Industry Leaders Discuss Our Current Bicycle Market

What is happening in our Australian bicycle market? As you can read in a separate article this month, bicycle imports remain way below pre-covid levels. Many dealers and wholesalers are struggling. Some dealers have closed. Sales are flat. Discounting is still prevalent.

Is this the new normal, or will things improve? And if so, when?

Recently I spoke with the CEO’s seven of the top 10 bike businesses in Australia to get their first-hand impressions. I asked them all a very similar set of questions, the core of which I’ve repeated below.

All of these conversations were made on an “off the record” basis. Therefore, you won’t read the names of any individuals or companies here and I’m not going to publish everything that was discussed. I’ve also shuffled the order of answers to each question. You may notice that some questions have more than seven answers. That’s because some individuals made more than one comment. In these cases, I’ve also interspersed their comments with the comments of others.

I’d like to thank all of these CEO’s for their time and very frank comments. I apologise to any I didn’t call who might have liked to add comments, but the omission was purely due to time constraints.

Do you agree with the CEO’s comments and predictions? Please feel free to add yours in the comments section at the bottom of this article.

What are your overall impressions of the Australian bicycle market at the moment?

“It’s tough out there! Last year we thought that if we end up with 2019 numbers, we’d be happy, but we’re back to 2016 numbers.”

“The problem is wider than just the bike industry. People are being tight with their money. There’s frustration within consumers who are struggling while they see some corporates still doing well.”

“The market is very flat at best! The higher cost of living is having a big impact on discretionary spending.”

“It’s a pretty challenging market right now and there are only two things that create momentum – new product launches and aggressive pricing.”

“Overall, it’s gone through massive change since Covid. We’ve seen a rationalisation of the dealer base and inventory, but it’s starting to turn. This year we’re slightly behind budget every month, but we’re focused on getting inventory down. Retail store margins are up a few points, so overall it’s close to an ok year.”

“Who knows what’s going on – it’s all over the place! Up and down month to month.”

“Fat electric bikes (ie beach cruiser style, often above legal power limits) are being sold outside the traditional IBD channel so they’re taking sales from bike retailers.”

“Demand for bikes is still relatively solid. I don’t see demand falling off a cliff. I think the cost of living pressures have been overblown.”

Within the different bike categories, are there some that are particularly strong or particularly weak?

“MTB’s are weak, both duallies and e-MTB’s.”

“E-bikes are still doing well for us. High end road is doing well, but the first and second shipments of new products sell out, then sales slow quickly after that. Pedal MTB duallies are bad.”

“Kids bikes are moving better than last year. $700 to $4,500 is very stagnant. We’re moving higher end bikes above $4,500.”

“Road is still pretty strong, e-mountain and gravel. Pedal-mountain is weak. The cheaper product and higher end are going strong with the middle band relatively weak.”

“We’re seeing some growth and good sell through in mid to high end in particular. The top end of town, more mature age people, are still doing well.”

“High end road still seems to be quite buoyant, including gravel and custom builds.”

“Kids bikes are quite strong for us.”

“It’s flat for bikes below $3,000 and e-bikes below $4,000. Those customers are most affected by the economy. There’s not a lack of real demand, but there’s fear of making a large purchase.”

How are your stock levels now compared to how you would like them to be?

“Covid gave some B & C brands hope and they placed big forward orders. New they’re giving ridiculous discounts. But our dealers have sold through a lot of their stock and they’re now ready to steadily place new orders.”

“We’ll still see, for the next year or so, the knock on effects of patchy stocks, overstocks and discounting. But there are other areas where wholesalers have been too conservative.”

“Just because one wholesaler is light on a particular type of bike, three or four others could be heavy.”

“Our stock levels are pretty good. We’re getting there. We’ll probably be back to normal by the end of 2024.”

“Road and Gravel are appearing to be strong, but mainly due to short supply and so their margins are holding up. MTB dually is not setting the world on fire.”

“Different companies are heavy in different lines of stock.”

“Our stock levels are good, but there’s always room for improvement. There’s always pressure to order more but hold less stock.”

“We’re very comfortable with our forward orders. We’re not under any pressure to take more stock.”

“Stock is still too high, but we forecast that our stock levels will be right by December.”

“We’re in a pretty good stock position. It’s not about the number in stock but the rate of sell through that’s the challenge. Brands will have to make tough decisions about when to introduce 2025 and 2026 models.”

“Stock is still way too high. It will take us 12 months to recover. We heavily discounted our oldest stock to clear it but now we’re not playing the discount game.”

Are you comfortable with your forward orders or are you under pressure to take more bikes than you would like?

“We’re comfortable with our forward orders. Our factory is saying, “Don’t overstock yourself.” Even if it means they’re a bit quieter.”

“Importers want to stay lean, but they’re sometimes pushed by their global HQ. Locally owned importers can put the brakes on and steer the bus themselves.”

“I’m very nervous about what’s going on in Asia. Recently two factories have told us they’re “on holidays’ for July and August. In 30 years I’ve never known this at this time of year.”

“Forward orders and pressure to take bikes is not an issue.”

What sort of year do you think we will have for 2024/25 and when do you think the market will return to equilibrium and discounting will reduce?

“Dealers have less power over pricing than the used to, now that some major brands are selling direct and there’s click and collect via dealers.”

“Does it ever return to equilibrium? Higher stock levels could easily run for another 18 months.”

“When you look at Australia’s macroeconomic data forecasts for 2025, we should see a slight drop in inflation, a small drop in interest rates and a slight increase in GDP (gross domestic product). So overall it should be slightly better for Australia in general, but how quickly this impacts bikes sales – it’s not a linear correlation.”

“The value that consumers are getting now will never be repeated. One, because of the discounting and two, because of shifts in Shimano’s groupset policy due to CUES, and SRAM not playing at the lower levels. Overheads at bike factories will rise.”

“I think that the discounting is more selective now. They’re also pushing out bikes through longer payment terms. A lot of dealers took bikes on longer terms, but it also affected their cashflows (when the bikes were slow to sell through). Dealers are more savvy now and will forego an incentive to better manage their cashflow.”

“If it’s flat in 2025 compared to 2024 we should be happy because we’ve had consecutive years of decline. Inventory will be normalised. We’re still slightly up on pre-covid levels.”

“Our business has a profit driver – we want margin improvement.”

“I’m still very positive about the long term bicycle market in Australia. It still has all those positive attributes that we all know around mental and physical health, transport and all the others. But big discounts cripple our industry and it will take longer for our industry to normalise.”

“The market will remain competitive. As long as one or two brands have excess stock, that will drive competition. There’s a longer tail of the overstocks that’s bigger than any one company.”

“Retailers are nervous about putting pen to paper when it comes to forward orders – we’re getting laughed at.”

“The current challenges are not specific to the bike industry. Customers are always making decisions, whether it’s trampolines, scooters – how affordable those products are to the customers is important.”

“I wish I knew! I think it will be tough this year.”

“Retail will always be a competitive game. There’s more transparency now via the web for consumers to see where the discounting is.”

“In the general market it’s a dual economy with the “haves” being the third of people who own their home outright and the “have nots” but now even some of the “haves” have shut up shop a bit when it comes to large purchases.”

“Good performing retail teams (stores) who are engaged with their customers, have good sales consultants and good workshops are going fine.”

“The current low import numbers are exciting news for me. We need a fundamental reset about our expectations. Every brand orders too much stock. The only winner from this is the consumer, never the wholesaler or retailer. Brands need to acknowledge that they’re ordering too many bikes each year. Right now we sell half our bikes at good margin and half at shitty margins. You can sell a little at a lot or a lot at a little.”

“We’re nervous about price increases. Factories are asking for increases across the board. Also the cost of doing business here is going up. I’m also worried about the Aussie dollar falling.”

“We’ve all hoped it would be over now, but it continues. I think we’ll continue to see flatness for the rest of the 2024/25 financial year. Out of every five bikes sold during covid perhaps 2.5 are still being used, so the second hand markets are currently flooded with quality bikes. This has a flow on effect for bike shops.”

“Equilibrium? That depends upon what comes in. Company owned stores are dumping bikes, going from one special to the next. When do these guys want to start making some money? But I think this year will be better than last year. It’s lumpy now but last year was consistently hard.”

“We’re in for quite some pain.”

“I think the e-bike numbers that you quote are vastly overstated. E-bikes are not being sold through mass merchants. I don’t believe there’s 250,000 ebikes being sold in Australia.”

“I think that by about this time next year, say July 2025, the market will return to equilibrium.”