Opportunities Exist for Progressive Bike Shops

????????????????????????????????????????????????????????????????????????????????????????????????While independent bike dealers face many challenges today, there are also clear opportunities for those who pursue them, according to a group of 15 experienced bike shop owners and managers who conducted a SWOT analysis of the bicycle dealer channel in November.

For those unfamiliar with SWOT, it is a planning technique that can be applied to businesses, industries, projects and even people. It is designed to focus discussion to evaluate both internal factors (Strengths and Weaknesses) as well as external factors (Opportunities and Threats). With a SWOT analysis in place, a business can take a clearer look at their overall situation and build an informed strategy going forward.

The dealer SWOT session led to a wide variety of ideas and concepts, some repetition, but surprising consensus on the issues of the day. Ideas flowed with animation and passion as the participants focused on all aspects of bicycle retailing. Here’s the SWOT list they came up with:

Strengths: (characteristics of the business that give it an advantage relative to others.)

  • Personal contact and relationships (“We are in the relationship business.”)
  • Passion for cycling
  • History of doing a good job
  • Hard work and long hours for little return
  • Longevity (the average bike shop has been in business for 30 years)
  • Valuable as infrastructure (“cyclists need local shops near where they ride.”)
  • Professionalism
  • Part of the local community
  • Offering immediate gratification (even free shipping is slow versus taking it off the shelf now.)
  • Offering desirable jobs
  • Touch and feel / tactile experience (test rides, trying things on)
  • Advocacy
  • Owner involvement

Weaknesses: (characteristics that place the business at a disadvantage relative to others.)

  • Poor retailers among us
  • Stubborn owners
  • Channel conflict and competition
  • Undervaluing ourselves
  • High costs to operate the business
  • Inconsistent customer service
  • Burnout
  • Low barriers to entry
  • Low pay and profit
  • Small buying power as individual stores
  • Over-dependence on brands
  • Independence makes unified action difficult
  • Perception that this is a hobby
  • Perception that prices are high
  • In-season new model year transitions devalue current year product
  • Small thinking / unwillingness to adapt / not progressive
  • Shortage of skilled workers

Opportunities: (elements that the business could exploit to its advantage.)

  • Under-served demographic groups (age, ethnicity, gender).
  • Reaching out specifically to women
  • Urbanization and increase in bike commuting
  • Improved vendor relations
  • Changing peoples’ lives in a proactive way
  • Can engage with people physically, in real time
  • Product complexity (an opportunity to teach and add value)
  • To be the hub of the cycling community
  • Personal contact
  • High gas prices and urbanization
  • The wizardry that happens in the service department
  • Marketing on value, not just price
  • Making the store the local hero

 Threats: (elements in the environment that could cause trouble for the business.)

  • Commoditization (the race to the bottom, price is the focus, products not differentiated)
  • Online distribution
  • Weather
  • Price competition
  • The shrinking middle class
  • Global changes
  • Young peoples’ devotion to electronics
  • Low barriers to entry
  • Burnout
  • Wholesale pricing available to the public
  • Direct selling by brands to consumers
  • Changing generational mores
  • Abandonment by major brands
  • Climate change
  • Lack of qualified employees
  • Rising costs
  • Anti-bike political culture
  • Distracted driving
  • Lack of safe places to ride
  • Unethical suppliers

While this list is certainly not exhaustive, it does hit on many of the themes and concerns at work as the industry positions itself for the future. While some of the biggest threats are societal, and therefore out of the individual dealer’s control, the list does point to many things that can be done at the micro level, within the store, very much within a dealer’s control.

Seek the opportunities, minimize the threats, and create a future where new cyclists receive the goods and services they deserve rather than being tragically left to fend for themselves, smartphones in hand, uncomfortable on ill-fitting bikes that squeak and rattle, lost, raging in frustration as they try to figure out, once again, how to install the left pedal on a stripped crankarm using a crescent wrench and a hammer. They deserve better. Progressive bike shops can make it so.

2 thoughts on “Opportunities Exist for Progressive Bike Shops

  1. Some of these items were covered in the SWOT analysis.. but speaking as someone who has brought a number of people into the sport, I have the following observations on the typical LBS:

    -Too much of a focus on high performing athletes in product mix. While it’s great when they buy a lot of those high margin items like the $3,000 Zipp wheelset, you also need to have a broad range of products at price points that will appeal to a beginner, and make them feel comfortable, as most new people wanting to take up the sport, don’t know where to begin.

    -Need to focus on partnerships to bring in new riders. I worked as a spin instructor in a health club. I saw as part of my job, to have members not just treat it as an aerobics class, but to treat it as training to eventually get out on the road. I formed a partnership w/ a great LBS. The members got discounts off bikes & accessories. I would train them through the winter & spring & we would do an Event Ride as a team in the summer. The LBS ran a maintenance clinic just for our members (30 attended). The local Trek rep stepped up & paid for a buffet supper, as well as giveaways & cycling socks for everyone. It was a mutually beneficial relationship for both the LBS and the Health Club, and brought a good number of new cyclists into the sport (and thus customers of the LBS who wouldn’t think of going anywhere else)

    -Shop rides for BEGINNERS. Can’t emphasize this enough. Most shops don’t want to be bothered, but you are not going to bring in someone new when your slowest pace on a shop ride is 16-18mph

    -Overbearing manufacturers is a huge problem & limits selection in the LBS. There is a certain one that comes to mind that starts w/ the letter ‘S’ that limits competition, not just in the lines of bikes carried, but accessories as well. I have gone into my favorite LBS here looking for a high quality. and common brand of saddle. In spite of it being a decent sized shop, they said all we carry is ‘S’ brand. But that’s not what I wanted. So I walked out & ordered the saddle that I wanted on Performance Bike. Some of these large manufacturers are squeezing their dealers so hard, it can actually drive business away due to the limited selection. I felt bad for the LBS, who is beholden to ‘S’ The manufacturers need to knock it off! Compete on an even playing field & have the confidence that their products can stand up to the competition on their own.

    -Most LBS websites are notoriously poor. Just look at your LBS website, and then compare how easy (or hard) it is to find items vs. going to performancebike.com While the LBS doesn’t have the resources to develop a site of that same caliber, they can make it much easier to navigate as well as find items, and allow customers to see what’s in stock in the store (not just bikes but accessories, nutrition & clothing too) This helps drive sales from the laptop/iPad shopper who may decide to buy from you for the immediate gratification, vs. having to wait for the item to be shipped.

    -Most (not all) LBS’ don’t do enough to support local bike clubs and/or event rides. It goes beyond giving the club members a 10% discount on accessories… it means getting active within the club. Same with the local event rides. When I was on the planning committee for an event ride with 1500 participants, it was like pulling teeth many times just to get wrenching service from the local shops, let alone SAG vehicles (we’d have to do our own SAG vehicles). This is a great opportunity to make an impression on the recreational cyclist (which is where the bulk of the customer are)

    -Not enough community involvement. Support local police & schools when they have ‘learn to ride’ programs. If there aren’t any in your area, start one! Riding by kids is way down, which does not make a good funnel for future customers. Work w LAB to run learn to ride for adult programs in conjunction with the local recreation dept. There is no easier way to get people to feel more confident riding on the roads thus attracting new customers.

    -Most LBS’ don’t have a ‘loyalty program’ Loyalty programs are great bc you can let them earn 10% back in points or dollars that ensures repeat business. You can even run double & triple point promotions over the course of say a weekend. If you develop a program that’s good enough, you can even charge customers to be a member.

    Just my 2¢…

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