Hybrids are hot, roadies not.
02-12-07, 11:22 AM
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Hybrids are hot, roadies not.
From Bicycle Retailer & Industry News
Roadies may find the comments about 'devaluing' carbon bikes interesting, while 'advocates', commuters and those advocating bikes for transportation my be heartened by the comments concerning the 30% rise in hybrid sales.
Roadies may find the comments about 'devaluing' carbon bikes interesting, while 'advocates', commuters and those advocating bikes for transportation my be heartened by the comments concerning the 30% rise in hybrid sales.
Road Surplus Could Create Closeout of High-End Bikes
By Matt Wiebe
JANUARY 01, 2007 -- MONTGOMERYVILLE, PA--Suppliers shipped 6 percent more units to bike shops through September, and posted a 9 percent sales jump. The increases come at a time when Wal-Mart and other major retailers are lowering their sales expectations.
Road bikes, which have driven specialty sales over the last few years, only posted a 3 percent sales gain.
In contrast, hybrid sales jumped 30 percent, followed by front suspension mountain bikes, up 17 percent, and full-suspension, up 11 percent, according to the Bicycle Product Suppliers Association’s (BPSA) third quarter 2006 report.
Considering that overall bicycle imports through September are down 9 percent in units and dollars, the specialty channel seems to have picked up market share from mass retailers.
The drop in imports also suggests mass suppliers and retailers have plenty of inventory on hand.
The big downside for the specialty channel is the huge growth in road bike inventory and slim supply of hybrids that may cause spot shortages.
“The inventory situation on road bikes is not a good one. In 2005, the inventory on Jan. 30 was $23.7 million or, by my estimates, a little more than two months on hand,” said Bill Austin, Raleigh USA’s chairman and chief executive officer, and chair of the BPSA’s statistical committee.
“Now at the end of October road inventory was $67.2 million. However, with the sales lower in the coming months, what we have on hand could supply the road market for more than five months,” he noted.
Scott Montgomery, Scott USA’s vice president of the bicycle division, wonders if the situation may play out a bit differently because of low retail inventories.
“From my retailer visits, it seems like they are buying way more conservatively than in the past. While inventory levels are high for some suppliers, they could be drawn down quickly through the channel,” he said.
Suppliers reporting to the BPSA were sitting on 25 percent more road bikes last September than in 2005, or 19,818 more units.
More telling is the 44 percent jump in value of that inventory. The average value of a road bike in suppliers’ warehouses last September was $677 per unit, compared with $585 in 2005.
Since suppliers report inventory at cost, a $677 bike in inventory likely sold for $1,512 at retail after supplier and retailer margins are added on. Last year’s average bike in inventory sold for $1,306.
Pricier road bikes would not be a problem if they were what consumers wanted, however, the average road bike shipped to retailers last September sold for $1,295 at retail, or about $200 less than the road bikes still in inventory. Suppliers may be forced to closeout inventory of higher-value road bikes to bring inventory levels down.
“My concern is the brands will start discounting and it will serve to devalue the carbon frame. Carbon construction is increasing in cost, so the perceived value of carbon will likely be damaged,” said Bob Margevicius, Specialized’s executive vice president of the bike group.
Due to the lack of sales data from the channel, suppliers can do little to improve forecasting. Next season suppliers could be stuck with a surplus of hybrids and not enough road bikes.
On the bright side, the robust 30 percent sales growth of hybrids coupled with the huge drop in inventory suggests that the category is one of the major success stories of 2006.
“I don’t think anyone is surprised about where all the hybrids are going. Gas prices are driving the bikes as transportation,” said Jacob Heilbron, Kona’s chairman of the board.
“Dealers have not been able to keep any hybrid priced at less than $500 on the floor, and I think some of the jump in front suspension sales is also due to people picking up one for basic transportation,” he added.
Since gas prices are not likely to come down anytime soon, Heilbron sees commuter or utility bike purchases as a great opportunity for future business.
However, with no consumer data available, it’s hard to tell just how many of these hybrids are being purchased for trips to the grocery store or commutes to work. Given perennial consumer fear of traffic, hybrids could be going to leisure, recreational or fitness riders.
Front suspension, the second major growth category, may be riding on the coattails of the success of hybrid bikes. But growth in racing, 24-hour as well as festival events, also is pegged as contributing to strong hardtail sales. The racing crowd bought higher-spec bikes and raised the unit value in 2006.
“The rise in hardtail value is also attributed to greater carbon content and higher-valued Shimano and SRAM spec,” Margevicius said.
Dual suspension rounds out the big sales gainers and although BPSA members shipped fewer units, 2 percent less, average unit value is up 13 percent to $1,119. The category now represents 14 percent of suppliers’ dollars.
By Matt Wiebe
JANUARY 01, 2007 -- MONTGOMERYVILLE, PA--Suppliers shipped 6 percent more units to bike shops through September, and posted a 9 percent sales jump. The increases come at a time when Wal-Mart and other major retailers are lowering their sales expectations.
Road bikes, which have driven specialty sales over the last few years, only posted a 3 percent sales gain.
In contrast, hybrid sales jumped 30 percent, followed by front suspension mountain bikes, up 17 percent, and full-suspension, up 11 percent, according to the Bicycle Product Suppliers Association’s (BPSA) third quarter 2006 report.
Considering that overall bicycle imports through September are down 9 percent in units and dollars, the specialty channel seems to have picked up market share from mass retailers.
The drop in imports also suggests mass suppliers and retailers have plenty of inventory on hand.
The big downside for the specialty channel is the huge growth in road bike inventory and slim supply of hybrids that may cause spot shortages.
“The inventory situation on road bikes is not a good one. In 2005, the inventory on Jan. 30 was $23.7 million or, by my estimates, a little more than two months on hand,” said Bill Austin, Raleigh USA’s chairman and chief executive officer, and chair of the BPSA’s statistical committee.
“Now at the end of October road inventory was $67.2 million. However, with the sales lower in the coming months, what we have on hand could supply the road market for more than five months,” he noted.
Scott Montgomery, Scott USA’s vice president of the bicycle division, wonders if the situation may play out a bit differently because of low retail inventories.
“From my retailer visits, it seems like they are buying way more conservatively than in the past. While inventory levels are high for some suppliers, they could be drawn down quickly through the channel,” he said.
Suppliers reporting to the BPSA were sitting on 25 percent more road bikes last September than in 2005, or 19,818 more units.
More telling is the 44 percent jump in value of that inventory. The average value of a road bike in suppliers’ warehouses last September was $677 per unit, compared with $585 in 2005.
Since suppliers report inventory at cost, a $677 bike in inventory likely sold for $1,512 at retail after supplier and retailer margins are added on. Last year’s average bike in inventory sold for $1,306.
Pricier road bikes would not be a problem if they were what consumers wanted, however, the average road bike shipped to retailers last September sold for $1,295 at retail, or about $200 less than the road bikes still in inventory. Suppliers may be forced to closeout inventory of higher-value road bikes to bring inventory levels down.
“My concern is the brands will start discounting and it will serve to devalue the carbon frame. Carbon construction is increasing in cost, so the perceived value of carbon will likely be damaged,” said Bob Margevicius, Specialized’s executive vice president of the bike group.
Due to the lack of sales data from the channel, suppliers can do little to improve forecasting. Next season suppliers could be stuck with a surplus of hybrids and not enough road bikes.
On the bright side, the robust 30 percent sales growth of hybrids coupled with the huge drop in inventory suggests that the category is one of the major success stories of 2006.
“I don’t think anyone is surprised about where all the hybrids are going. Gas prices are driving the bikes as transportation,” said Jacob Heilbron, Kona’s chairman of the board.
“Dealers have not been able to keep any hybrid priced at less than $500 on the floor, and I think some of the jump in front suspension sales is also due to people picking up one for basic transportation,” he added.
Since gas prices are not likely to come down anytime soon, Heilbron sees commuter or utility bike purchases as a great opportunity for future business.
However, with no consumer data available, it’s hard to tell just how many of these hybrids are being purchased for trips to the grocery store or commutes to work. Given perennial consumer fear of traffic, hybrids could be going to leisure, recreational or fitness riders.
Front suspension, the second major growth category, may be riding on the coattails of the success of hybrid bikes. But growth in racing, 24-hour as well as festival events, also is pegged as contributing to strong hardtail sales. The racing crowd bought higher-spec bikes and raised the unit value in 2006.
“The rise in hardtail value is also attributed to greater carbon content and higher-valued Shimano and SRAM spec,” Margevicius said.
Dual suspension rounds out the big sales gainers and although BPSA members shipped fewer units, 2 percent less, average unit value is up 13 percent to $1,119. The category now represents 14 percent of suppliers’ dollars.
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02-12-07, 11:56 AM
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good thing the shop is carrying plenty of fuji hybrids.
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02-12-07, 05:59 PM
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See what happens when you post in General to avoid cross-posting...thread death!
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02-12-07, 06:18 PM
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If road bikes were more affordable they'd be more popular with entry level cyclists. You can't deny that.
Those numbers are sort of meaningless in the long run. You have to look at user attachment rates. If someone buys a hybrid, do they stick with riding it? Do they end up buying a roadie or a mtb later? Or do they buy it and never actually ride it?
For the industry, it's more important to keep people riding rather than sell more bikes, because if they ride they buy bikes anyways.
Those numbers are sort of meaningless in the long run. You have to look at user attachment rates. If someone buys a hybrid, do they stick with riding it? Do they end up buying a roadie or a mtb later? Or do they buy it and never actually ride it?
For the industry, it's more important to keep people riding rather than sell more bikes, because if they ride they buy bikes anyways.
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02-12-07, 06:25 PM
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You know road bikes are made out of other materials also. Other then Carbon. I know it's hard to believe but it is true.
02-12-07, 06:40 PM
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Originally Posted by UmneyDurak
You know road bikes are made out of other materials also. Other then Carbon. I know it's hard to believe but it is true.
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02-12-07, 06:58 PM
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Originally Posted by blickblocks
Yeah I don't really understand what the article was talking about in relation to CFRP. Low end road bikes are almost always aluminum.
“My concern is the brands will start discounting and it will serve to devalue the carbon frame. Carbon construction is increasing in cost, so the perceived value of carbon will likely be damaged,” said Bob Margevicius, Specialized’s executive vice president of the bike group.
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"Let us hope our weapons are never needed --but do not forget what the common people knew when they demanded the Bill of Rights: An armed citizenry is the first defense, the best defense, and the final defense against tyranny. If guns are outlawed, only the government will have guns. Only the police, the secret police, the military, the hired servants of our rulers. Only the government -- and a few outlaws. I intend to be among the outlaws" - Edward Abbey
"Let us hope our weapons are never needed --but do not forget what the common people knew when they demanded the Bill of Rights: An armed citizenry is the first defense, the best defense, and the final defense against tyranny. If guns are outlawed, only the government will have guns. Only the police, the secret police, the military, the hired servants of our rulers. Only the government -- and a few outlaws. I intend to be among the outlaws" - Edward Abbey
02-12-07, 07:06 PM
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Originally Posted by blickblocks
If road bikes were more affordable they'd be more popular with entry level cyclists. You can't deny that.
Those numbers are sort of meaningless in the long run. You have to look at user attachment rates. If someone buys a hybrid, do they stick with riding it? Do they end up buying a roadie or a mtb later? Or do they buy it and never actually ride it?
For the industry, it's more important to keep people riding rather than sell more bikes, because if they ride they buy bikes anyways.
Those numbers are sort of meaningless in the long run. You have to look at user attachment rates. If someone buys a hybrid, do they stick with riding it? Do they end up buying a roadie or a mtb later? Or do they buy it and never actually ride it?
For the industry, it's more important to keep people riding rather than sell more bikes, because if they ride they buy bikes anyways.
What I get from the 30% increase in hybrid sales is that some percentage of that increase is because more people are opting for bikes for transportation, which is good news and not a slam on road bikes.
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"Let us hope our weapons are never needed --but do not forget what the common people knew when they demanded the Bill of Rights: An armed citizenry is the first defense, the best defense, and the final defense against tyranny. If guns are outlawed, only the government will have guns. Only the police, the secret police, the military, the hired servants of our rulers. Only the government -- and a few outlaws. I intend to be among the outlaws" - Edward Abbey
"Let us hope our weapons are never needed --but do not forget what the common people knew when they demanded the Bill of Rights: An armed citizenry is the first defense, the best defense, and the final defense against tyranny. If guns are outlawed, only the government will have guns. Only the police, the secret police, the military, the hired servants of our rulers. Only the government -- and a few outlaws. I intend to be among the outlaws" - Edward Abbey
02-12-07, 07:50 PM
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Originally Posted by chipcom
Basic economics - surplus inventories = lower prices. The cost of carbon bikes could be coming down in the short term as inventories are adjusted...you'd think that would be good news for roadies who might want to buy a carbon bike, but it looks like my pal UD would rather percieve something offensive to roadies and spoil for a fight, rather than actually reading the article.
I guess my comment was more directed to the article, and not you. Would be nice to hear how none carbon road bike inventory is doing. I am guessing similar to carbon bike ones.Besides I have irrational paranoia about carbon. Remember kids Aluminium is real!
02-12-07, 08:43 PM
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I think the surplus of road bikes is due to the "Armstrong Effect" wearing off. If Floyd's TdF victory wasn't tainted by doping (allegations) he'd be a national hero and road bike sales would stay strong. Now, cyclists are thinking more about utility than aspiring to be the next champ.
02-12-07, 08:51 PM
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Originally Posted by UmneyDurak
Oh heck yeah! I guess my comment was more directed to the article, and not you. Would be nice to hear how none carbon road bike inventory is doing. I am guessing similar to carbon bike ones.
Besides I have irrational paranoia about carbon. Remember kids Aluminium is real!
I guess my comment was more directed to the article, and not you. Would be nice to hear how none carbon road bike inventory is doing. I am guessing similar to carbon bike ones.Besides I have irrational paranoia about carbon. Remember kids Aluminium is real!
Maybe the price of carbon bikes will come down to the point where it overcomes my fear of breaking one under the weight of my god-like bod.
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"Let us hope our weapons are never needed --but do not forget what the common people knew when they demanded the Bill of Rights: An armed citizenry is the first defense, the best defense, and the final defense against tyranny. If guns are outlawed, only the government will have guns. Only the police, the secret police, the military, the hired servants of our rulers. Only the government -- and a few outlaws. I intend to be among the outlaws" - Edward Abbey
02-12-07, 08:54 PM
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Originally Posted by xlntRider79
I think the surplus of road bikes is due to the "Armstrong Effect" wearing off. If Floyd's TdF victory wasn't tainted by doping (allegations) he'd be a national hero and road bike sales would stay strong. Now, cyclists are thinking more about utility than aspiring to be the next champ.
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"Let us hope our weapons are never needed --but do not forget what the common people knew when they demanded the Bill of Rights: An armed citizenry is the first defense, the best defense, and the final defense against tyranny. If guns are outlawed, only the government will have guns. Only the police, the secret police, the military, the hired servants of our rulers. Only the government -- and a few outlaws. I intend to be among the outlaws" - Edward Abbey
02-12-07, 09:33 PM
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Originally Posted by xlntRider79
I think the surplus of road bikes is due to the "Armstrong Effect" wearing off. If Floyd's TdF victory wasn't tainted by doping (allegations) he'd be a national hero and road bike sales would stay strong. Now, cyclists are thinking more about utility than aspiring to be the next champ.
02-12-07, 10:20 PM
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Originally Posted by chipcom
<snip> People also perceive road bikes as 'sport bikes' rather than something comfy and utilitarian enough for general recreational putting around or transportation purposes. <snip> I will admit that my snow bike is a hybrid...IMO a better tool for the job than a road bike.
What I get from the 30% increase in hybrid sales is that some percentage of that increase is because more people are opting for bikes for transportation, which is good news and not a slam on road bikes.
What I get from the 30% increase in hybrid sales is that some percentage of that increase is because more people are opting for bikes for transportation, which is good news and not a slam on road bikes.
I don't regret the decision for an instant. I've put over 3,000 miles on it in nine months in all weather and all conditions. (Keep in mind, that's rarely more than two or three miles at a whack, so it represents a lot of trips.)
That said, I just bought a roadie for stretch-out-and-crank recreational riding.
02-12-07, 10:49 PM
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I think it's an interesting article. Honestly, I've seldom seen looks at the bicycle market like that, but then again I haven't really gone looking...
My overall take on the article is it doesn't really say anything surprising. I think we all know bicycle popularity has been climbing over the last few years, due largely to greater recognition of the bicycle as both fun and practical, be it for exercise, utility, or just getting outdoors, and the rising price of gas has been a big help in that respect.
I think that since there's been more "average Joes" (and Janes... like my sister who recently bought a hybrid) interested in cycling, it's only natural that we see the big rise in hybrids, since they are generally marketed as a utility bike to people looking for something less intimidating than a full-on road bike and easier-pedaling than a mountain bike.
As blickblocks implied, these also tend to be the people least likely continue riding long term or frequently (again, like my sister), but it's still encouraging to note that sales are up across the board, even if it's just 3% for roadies.
My overall take on the article is it doesn't really say anything surprising. I think we all know bicycle popularity has been climbing over the last few years, due largely to greater recognition of the bicycle as both fun and practical, be it for exercise, utility, or just getting outdoors, and the rising price of gas has been a big help in that respect.
I think that since there's been more "average Joes" (and Janes... like my sister who recently bought a hybrid) interested in cycling, it's only natural that we see the big rise in hybrids, since they are generally marketed as a utility bike to people looking for something less intimidating than a full-on road bike and easier-pedaling than a mountain bike.
As blickblocks implied, these also tend to be the people least likely continue riding long term or frequently (again, like my sister), but it's still encouraging to note that sales are up across the board, even if it's just 3% for roadies.
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02-12-07, 11:01 PM
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My hybrid is still my favorite bike to ride. Most of my rides are under 30 miles on the hybrid.
02-12-07, 11:21 PM
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maybe, if carbon fiber gets expensive enough, the bike manufacturers will start producing high quality, high end steel bikes and market those to people. oh, but the profits would not be as great, unless they could convince people 7,000 dollars is not too much to pay for a steel bike..
I can hear the sales pitch now...."this steel, see, its' been to mars. i mean, the tires have. no, the fabric used in the tires has also been to mars. this steel has been recycled in Chinese steel founderies from old American cars. Classic cars."
I think the bike companies will need to find another expensonium to foist onto the masses. or else start selling 'like new' road bikes on Craig's List.....
I can hear the sales pitch now...."this steel, see, its' been to mars. i mean, the tires have. no, the fabric used in the tires has also been to mars. this steel has been recycled in Chinese steel founderies from old American cars. Classic cars."
I think the bike companies will need to find another expensonium to foist onto the masses. or else start selling 'like new' road bikes on Craig's List.....
02-13-07, 07:12 AM
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Now that I have ridden bikes for 4 years, I realize that buying a racing bike was the wrong move. I'm much more comfortable on my steel bike. In fact, I'm looking into building a nice steel road bike to replace my Lemond.
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02-14-07, 01:27 PM
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Originally Posted by Falkon
good thing the shop is carrying plenty of fuji hybrids.
I would have thought the Baby Boomers would be heading towards the cruisers with nexus hubs but no, they're still out there on their road bikes yelling "Car Back"!
02-14-07, 01:36 PM
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The low end bike market seems so driven by the misconceptions of people who don't know anything about bikes. Big, **** numbing grampa seats, poor quality/ unnecessary front suspension, and an irrational fear of drop bars are the norm. Oh well...
02-14-07, 01:48 PM
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Originally Posted by mander
The low end bike market seems so driven by the misconceptions of people who don't know anything about bikes. Big, **** numbing grampa seats, poor quality/ unnecessary front suspension, and an irrational fear of drop bars are the norm. Oh well...
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02-14-07, 02:29 PM
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Originally Posted by blickblocks
Have you been to any xmart lately? All the bikes seem to have dual suspension. Why the hell would a person riding a poor quality bike on the road need dual suspension??? I don't get it.
I think they figure that since they have shocks on their cars, they need them on their bikes too.
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"Let us hope our weapons are never needed --but do not forget what the common people knew when they demanded the Bill of Rights: An armed citizenry is the first defense, the best defense, and the final defense against tyranny. If guns are outlawed, only the government will have guns. Only the police, the secret police, the military, the hired servants of our rulers. Only the government -- and a few outlaws. I intend to be among the outlaws" - Edward Abbey
02-14-07, 02:42 PM
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Originally Posted by blickblocks
Have you been to any xmart lately? All the bikes seem to have dual suspension. Why the hell would a person riding a poor quality bike on the road need dual suspension??? I don't get it.
The first bike I bought myself back in 1989 was a Murray mtb. bike. Heavy, cheap steel with downtube shifters. I thought I needed a bike with fat tires for the crappy streets of New Orleans. Didn't know anything about bikes or anyone that did. Got to ride a really nice Cannondale one day but it cost $1k and I was a starving grad student buying high-end stereo equipment at the time.
02-14-07, 03:03 PM
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Schwinn are actually coming out with ALOT of lower-end road bikes this year. Mostly road bikes with non-CF forks.
But I think hybrids have been selling like hot cakes the last few years. People who want to take "fitness rides" finally realize that those $200 full suspension bikes at Target are crap.
But I think hybrids have been selling like hot cakes the last few years. People who want to take "fitness rides" finally realize that those $200 full suspension bikes at Target are crap.
02-14-07, 04:05 PM
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Originally Posted by chipcom
Yeah, we got such nice, smooth roads in Cleveland!
I think they figure that since they have shocks on their cars, they need them on their bikes too.
I think they figure that since they have shocks on their cars, they need them on their bikes too.
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