As American consumers return to spending money on experiences post-pandemic, they’re not spending nearly as much at bike shops as they did during the COVID-19 outbreak.
Thus bike retailers that struggled to keep inventory in stock during the peak demand of the lockdowns and restrictions of 2020-2022 now have too much on hand, even though data shows participation in biking is still on the rise overall.
While there are a few bright spots in select types of bikes, such as electric and gravel, many retailers and suppliers are discounting inventory to keep sales flowing.
“We had a huge shock to our economy in 2020. A lot of folks wanted bikes, and a lot of information traveled upstream about the crowds gathering at the shops looking for bikes,” said Patrick Hogan, senior research manager at PeopleForBikes, an industry coalition of bicycling suppliers and retailers. “The market has responded by making more products than we need, at a time when demand is not high enough to move that product quickly, so we’re overburdened with supply in the bike category.”
10% Decline YOY
The most recent annual data from consumer behavior research firm Circana (formerly NPD) for the 12 months ending April 2023, shows yearly total business for bikes, accessories, services, parts, etc. sitting at just shy of $7 billion. That’s a 10% decline over last year’s $7.8 billion.
In 2021, during the height of COVID demand, total annual bike sales were about $9 billion.
“The business had a huge COVID jump,” said Julia Day, executive director of business development in the sports category. The jump was so huge that it’s difficult to compare this year’s sales to the COVID years, she said.
To measure against a more typical year, total bike sales in the year leading up to the pandemic were about $6.4 billion. While current sales are still above pre-pandemic levels, fewer total units were sold in the past year – 104 million versus 124 million in the year leading up to COVID.
That’s where inflation and rising prices come in, with the average price for a bike product going up about 3%, Day said.
For complete bikes as a category, sales for the 12 months ending April 2023 were about $4.3 billion, which is ahead of the pre-COVID total of $3.8 billion.
Participation On the Rise
Consumer demand was pulled forward during the COVID pandemic, Hogan said, meaning sales that might have been spread out to 2023 or 2024 happened in 2021 and 2022.
He expects more discounting until the market’s demand eventually catches up with supply.
“That’s typically the first and easiest lever to pull as dealers and brands are looking to move product quickly,” Hogan said.
However, the number of people participating in bike riding is trending upward.
“There are more Americans riding bikes now than we’ve ever measured before, going back to 2014,” Hogan said. “Even though some of the market activity might be slowed, it doesn’t mean that folks aren’t riding their bikes.”
According to the National Sporting Goods Association (NSGA), bicycle riding participation increased 4.1% in 2022 over 2021, and reached the highest participation level in the past two decades.
In 2022, 44.6 million people 7 years of age or older rode a bicycle six days or more.
The total ridership was 11.4 million, or 25.6%, for riders age 7-17, and 33.2 million, or 74.4%, for riders 18 and older.
Another 15.1 million people rode bikes one to five days during 2022, making a total of 59.7 million riders for the year.
The Wrong Inventory
Overall, sales are up slightly over 2019 among the members of the National Bicycle Dealers Association, but down for the majority since the COVID boom, and foot traffic to stores is down.
That’s according to Heather Mason, president of NBDA, which has over 1,000 North American members, including about 700 specialty retailers in the U.S. and Canada.
Criteria for membership include that 50% of floorspace must be dedicated to selling bikes and the business must have a brick-and-mortar location.
Revenue is slightly up over 2019, but Mason attributes that to inflation. Total units of bikes sold are down – bikes have just gotten more expensive.
“A lot of retailers have too much of the wrong inventory,” Mason said. That means dealers might have overbought during COVID, especially for bike types that aren’t selling as well, including road and comfort types.
Mountain, gravel, and e-bikes are better to have on hand at the moment, according to Mason.
Bikes with older components are also a hard sell. “People want newer technology,” she said.
At the end of 2023 Q1, wholesalers had more than $765 million in inventory, according to Hogan, 181% of the inventory they held in February of 2018.
Bright Spots
Bike shop service and repair departments continue to perform well, growing over the numbers from 2021 and 2022, according to Hogan, which is key to making it through an otherwise challenging market.
“We know that service boomed in 2021 as folks were upgrading their components instead of upgrading a bike, because bikes were really hard to come by,” he added. “Instead, they were bringing new life into their bike. We know that as ridership is sustained at this high level, we’re still seeing folks bringing their bikes into the shop indicating that they’ve been riding it and they want to keep riding it.”
Independent Retailers Performing Better
For complete bikes, the Circana data shows that independent bike retailers are experiencing less of a decline year-over-year by dollars than the rest of the market.
Independent shops are posting an 11% decline in dollars sold, and 16% decline in units sold, compared to last year.
The rest of the market, which includes mass market stores, e-commerce, and sporting goods retailers, had a 13% decline in dollars sold and a 14% decline in units sold, year-over-year.
E-bikes
E-bikes are one category that has continued to grow, according to Circana data.
For the 12 months ending in April 2020, 149,000 e-bikes sold. For the 12 months ending in April 2023, there were 454,000 units sold.
Hogan of PeopleForBikes sees the popularity of electric bikes as promising. “There’s a lot of opportunity to replace car trips with bike trips,” he said.
There are both new consumers coming to electric bikes who are being brought into the market through that category, and there are folks who are purchasing electric instead of non-electric.
With e-bikes, the technology is booming at the same time prices are coming down. “They’re reaching new cyclists,” Mason said. “That’s really important right now.”
Road and Comfort
Mason said the decline in road bikes has been driven by a lack of safe spaces to ride, deaths and injury from the activity, as well as a dip in media attention to technological improvements.
Hybrid and comfort bikes are losing market share to e-bikes, according to Mason. Consumers who want something easy to ride are choosing e-bikes instead.
Gravel
Gravel bikes are popular because the sport is still growing, and more events are popping up.
“People are coming back to these events or trying one for the first time,” Mason said.
Possible Inventory Solutions
Mason said suppliers are discounting and trying to drive people to buy in stores or on websites through discounting. She recently met with a supplier to ask if the discounts were working, and the supplier said they are helping move inventory a little.
“We’re seeing a lot of retailers follow suit with matching the discounts,” Mason said. “They’re losing a lot of margin though, unfortunately.”
Retailers are making about 30 margin points if they’re lucky on the sale price on bikes. Mason recommended retailers try to tack on sales of higher-margin accessories to make up for the lost margin.
For example, if a retailer has a water bottle that it’s going to make 60 points on, and one it will make 30 points on, get that 60-point bottle front and center and train your staff to sell the one that’s going to make more money, she said.
“Just being very strategic about your accessories, and not having too many experimental items, making sure everything has good sell-through,” Mason added.
She also recommends a focus on staff training, so when a curious customer comes in looking for a bike the sales associate can make the sale.
“A lot of retailers are doubling down on educating their staff on how to close a sale, not to just sell on price, but figure out why the customer is there and what they need,” Mason said.
And if retailers don’t have the exact kind of bike a customer wants, she’s even seeing some shops take the tire off a road bike that will fit a wider tire and turn it into a gravel bike.
“We’ve seen some retailers get a little creative with inventory to move it,” Mason said.
Bart Schaneman can be reached at [email protected].
