops doing good planning who pay attention to the details of their business are still doing well, it is clear good retailers in some cities are having a bad year,” Clements said.

According to the Bicycle Product Suppliers Association’s (BPSA) tally of wholesale bike shipments, the bike business is down 5 percent in units shipped while sales were up a modest 2 percent through August. Since Specialized and Trek are the largest BPSA members, it is surprising their optimistic sales reports do not match what the BPSA says its member sales were.

Both suppliers, with a nod towards the credit freeze crippling other U.S. companies, said their own financial houses were in order. Burke cited Trek’s sizeable credit lines through reputable banks including J.P. Morgan and Bank of America. Both Specialized and Trek cautioned dealers about doing business with second- and third-tier suppliers who may not be in as robust health as they claim to be. However, neither supplier addressed Asian credit issues that may impact supply chain delivery.

—Matt Wiebe

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