Are Bikes the Black Hole of Bike Shop Profitability?

A new financial study confirms a sad truth about bicycle retailing: most bike shops do not make a profit on the sale of new bicycles.

This may be old news to many, especially retailers wrestling with unruly income statements and stiff price competition, but the new report uses hard numbers to show that the failure of new bicycles to generate retail profit is much more than urban myth.

In fact, the report shows that new bicycle margins do not even cover their share of the basic operating costs of the average bike store. Overall store profitability is only possible because sales of higher margin items such as parts and accessories drive the averages up, categories now facing increasing price competition from on-line retailers.

The source is the NBDA Cost of Doing Business Survey, conducted by market research firm Industry Insights every two years since 1993. It is different from many surveys