A Surge in Bicyclists Appears to Be Waiting

By JAN ELLEN SPIEGEL
The New York Times
Published: Jan 01, 2009

After a summer of their dreams, bicycle store owners are facing a grim reality this winter.

Big increases in business earlier in the year led some shop owners to think they were largely insulated from a slowing economy. But since then, the economy has spiraled downward, taking sales of bicycles and much else with it.

The question now is whether all the bicyclists who came out last summer will be back next summer.

“This is not like the rest of the recessions we’ve been through,” said Jay Graves, who owns six Bike Gallery stores in Portland, Ore., the first of which his father started in 1974.

Business skyrocketed last summer along with gasoline prices, Mr. Graves said, especially sales of hybrid bikes that can be used for recreation and transportation. So Mr. Graves ordered plenty of cold weather gear for what he believed would be new legions of bike commuters.

“We wished we hadn’t gone in quite as heavy,” Mr. Graves said. “Business is not growing at the rate it was earlier in year.”

Summer is high season anyway for bicycle store sales. Christmas sales are minuscule comparatively. And double-digit increases in revenue for the stores last summer only underscored the unpredictability of the business.

Industry analysts like Jay Townley, a partner with Gluskin Townley Group, bicycle industry consultants in Wisconsin, were skeptical even last summer that small bike stores would sustain their surge in the off-season.

They said even then that other bicycle store owners and managers who made the same inventory decision as Mr. Graves were misreading the indicators. What owners thought — or hoped — was a commuter trend probably was not. The analysts argued that bicycle commuters were generally already bike riders. They account for less than 1 percent of commuters in the United States, with isolated pockets like Portland, at about 6 percent.

Mr. Townley was even more skeptical now, predicting a flat to slightly down year for small bicycle stores. Lower gas prices are one reason. He also pointed to the major price increases in the industry resulting from the rising cost of materials and shipping — 98 percent of bicycles are manufactured overseas — which cut into profits. He cited data that showed wholesale sales of new bicycles to shops for the first nine months of the year were off by more than 4 percent.

“More people riding bikes has not translated into any improvement in bike business,” he said.

He noted that data going back to the 1960s showed that the bicycle industry did suffer during recessions. “Is a consumer going to buy bikes or do anything the way they did in 2008 in the summer of 2009?” Mr. Townley asked. “I don’t know.”

Since 1999, sales of bicycles in the United States have held steady at about 18 million a year, including bicycles for children, according to data compiled by Gluskin Townley. Along with sales of related parts and accessories, that adds up to about $6 billion a year. Over those same years, the number of small specialty bicycle stores dropped from a little more than 6,000 in 2000 to just over 4,300 now. While those small stores account for only 17 percent of the bicycles sold (the rest are sold by chain stores, mass merchants and on the Internet), they represent about 50 percent of the revenue.

Surveys by Bikes Belong, a group in Boulder, Colo., that advocates more bicycle riding, and Gluskin Townley echoed observations of bicycle store owners and managers that the most pervasive, and possibly the biggest contributor to the summer bicycle business boom was repairs — the result of people dragging long-forgotten bikes out of basements and garages and fixing them up for recreation because they stayed home instead of traveling.

Many stores said that they had to add mechanics and that the most curious development was an influx of bicycles so old they prompted a run on 27-inch tires, once an industry standard but largely out of use since the early 1980s.

Peter Clark, 38, of Branford, Conn., brought his 1993 Trek, complete with duct-taped seat, to Zane’s Cycles, a nationally known store among serious cyclists, and grabbed his not-quite-trim midsection when asked why he was getting it fixed. “I could go out and buy a new bike,” he said. But, he added, “I don’t want to commit to a bike and then not ride it.”

In interviews, store owners said they were having trouble last summer keeping accessories, especially bike bags and car racks, and tires and tubes in stock, which industry people said meant people were actually using the bikes they had fixed up.

“The question is,” Mr. Townley said, “Will they take the bike out of the basement, inflate the tires and ride it again? My gut says no.”

Tim Blumenthal, executive director of Bikes Belong, disagreed. “I believe that last summer’s spike in gas prices and the reaction of Americans was different from any previous spike and any previous reaction,” he said. “It wasn’t just about sticker shock at the pumps. When people ride bikes, lots of good things happen.”

At Zane’s, Tom Girard said in his 15 years as general manager, he could not remember a summer like last one, with business up 30 percent over the previous year. Three months later, he said that business has stayed strong and that his gamble to increase cold weather gear stock by 25 percent is paying off so far though it is at the low end of what he had hoped for. The employee he added in the fall — an unusual time to add an employee in a seasonal business like biking — is still on staff.

“It’s like package stores,” he said. “When the economy’s bad people drink. When the economy is good, people drink. When the economy’s bad, people still need to do something. So they ride their bikes.”

But Mr. Girard hastened to add that no one is recession-proof. “If you’re a good store and have a good business plan,” he said, “I think that makes you more recession-proof than what you’re selling.”

The experts say surviving in this economic climate means small bicycle stores must choose products carefully to keep inventory low and cash flow high. That is why Mike Hamannwright, a 20-year veteran of the bicycle business and co-owner of four Revolution Cycles stores in the Washington area, said he cut back on cold weather gear even though he saw lots of stay-at-home people, especially couples, buying bicycles over the summer.

“Some bike shops are going to go out of business,” he said he warns his staff. “Not every bike shop is going to go out of business and if we don’t want to be one we’ve got to be great.

“Anybody who was a little weak, this is going to be the crushing blow,” he added.

There is a school of thought that the sluggish coda to the summer bicycling boom is not the end of the refrain.

“I don’t think any of us are fools that $1.89-a-gallon gasoline is really going to be the way it will be from here on out,” said Fred Clements, executive director of the National Bicycle Dealers Association. “I don’t want to appear to be too bullish, but some of longer term trends — how we get out of an economic recession like this — don’t necessarily put bicycles in a bad spot. Bicycles are part of a solution to the problem.”

© The New York Times. All rights reserved. This article originally appeared in The New York Times.