Bicycle retail salaries: How low is too low?

yournamehereCustomer service is a great tool for building long-time relationships with bike shop customers.

But good customer service requires qualified and motivated people on staff, and this is not easy to achieve or maintain. Staff issues are frequently cited as one of the most vexing challenges for retail bike stores. Why? One reason is that it’s hard to recruit the talented people you need when offering the relatively low wages available in bike retail.

Bicycle mechanic salaries made the news earlier this month when Bicycle Retailer and Industry News reported on a blog post that had gone semi-viral (by bicycle industry standards anyway), with 197,000 views as of this writing.

Donny Perry, a global development manager at Specialized, posted a presentation in mid-February (http://www.slideshare.net/donnyperry/bike-mechanic-salaries) that called out the sub-standard average pay offered to bicycle mechanics.

He noted that the average bicycle mechanic earns just $22,337 per year (according to salary.com). This compares to $23,013 for high school dropouts, $25,188 for janitors, and $29,962 for gardeners. The average wage for a full-time worker in the United States is $40,584, according to the U.S. Census, and some of the average wages for mechanics are below the survival level in many urban areas and nine states, Perry noted.

His goal was to open a discussion on improving mechanics pay, and maybe help the profession become more than a labor of love for the good people who help keep us all riding.

The NBDA’s 2013 annual retail survey generally supports the numbers Perry cited on bicycle mechanics pay. A junior mechanic earns an average $15,336 per year, and a senior mechanic $27,606, according to this report.

But employees in other bike shop jobs aren’t buying mansions either. On average, the people most responsible for customer interaction are paid at about the same rate or even below that of mechanics. Junior salespeople earn an average of just $15,000 per year, and senior salespeople $27,622.

Is moving into retail management the answer? It helps a little. A sales manager takes home $32,286 per year. While this is well above the janitor benchmark, it still lags significantly below the nation’s average salary for full-time employment.

What about store managers? They earn $40,301 per year.

And store owners? The average bike shop owner earns $49,877 per year. This is well above the national average for all workers, but this is not easy work by any means. Consider the average bike shop owner is responsible for running a business with average gross sales of $891,084, with 7.3 employees, about 5,000 square feet of real estate, and all the challenges inherent in running a viable brick-and-mortar business in the Internet age. An owner-operator definitely earns his or her salary.

Do the numbers point to any possible solutions? Maybe a few, or at least to some directions to explore:

Productivity may be a metric to watch. The average full-time equivalent employee is responsible for $134,854 in revenue in the average bike shop. Beat that number by a lot, and maybe the employee can be paid more and the store can also benefit.

For mechanics, industry lore proclaims that if a mechanic can be about 70% efficient (70% of their time on the clock is billed labor), that is considered a pretty efficient operation. Most stores operate below that number. Could that be a good number to shoot for? Could improved productivity lead to greater profitability and ultimately higher wages?

Size matters. Owners of stores with $2 million or more in sales earn an average of $71,595, compared to just $30,611 for those under $300,000 per year. Even senior mechanics do better in bigger stores. A senior mechanic earns $34,500 in a store with $2 million and more in sales. The message from the research: more dollar volume seems to create a little more room for higher salaries.

Profitability. The NBDA’s Cost of Doing Business study shows that the average store earns a 5.8% profit as a percentage of gross sales while High Profit stores (the top 25%) earn 15%. The differences are concentrated mainly in two areas: expense control and efficiency. High profit stores generate more money per square foot than the average. They also devote more of their available square footage to selling areas, and less to warehouse or offices. They also keep other costs low, including occupancy expenses and general and administrative expenses. Watching the details may be dull work, but it makes a big difference in profitability and may give stores greater financial flexibility to pay good people a little more.

The bicycle industry is not alone in offering relatively modest wages for retail work. According to salary.com, the average retail cashier earns $19,788, and retail salesperson $29,000. But given the importance of customer service and relationships to our industry’s future, finding ways to financially reward excellence and keep good people employed is worth some effort. Loving what you do is a beautiful thing. At some point you also need to eat.

3 thoughts on “Bicycle retail salaries: How low is too low?

  1. Mr. Perry’s assertions are at least a little hypocritical considering his employer and his employer’s peers, who do not pay sustainable margins for selling bikes, aren’t very likely to increase the pay to bike shops by jacking up their MSRPs, are they? It’s a bit of the armadillo calling the porcupine prickly.
    Mr. Perry’s article also lacks much of a wider understanding of economics and retail price theory.
    Would be interesting to know what Specialized outside rep pay ranges are, from lowest to highest last year, considering all the time they live on the road away from family, wear & tear on personal vehicles, etc. and compare it to, say, agricultural or pharmaceutical sales reps, if comparisons are to be drawn.

  2. Fred, the problem, as you point out, goes beyond what the typical bike shop pays mechanics. Most bike shops are trapped in a vicious circle that drives them to keep making costly hiring mistakes out of expedience to fill a vacancy and only being able to afford minimum wage retail employees – and as the result not being able to grow their businesses so they can afford to pay better wages for customer service naturals!

    Our observation and studies show the solution is directly tied to a bike shop being able to actually grow the business to be able to afford to pay more in wages and benefits. The first step in breaking this vicious circle is a systematic hiring process that will increase a bike shops probability of making a good hiring decision from 30% to 80%. Such a hiring process will typically cost a few hundred dollars per job candidate, plus the owner or manager’s time – and a commitment to the process, but the ROI is huge!

    A few hundred dollars, mostly for online assessments and a background check is a small investment compared to the cost of a bad hire and finding a replacement. A recent study found it costs on average $3,328 to find, hire and train a replacement for a $10/hour retail employee. Hay Group reported a median turnover rate of 67 percent for part-time retail employees – so turning good hiring decisions from 30% to 80% is well worth the commitment to a systematic hiring process.

    The typical bike shop owner needs to know the costs of bad hiring decisions to their business, and understand their Return on Investment in a systematic hiring process that will minimize costly hiring mistakes, reduce employee turnover and increasing profits by making every one of their sales associates top performing customer service professionals in addition to paying skilled mechanics a decent wage!

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