The Bike Shop is Dying (and that's ok)

The impetus for this post comes from a Giant and a SRAM rep (whom I won't name). They came into my shop individually, ostensibly to check up on us and do a sales demo or something, but they ended up just chatting with each other for over an hour. The topic? How each rep's respective company will deal with the death of the bike shop.

Two years ago, Chicago reached what I call "bike-shop-bubble-status," which is to say that there were over 100 bike shops, all within a 10-mile radius of each other. This, during a time when online retail is becoming easier and safer than ever, seemed to be a strange development that I've mentioned elsewhere on this blog, but it would seem that the bubble has burst.

Bike shops are closing left and right in this city, and the companies that live higher on the food chain are feeling a pinch: Specialized did a 50 person layoff, Giant did a 10 person layoff, and SRAM is canning 40 people – all just in the beginning of this year.  The total American staff of these companies is not large, even a small round of firings can represent a significant portion of their workforce.

So what's going on? Well, as that first article I linked to says, the companies are re-organizing to better take advantage of e-commerce.

E-commerce, or direct-to-consumer model businesses, have the potential to deliver the same product at a serious discount because they cut out not just the middle-man, but the thousands of square feet of warehouse space that keeps the middle-man stocked, as well as the thousands of shipping miles to and from various distribution sites. BikesDirect.com has been providing quality(ish) discount bikes for years using this model, but their site is janky and they never took off.

In Europe, however, they've been breeding a new chimera, the "high-end" direct-to-consumer brand. Planet X and Canyon are two of the most notable e-brands. What has people like the two industry reps who came into my shop scared, is that these Europeans are planning an American invasion that will almost certainly re-make the industry. Within a few years, the bike shop as we know it simply won't be necessary.

I'm one of the few bike shop workers who think this is a good thing. Or, maybe not a good thing, but a whatever thing.

From my perspective, and the perspective of many other professional mechanics, there has been a serious problem with wage stagnation, despite the fact that the bike industry as a whole has been booming for over a decade. The reasons for this are complicated, of course, but one of the main road-blocks keeping mechanics from earning a higher wage (IMO) is the fact that shop owners all know that no other shop will pay better. There has been a freeze throughout the industry, for reasons I don't understand in the least bit, and it all has to do with the disposability of labor. Mechanics have a hard time striking out on their own because the current bike shop model that the consumer expects is designed with new sales in mind, not service, and that's a skill set the average mechanic isn't inclined to take advantage of. However, in the new, direct to consumer industry model, the service writer and technician become increasingly more important, while at the same time all other bike-shop personnel become less important. This gives the mechanic greater bargaining power, and also lowers the barriers to small business ownership. I'm speculating here, but I'm also willing to take bets.

My prediction of the future is that bike shops will be more like car mechanic garages: a place where the sale of items is mostly a consequence of required service. The mechanic will be the most important figure in the building, and generally will also be its proprietor. Shops will be smaller, but there will likely be more of them too.

A few traditional bike shops will remain. The super-shop, which offers a huge selection and an exciting shopping experience will probably survive the same way that REI outlets do: they're fun to go to. Also, some specific niche stores will stay in business: shops that specialize in bikes for handicap people or shops that target know-nothing millionaires with exceptional pampering will likely be just fine.

But the average "Ma & Pa" bike shop is as good as dead.

Giant and Trek, old guard stalwarts of the shop system, whose reps have said in the past that they'll never do online sales, are already releasing plans for their own direct-to-consumer operations. Shimano has been selling wholesale-rates to e-tailers for years now. Soon, all surviving companies will have an online sales presence.

The revolution is here. But you might be asking, "What about the intangible aspects of the bike shop? I mean, where will people meet to go on rides and get information?" Yes, that is a problem. But, it can solved. The transition away from the traditional bike shop will be rough for a lot of people, but it will also offer a lot of opportunities in the social and economic holes that the bike shop leaves behind.

The smart thing to do right now is think about what your life will be like without a bike shop, and consider how you can fill the vacancy. I think you'll be alright.

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