The Bicycle Industry: A Masterclass in Self-Destruction

I spent nearly twenty years of my life in the bicycle trade, running my own shop before getting out in 2017. If you asked me to describe the industry in one sentence, it would be this: it doesn’t just shoot itself in the foot on a regular basis, it holds a fully-automatic rifle to its own head and seems to have a very trigger-happy disposition.

From the outside, you see shiny bikes and healthy-looking people. From the inside, it's often a masterclass in how not to run a business. The mess the industry finds itself in post-lockdown wasn't an accident; it was the spectacular, inevitable finale to decades of madness.

The Old Madness: A Flawed Blueprint

Even before the pandemic, the bike trade was wobbling on a very unstable unicycle. One of the biggest issues has always been the ridiculously outdated route to market. For many big brands, a bike leaves a factory in the Far East, goes to a brand's European warehouse, then to a UK national distributor, and finally to a bike shop. Every single one of those steps adds its own profit margin. By the time that bike reaches you, the customer, its price has been inflated by a whole chain of middlemen.

Then there's the ludicrous "model year" cycle. In the UK, new bike models are traditionally launched around September. This means that just as the peak summer selling season is underway, the industry starts slashing the prices of the "old" models to clear them out. As a shop owner, this was a nightmare. You had to run your stock incredibly lean during the busiest months, terrified of being stuck with a pile of bikes you'd paid full whack for, only for the brands to cut the RRP from under you. It’s a system that actively discourages shops from being well-stocked when demand is highest. Utterly daft.

You might ask why these decisions get made. Well, for a long time, the bike trade has suffered a "brain drain." For most roles below the very top, the pay is pretty poor. The real talent often, and wisely, moves to better-paying sectors, leaving a vacuum filled by well-meaning enthusiasts rather than sharp business minds.

The Great Lockdown Folly

For years before 2020, the market was flat. Discounting was rife, and most shops were groaning under the weight of too much stock they couldn't shift. Then, lockdown hit. Suddenly, everyone wanted a bike.

The world ran out. Shops sold everything they had, distributors sold everything they could get, and manufacturers couldn't make them fast enough. Component giant Shimano, who supply parts for the vast majority of bikes, had lead times stretching into years. For the first time in a long time, bikes were selling at full price. The boom was real, and the profits were huge.

And this is where the industry loaded the gun. A bizarre collective delusion took hold. Instead of seeing the boom for what it was, a temporary, once-in-a-generation blip caused by a global pandemic, they decided this was the new normal.

The result was catastrophic over-ordering on a global scale. Everyone, from the biggest brands to the smallest shops, ordered bikes like the party would never end. Production went into overdrive.

But of course, the party did end. The world opened back up, people went back to their cars and holidays, and all those nearly-new bikes bought in a fit of lockdown boredom began flooding the second-hand market on eBay and Facebook.

The Hangover

The industry woke up to the perfect storm. Warehouses were bulging with eye-wateringly expensive stock that nobody wanted. The public either already had a bike or could pick up a barely-used bargain for half the price of a new one.

The crash was brutal, and it simply exposed the cracks that had been there for decades. The wishful thinking and poor planning finally came home to roost. We've seen massive names in the industry go into administration. Distributors are folding, brands are in trouble, and local bike shops are sitting on mountains of stock they can't afford to sell at a discount, but can't shift at full price.

The lockdown bike boom didn't break the bicycle industry. It just held a massive magnifying glass up to a business model that was already fundamentally broken. It's not looking like getting better any time soon, and you can't help but think they've only got themselves to blame.