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Hybrids Boost Unit Shipments in Q1

Published June 16, 2009


PHILADELPHIA, PA—The industry let out a collective sigh of relief after realizing that the 13 percent sales drop in the fourth quarter of last year wasn’t an indicator as to how sales would trend this year.

According to the Bicycle Product Suppliers Association’s just-released March report, members saw sales jump 4 percent and shipments climb 2 percent in the first quarter compared to the same period last year.

March-on-March numbers were even better—shipments climbed 3 percent and value was up 9 percent.

“Bikes, while not recession proof, are still considered a very good buy among consumers. A family may not be able to fly to Disney World for their vacation, but they can ride their local bike path or nearby campground,” said Elysa Walk, general manager of Giant.

Many suppliers expected consumers to value shop this year as the economic downturn took its toll. But retailers ordered more expensive bikes than last year. Average unit value climbed to $383 from $377.

While the bike market appears to have bounced back, it looks very different. More Americans are turning to European-style hybrid bikes and abandoning enthusiast-oriented road, full-suspension and BMX/freestyle bikes.

Suppliers shipped 90,876 hybrids to dealers in the first quarter, an increase of 18,214 units. In fact, hybrids are so important to today’s bike market that removing them from BPSA’s report puts shipments down 2 percent and dollar sales flat for the quarter.

Chris Speyer, chairman of BPSA’s statistics committee and vice president of product and marketing at Raleigh, thinks the growth of hybrid sales is an indication of value shopping.

“Hybrids don’t have as many barriers or preconceptions as other categories. They are viewed as practical by the enthusiast looking for an urban commuter and by the recreational customer looking for a practical bike for short rides. This makes the category a good value,” Speyer said.

Front-suspension bikes, the only other adult category to show a gain, was up 7 percent in units and 11 percent in sales. Yet retailers and suppliers say that many consumers buy front-suspension bikes for pavement use, like commuting.

Road bikes continued to slip. Shipments dropped 1 percent and sales were down 8 percent. Suppliers found it hard to sell road bikes to retailers even though they cut the average road bike wholesale price to $872 from $937 last year.

Full-suspension shipments continued their downward trend, which started last season. Shipments dropped 2 percent though sales increased 2 percent.

Juvenile shipments were down overall: BMX/freestyle was down 20 percent, 24-inch shipments 8 percent and 19-inch and below 5 percent. The only juvenile category that grew in units was 20-inch, up 2 percent.

Suppliers in all channels imported 31 percent fewer bikes in the first quarter in an attempt to sell down huge stocks of bikes. That should have reduced bikes on hand, yet inventory in the specialty channel is almost as large in March as it was in January. Suppliers are sitting on 37 percent more units worth 54 percent more dollars than last year.

Hybrids are driving much of this increase, up 82 percent in units and 90 percent in value. But at least suppliers have a chance to sell that inventory.

Road inventory is not looking as good; it’s up 29 percent in units and 47 percent in value.

“In all segments we carried more inventory through the slow winter than desired. But we reacted several months ago and are selling through now that the season has broken,” said Giant’s Walk.

Last March suppliers were sitting on road inventory with an average value of $550 that they sold to shops for $937, making a $387 margin. This year they sat on road bikes with an average value of $628 that they sold for $872, making a $244 margin. Even though suppliers cut their margin 37 percent, they were unable to interest retailers in road bikes.

“It’s a challenge for us and our retailers when other brands discount in-line product so aggressively. They’re trying to entice consumers with reduced prices and rebates, but their dealers make less on each sale,” Walk said.

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