business news in context, analysis with attitude

by Kevin Coupe

Interesting piece in the Wall Street Journal the other day about innovations taking place in the bicycle shop industry, as retailers look for new ways to attract customers and business.

According to the story, "Around the country, bike shops are shifting gears. The National Bicycle Dealers Association 2013 survey of 4,000 establishments found that 12% have coffee bars, 11% offer spinning classes and almost 5% serve beer. About 1% offer massages, yoga or full-service restaurants ... For some shops, diversification is a survival strategy. While more people are riding bikes - cycling in New York City alone has more than doubled since 2005 - fewer are buying new ones. And recently added bike-sharing programs in cities like Boston, New York and Chicago have put a dent in shop-based rentals. Now, the $6 billion U.S. bicycle market is trying to lure new customers, especially women and families, with extras ranging from poetry readings to open-mic nights and even weddings."

What's intrigues me about this is not just the notion that in order to compete, retailers have to expand the kinds of products and services that they offer. There's also the structure of the retail bike business itself - while mass and discount retailers and toy store sell almost three-quarters of all bikes in the US, for an average price of $78, they also represent less than a third of industry volume.

The National Bicycle Dealers Association website says that "the approximately 4,100 specialty bicycle retailers commanded approximately 15% of the bicycle market in terms of unit sales in 2012, but 52% of the dollars, a dominant dollar share. Dealer price points generally start at around $200, with the average at $673, though prices can range into the thousands. While the number of specialty bicycle stores has declined in recent years due to consolidation, they are responsible for approximately the same amount of business through these fewer (but larger) stores today."

The lesson is instructive, I think.

It is an Eye-Opener.
KC's View: