Cycling Industry Woes Keep Piling Up

Economists seem to be mystified. Traditional economic indicators look good. The economy should be chugging along and growing quite nicely, but wages are stagnant household debts continue to grow and on average the sense of financial security seems to be waning.

In the cycling industry, there’s a decent amount of doom and gloom despite this “strong economy.”

Just a few weeks ago ASE, the parent company formed to hold ASI (Fuji Bicycles, Kestrel, Breezer, and Oval) and Performance Bike Shops filed for Chapter 11 bankruptcy. Performance has 102 shops, 40 of them are unprofitable. Regardless, “store closing” signage will be appearing at all locations whether closing or not, as  approved by a judge. Post-liquidation, it sure looks like ASI will be broken into its component parts and sold off. Kestrel, Breezer and Oval might be going the way of the wind.

Ideal, Fuji’s primary manufacturer, is attempting to rid itself of any Fuji inventory. ASI is attempting to block that move saying it undercuts ASI’s chances of meeting creditor obligations.

It will be interesting to see if anyone steps up to buy the Fuji name, maybe Specialized will pick them up and take over the Roubaix name.

Then news came last week that the Interbike trade shoe, run by Emerald Expositions, would be shutting down after a 30-year run. Sure the move to Reno was nothing short of disastrous, but the industry moved away from the tradeshow long ago.

Finally,  Rapha recently reported a   £20M loss for the first six months. For perspective, in the  year prior to the company being purchased by RZC, Rapha had earned   £1.4 million in profit on   £67.1 million in sales. This one hurts a little less, Rapha being purchased by Walmart heirs wasn’t exactly a high point for the industry. That said, some 80 employees have been laid off in the wake of the earnings report, which does hurt.

All of that leads to the question, what’s happening? And what does the industry do?

My guess, you have to out-Canyon Canyon. People don’t want to go into a bike shop to buy a pre-built bike. And they certainly don’t want to go to a bike shop and spend 8 hours component swapping a pre-built bike until it’s something they actually want to take home. Additionally, very few people have the time, know-how or will to build up a custom bike at home.

The industry has to ship bikes that people want. Car companies have customizers on their sites, but very few bike manufacturers have figured it out. I want to customize my bike from the saddle to the cassette, to the bar tape and I don’t want to pay a ridiculous premium to do it. When I’m done, I want that bike on my doorstep in a week or two at the maximum. Figure that out, and reap the benefits.

That’s just the enthusiast market. There’s a real opportunity out there to appeal to the average American. People are addicted to cars, but with some hard work and ingenuity, you could sell bikes as a great middle finger to automobile dependence and debt enslavement. There’s a reason Dollar General is raking in cash, and it’s not because people don’t want to get their groceries at Kroger or Whole Foods, they simply can’t afford to. Stop pushing $15k superbikes and over-innovated bikes with marginal gains, start selling people on the idea of an e-bike commuter and give them attractive financing options.