By Marc Sani
Set aside any doubts: The insurrection that swallowed our nation’s Capital Jan. 6 will reverberate for years to come.
At the moment, no one knows where the country is headed—exactly. But “The Troubles,” an oft used phrase to describe the 30-year conflict in Northern Ireland, may signify the sort of long-term, low-level disinformation war to be waged for the minds of many who believe an election was stolen: the ‘Big Lie’ that ‘deep state’ Democrats led by Bill and Hillary Clinton, George Soros, Bill Gates and others lead a Satanic ring of pedophiles who murder and drink the blood of children.
No, I’m not making this up! A lot of people believe that at one level or another. That is the contorted thinking of too many Americans today.
But to leave this ghastly page of history behind for a moment, let’s get back to the business of cycling and what may be in store for the U.S. market as we stare into a new year. Several general items to keep in mind looking forward:
- As I write this, the pandemic is in full swing. The U.S. leads the globe in total deaths within any single nation and will most likely exceed 450,000 by the time this column is published. Unbelievable.
As a result, we will continue to see a decline in overall retail sales and a rise in unemployment through the spring. It will be a dark time, as President Joe Biden has warned. Fear and uncertainty is never a good sign when it comes to the economy. And it’s uncertain how the burgeoning pandemic will impact the bicycle industry as we move through the year. Plus, at the moment, we are in the throes of winter and bicycle sales normally soften this time of year.
- It’s unclear how the Biden Administration will eventually roll out COVID-19 vaccinations or whether Biden’s financial stimulus plan will get through Congress, and in what form. However, it’s clear that Biden’s approach to tariffs levied by the Trump Administration, particularly on bicycles and parts made in China, will remain in place at least for the short term.
- Industry leaders I have talked with continue to warn that the supply chain disruption—a hallmark event for the industry in 2020—will continue in 2021. Orders for Shimano drivetrains, brakes and other parts will continue to experience delays. That, in turn, delays final assembly, shipping and, ultimately, distribution to dealers nationwide. Think lost sales.
- Nonetheless, most retailers are forecasting a good year for sales. Older dealers are selling their stores; Trek is snapping up some of them. But, at the same time, dealers are wary—paying off debt, reworking leases, broadening the lines of bicycles they carry (good news for tier two and three bicycle brands), and keeping a careful eye on the economy, unemployment numbers, and the vaccination roll-out. If all goes well, as most of us hope, the third quarter could be dynamite as vacations ramp up and people start to head outside without fear.
- The industry made money in 2020. Data from NPD Group (the USA’s bicycle data collection specialists) shows a 45 percent increase in supplier revenue over 2019 to a record US$1.658 billion (A$2.15 billion) for 2020. That is up by more than half a billion US dollars over 2019 when the total was US$1.142 billion (A$1.48 billion). This number includes only complete bicycles that are sold through IBD’s (independent bicycle dealers.) It excludes P&A sales to IBD’s and all products sold through mass merchants. That was bolstered by a 34 percent increase in units sold to dealers which grew from 1,835,846 units in 2019 to 2,459,085 units in 2020. This includes all types of bicycles sold through IBD’s. And import numbers from the U.S. Commerce Department are showing an uptick, 4.6 percent, through October of 2020, the latest numbers available.
- The brightest spot has been e-bikes and 29er full-suspension mountain bikes. Here’s some numbers: In 2019 e-bike sales to IBD’s totaled US$200.7 million (A$260 million) with 85,202 units sold. Last year, ebike sales revenue was up 106.7 percent to US$414.8 million (A$538 million) with a 92 percent increase in units sold to 163,322. Not bad for one year!
29ers also saw a healthy increase up 62 percent in units to 77,873 and 67 percent in dollars to $177.6 million (A$230.6 million). On the other hand, sales of 27.5 full-suspension bikes dropped significantly. In general, most other categories showed an uptick.
Still, I’m a tad less bullish than some of my peers. A lot of sales that normally would NOT have happened, or that were moved forward in April, May and June of last year, may have tapped out a tranche of buyers for 2021. We need to be honest with ourselves as an industry. We sell higher-end products to consumers who sit higher on the income ladder; there is not an inexhaustible supply of consumers willing to shell out US$2,539 (A$3,297)—on average—for an e-bike or US$2,281 (A$2,962) for a so-so 29er.
I tend to think once the pandemic is brought to heel, as consumers return to some sort of normalcy, kids get back to school, parents head to work either at home or an office or a mix of both, bicycle sales will begin to slow.
We may well see a shift in categories as new consumers opt for some type of e-bike or regular cyclists opt up for an e-MTB or e-powered road bike, but as Americans return to some sort of normalcy, so will bicycle sales. At least that’s my thinking.