Survey Shows Rising Dealer Metrics in a Flat Market

retsur2015cover_300pxThe number of bike shops continues to drop each year, with another 4% decline projected in 2015, but a new survey shows that several other dealer metrics are actually trending up.

According to the NBDA’s 2015 Specialty Bicycle Retail Survey, the average bike store is now larger in both dollar volume (over $1 million per year, an all-time high), and physical size (6,461 square feet), than ever before. They are also improving in sales efficiency, with average sales of $185 per square foot, a record high for these surveys, and an increase of 3% from the previous year.

While there continue to be huge challenges, the IBD channel itself was apparently churning along fairly well in 2014. IBDs were responsible for $4.7 billion in retail sales last year, including used bikes, approximately 63% of the retail dollars spent on cycling in the United States. This reinforces the notion that while many are certainly fighting for their business lives, a lot of them are fighting successfully. Over half reported that their sales were up in 2014.

What are some of the challenges they are facing? Competition from the Internet was at the top of the list, with 72% of the retailers noting it as an issue. Competition from mail order was cited by just over half, and availability of good employees by 46%. 34% said they had an increasing number of consumers asking for discounts, and 33% suffered from competition from mass merchants. Other problems were the rising cost of insurance, lack of protected market areas, lack of good places to ride, and competition from other bike shops. Other issues included lack of equitable dealer agreements, competition from sporting goods stores, and showrooming by consumers.

92% said they had experienced customers using hand-held devices in the store to help them shop. 89% had customers photograph a product in-store, 81% reported customers searching the web for the same product, and 73% had customers send a text a friend to discuss a possible purchase while in the store. Over half had customers scan bar codes in the store.

How did retailers respond to customer use of technology? 98% of the retailers took a positive approach and engaged showrooming people in a friendly discussion of the products available in the store. 19% referred customers to the store or brand’s website, and 1.6% expressed zero-tolerance views and asked showrooming customers to leave the store.

The survey also reinforced the continuing importance of non-product services for many stores. A whopping 82% said they offered bike fit services, and nearly 60% rented bikes. Almost 13% had a coffee bar available to customers, and 10% offered training, 7% coaching and 6.3% had beer onsite. Others were offering yoga instruction, coaching, juice bars, rides and tours.

Advocacy continued to be an important business strategy for many, with 79% saying it was either important or somewhat important to them. Those involved in advocacy gave money and donated time, both personal and staff. 82% belonged to at least one advocacy organization.

The survey’s executive summary concludes, “The specialty bicycle retail channel is in flux with many looking at both internal and external issues that are causing different levels of anxiety. Within the industry we see leaps of concern about product availability, protected market areas, and fair and equitable dealer agreements – let’s not forget to mention competition in general and between IBDs in particular (this type of competition jumped in this year’s study).

“Retailers continue to both use and complain about the Internet. It’s a competitive issue as well as a brand building issue – the retail store is the brand, as well as a sales issue with more retailers reporting that they are involved in eCommerce activities.”

The complete NBDA Specialty Bicycle Retail Survey is available at http://www.nbda.com for $399, or $69 for NBDA members. It is 225 pages long, with extensive tables and charts.

One thought on “Survey Shows Rising Dealer Metrics in a Flat Market

  1. “… the average bike store is now larger … they are also improving in sales efficiency …”

    For clarity in a market of declining stores, what the numbers mean is that the average of all stores in these things is going up, but not because existing in-place stores are both growing/expanding and getting more efficient. It is because weakened stores, probably tending toward the smaller, are failing, leaving the stronger, larger stores to be more dominant in the measurement of the numbers.

    This is an important thing to understand.

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