BY JASON NORMAN
SEATTLE, WA—Sales, deals, steep discounts—they’re a common sight in retail these days. Consumers have come to expect—and demand—lower prices for goods as stores take cuts in margins to move out aging inventory in a stale economy. And bike shops are no exception.
“People are coming in saying, ‘I want to buy this $500 kid’s bike, what can you throw in?’” said Marty Pluth, general manager of Gregg’s Cycles in the Seattle area. “It’s way more prevalent than in the past.”
Pluth said Gregg’s recently lost a special order of a high-end road bike when a competitor in the area was willing to throw in freight and do a custom fit.
But he doesn’t sweat it. Pluth said those customers will always let price dictate their buying habits. “I don’t think those customers will ever be very loyal,” Pluth said.
Bike shops, which already operate on tight margins, have had to cope with rampant bargain-basement mentality from consumers. Many say they started discounting 2008 product earlier, especially in light of consumer rebate programs offered by brands like Trek and Specialized, which can knock off as much as $1,200 from 2009 model-year bikes.
Stephen Howard, owner of Livermore Cyclery in California, said his shop has discounted 2008 bikes at least 15 percent to make them more attractive to customers.
“Within our store we feel like we have to match those [supplier] rebates by discounting ’08 product,” said Howard, who carries both Trek and Specialized. “Normally we would have hung on longer.”
“It’s challenging to maintain the margin,” he added. “But I think that’s the way it’s going.”
Howard said he’ll probably have to discount 2009 product next year. “We’re a year out of sequence,” he said.
Other retailers are holding special sales and promotions more frequently and talking them up in their marketing.
Breakaway Bicycle & Fitness in Michigan has been running strategic sales recently to get more people into the shop. For example, June was mountain bike month and the shop placed sales tags on ’07 and ’08 bikes.
This month, Breakaway Bicycle will coordinate with Trek to run a Tour de France promotion.
“We felt we needed to have something on sale all the time,” said Ken Polidan, co-owner of Breakaway Bicycle & Fitness, alluding to ways the shop is weathering the current economy.
Discounting previous-year’s models is nothing new for Bicycle Sport Shop in Austin, Texas. It’s been a way of life for the past eight years, according to owner Hill Abell.
This year, 2008 bikes were discounted 10 percent in January, anywhere between 15 to 25 percent in spring, and will sell “at close to cost” this month.
But Bicycle Sport Shop isn’t willing to offer deals on 2009 model-year bikes. “We just don’t do it,” Abell said. “We’re not profitable if we do.”
But to appease customers looking for deals, Bicycle Sport Shop might swap out wheels or offer to do a custom fit on high-end bike purchases. “We want to be flexible,” Abell said.
Several retailers are taking this route in lieu of offering a percent markdown on 2009 bikes.
“We tell them, ‘You’re already getting the lowest price,” said Pluth of Gregg’s. “When someone buys two $2,500 bikes or a $5,000 bike, we’ll work with them. We might give them a custom fit or something.
“If you’re not holding price, it just creates a downward spiral,” he added.
And some bike shop owners steer clear of the price factor altogether, finding a way to spur business without resorting to discount tactics.
“I can’t offer 10 percent off a $400 bike—that’s ludicrous,” said Charlie McCorkell, owner of Bicycle Habitat in New York City. “I’d be out of business if I did that.”
Instead, his store is holding more consumer events. “We’ve done four shop events this year,” said McCorkell. “Last year we did one.”
So far, Bicycle Habitat has hosted a women’s night, a fit night and two club nights to bolster store traffic. McCorkell and his staff are also visiting local businesses and making presentations on why bikes are good on many levels. “All of this has proven to be a business generator,” McCorkell said.
