Shop owners, lulled by summertime surge, find sales difficult to sustain

By JAN ELLEN SPIEGEL
THE NEW YORK TIMES

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

Big increases in business last year led some shop owners to think that they were largely insulated from a slowing economy. But the economy has continued to spiral downward, taking bicycle sales and much else with it.

The question now is whether all the bicyclists who appeared 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, the first of which his father started in 1974.

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

“We wished we hadn’t gone in quite as heavy,” Graves said. “Business is not growing at the rate it was earlier in the 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 the 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 bicycle store owners and managers who had made the same inventory decision as Graves were misreading the indicators. What owners perceived to be a commuter trend was probably not. The analysts argued that bicycle commuters were generally a fixed group. These riders account for less than 1 percent of commuters in the United States; in isolated pockets like Portland, they might account for about 6 percent.

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

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

He said 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?” 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. Counting sales of related parts and accessories, that adds up to about $6 billion a year.

In those same years, the number of small specialty bicycle stores dropped to about 4,300 now from a little more than 6,000 in 2000. While those small stores account for only 17 percent of the bicycles sold (the rest are sold by chain stores, mass merchants or on the Internet), they represent about 50 percent of the revenue.

The number of bicycles sold may surpass sales of motor vehicles this year, mainly because of the big drop in demand for cars and trucks. The last time bicycle sales were stronger than motor vehicle sales was in the early 1970s, in the midst of another recession, which was set off by the Arab oil embargo.

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