ORANGE, CA (BRAIN)—Switchback Cyclery will shutter its doors next month, after falling victim to tough economic conditions, smaller margins and increased competition from the Internet.
“I felt like we were doing everything right, we just could not make enough money to pay the bills,” said Sherry Panttaja, who owns the shop with her husband, Tim.
Switchback Cyclery opened more than 10 years ago in Orange, California and became entrenched in the community, hosting clinics and sponsoring local rides and clubs, but in the last two years it became increasingly difficult to stay in the black, Panttaja said.
Competition abounds in the area with numerous bike shops in Orange and the surrounding cities. About a year ago, Jenson USA, a mail order bike business, moved one of its retail locations to the nearby city of Corona, and Panttaja can’t keep up with their discount prices.
Also, Panttajas’ overhead is high with four employees and a monthly rent of $6,000 for her 2,800-square-foot retail space.
“For whatever reason, the fair market value in our area has gone up, but our margins are lower than ever in Orange County,” she said.
The current economic situation made matters worse. With families watching their spending, she saw a huge hit in sales of comfort and kids bikes.
“Usually before Christmas, I have a ton of kids bikes on order, but our cheapest one is $179. Customers come in with the intention to buy one, then say, “Ooh, I can’t do that,’” Panttaja said.
The Panttajas tried to adjust by cutting back on employees, holding sales and withholding their own salary for the past year, but things didn’t get better.
Instead of taking out another loan to keep the business afloat—something they promised themselves they wouldn’t do again after turning to credit during a similar crunch in 2001—the Panttajas instead opted to close the shop.
“I owe as much as I have in inventory. I can sell everything off, walk away with my head held high and say I did my best,” Panttajas said.