Bike Shops Have a Bright Future in Our Internet Age!

I have no doubt that the future is bright for independent bicycle dealers (IBD’s) throughout Australia and New Zealand. But it’s not bright for all IBD’s… just well managed ones.

Why? For many reasons. But let me start by comparing two industries that have several things in common.

For well over a century both of these products were mainly sold via independent retailers operating brick and mortar shops. More recently, both markets have been massively disrupted by the internet, one slightly sooner than the other. And most importantly, they both start with the letter B!

My IBD comparison case is the independent bookshop.

Book retailers started going to the wall earlier in the internet era and in even greater numbers than bicycle dealers.

When you think about the differences it’s not surprising. Books are smaller and much cheaper to ship via mail order than bicycles. Amazon’s initial sole focus and core product to this day is books.

Then there’s the product itself, at the end of the day, with the exception of high end art books and other niche markets, books are just a vehicle to convey content. You can replace them with e-readers like Kindles, audio books, podcasts and any number of new technologies that deliver content, often faster and at lower cost than printing, shipping and selling a physical book.

The number of independent bookshops peaked in the 1990’s and then plummeted. According to one article in The Guardian talking about UK book shops, there were 1,894 shops at the peak in 1995, which dropped to just 867 in 2016.

But since then, something illogical seems to have happened. The number of UK shops has started increasing. Ever so slightly, with just one extra shop in 2017 and another 15 in 2018.

Australia’s book trade is telling a similar story according to Books + Publishing, the leading trade journal. After years of carnage in the Australian book industry, the number of books sold in Australia – we’re talking physical books, not ebooks or any other newfangled electronic nonsense – has actually increased, albeit by tiny percentages in both volume and value for the past four years.

If even the book sales business can stage a recovery, there are good reasons why the bicycle market can too.

Before listing them, let’s take a nostalgic look down memory lane to what was, with the benefit of hindsight, probably the best time to be a bike retailer in Australia.

I’m talking about the noughties. In the early 2000’s the internet was already around, but it wasn’t turbocharged by everyone having a smartphone in their hand. It’s hard to believe that the first iPhone was not released until 29th June 2007.

Social media was also barely underway.

Meanwhile bike sales were being driven along by the carbon road revolution, new disc brakes on mountain bikes and other technological breakthroughs.

Total bike sales peaked in Australia at over 1.4 million units in 2007. Dealers were also enjoying the first flows of what would become a flood of more than $100 million in new capital entering the market as international brands bought out their former Australian distributors and set up direct subsidiaries. They offered longer credit terms to dealers as a way of buying and then holding market share.

Then what happened?

The global financial crisis started to rumble in 2007 and fully hit home in late 2008, shrinking total sales just as internet sales were seriously growing their market share.

Bike shops started closing. Times may never have seemed easy, but as Joni Mitchell (Who? …ask your parents.) once sang, ‘You don’t know what you got ‘til it’s gone.’

But if even book sellers can turn things around, I think there’s many more reasons why well managed IBD’s can do the same.

Here are six:

  1. Books don’t need assembly when they’re shipped in a box, bikes do.
  2. Unlike books, bikes need regular servicing and repairs. New pages anyone? No thanks, but I need a new set of tyres.
  3. You can test read a book online, but virtual reality is nowhere near the point where you can realistically test ride a bike any other way than in the flesh.
  4. Global bike brands, at least some of them, across both complete bikes and P&A are starting to realise that the short term sugar hit of big online sales at big discounts comes at the long term expense of trashing their dealer network. Admittedly, some dealers will say it’s too little too late.
  5. Books are extremely simple products that have not significantly changed in centuries. The bike industry is full of complex products that are improving very rapidly.
  6. Finally, the most obvious example of complex products that are improving rapidly is ebikes. They are bringing new customers into bike shops, who are spending far more money that a ‘newbie’ would previously have spent on a non-ebike.

Which brings me to the conclusion that I alluded to in my opening paragraph. The future is bright for IDB’s, but only for those who learn how to manage their businesses well.

In addition to publishing The Latz Report, I coach a number of businesses, not just bike retailers but others from a variety of industries. In every industry, some businesses thrive, some just get by, others go to the wall.

Don’t blame our industry. Everyone I coach tells me how tough their industry is as though it’s some special case. They’re all tough! It’s called the free enterprise system and its method of discipline is called bankruptcy.

The future of your business can be very bright. It’s up to you to make the wise decisions that will make it happen.

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