CHICAGO, IL (BRAIN) — Perhaps it’s the growing network of bike paths, trails and green lanes. Or Chicagoans coming to the realization that it takes longer to drive somewhere than to bike. But retailers we visited on day two of the Dealer Tour report a growing commuter market and many stock a wide selection of bikes, tires and other accessories specifically for this rider.
More city dwellers are braving winter temperatures and roads and riding year-round, some said.
Still, there’s no denying the seasonality of the bike business here. So owners must find ways to make it through the slog of winter. They support the local 'cross scene, offer winter pricing on service to keep staff on payroll or double as a café.
It’s all about cash flow, managing expenses in the winter and being at the ready for the break in weather so you can make up your losses and hopefully a little more during peak season.
We logged 35 miles—and no flats—with visits to five shops. Here’s the recap:
Wheel & Sprocket
Chris Kegel, who owns the seven-store operation Wheel & Sprocket, joined our three-day Dealer Tour. And why not? Editors and Tour sponsors had a chance to see the first store Kegel has opened across the border from his Wisconsin base in Evanston, Illinois.
While Kegel enjoyed the 13-mile ride under a bright and sunny sky from the hotel to his store, he stood in the background as Chris Mailing, his store manager, offered a brief history of the store and its location.
The city of Evanston, an affluent Chicago suburb and home to Northwestern University, has had a bicycle store in the heart of downtown for 42 years. What had originally been Turin Bicycles, owned by Lee Katz, was later renamed Ten 27 when Mailing became its owner. But on Dec. 31, Mailing closed Ten 27 and on Jan. 1 of this year reopened it as Wheel & Sprocket under Kegel’s ownership. Most of the key staff remained with the store, Mailing said. The store was closed for five weeks as it underwent a low-six-figure renovation.
Mailing has known Kegel for more than 10 years after meeting at a retail conference. He and Kegel also were founding members of the first National Bicycle Dealers Association’s Profitability Project, what the NBDA refers to as its P2 group.
Kegel is currently Trek’s biggest dealer in the Midwest and is the third largest in the nation. But besides Trek, the store carries Felt, BMC and Electra. And despite what many say has been a winter that has lasted too long, Mailing estimates the store will generate $1.75 million in sales—about what it has done in the past.
Like other retailers we have visited on this Tour, Mailing said burgeoning commuter sales have pumped new life into the market, and Wheel & Sprocket is benefiting. Evanston is also a hub for Chicago’s cycling clubs, many of which come out to Evanston on the weekends to ride on bikeways and along Lake Michigan. “A ton of clubs meet here,” Mailing said. “Evanston is a gateway to nice riding and is hugely popular with a great cycling culture.”
The Pony Shop
It’s easy to miss The Pony Shop from the road. It’s a narrow store in a large nondescript brick building. But once inside, the shop breathes cyclocross. It helps that owner Lou Kuhn has won three state cyclocross championships in the past seven years, and most of his six winter employees race.
“It’s a great sport and timed perfect for a shop, taking place during what is normally a slow season,” Kuhn said.
Kuhn noted that the average elite racer has three or four pairs of wheels. Given the shop’s reputation for securely gluing on tubulars, it’s not uncommon for one customer to have the shop mount 10 tires during the season at $50 each. And that’s after the same customer bought wheels and tires at the shop. The quantity of Dugast tires he has on hand is impressive.
With only 1,500 square feet of retail space, Kuhn doesn’t bother stocking apparel, and his P&A offerings are limited. He doesn’t preorder bikes either, and doesn’t have the space to build bikes prior to the start of the selling season. His summer inventory of midrange $500 to $600 bikes targets his local customers.
Kuhn said he averages eight to 10 turns a season. And as far as inventory, everything is paid for in 30 days, giving him little to worry about over the winter. He admits it’s not a traditional business model, but given his space constraints it’s a model that works well for him.
Heritage Bicycles General Store
One of Chicago’s newest stores has survived two Chicago winters, and owner Michael Salvatore is bullish about his urban chic café/bike store’s potential for expansion. In fact, he’s eyeing a space nearby where he would sell only kids’ products, including a Heritage-branded balance bike, wagon and scooter.
Salvatore’s Heritage Bicycles General Store opened 15 months ago in the city’s Lakeview neighborhood. His vision was to sell locally made yet affordable city bikes. “Hyper-local manufacturing is a big deal for me,” said Salvatore, who only sells his house brand of Heritage steel bikes. The bikes are welded in a facility three miles from his shop using tubing from a local supplier, then painted by a vendor 10 miles away. Bikes are then built to a customer’s preferred spec at his store on Lincoln Avenue. He currently offers two models, with a third one to hit the shop this month and a fourth in June.
He also tries to stock U.S.-made softgoods and accessories where possible, including casual apparel line Rozik out of Texas, Wheelmen and Company bags out of California and Michigan’s Detroit Cargo bags.
He knew there was a market, having launched Bowery Lane Bicycles, a U.S.-made bike brand, in New York. And wanted to bring the concept to Chicago. Salvatore thought his customers would be young hipster kids, but has discovered a budding older clientele drawn in by the made-local ethos. Selling 100 bikes in his first year, when he expected to sell 15, has reinforced his thinking that a market exists for stateside manufacturing if it remains competitively priced. So his bikes can be had for as little as $799 for a basic singlespeed with coaster brake, chainguard and fenders, and top out at $2,000.
This year he expects to sell more than 300 of his Heritage-branded bikes through his shop and website, and he’s rethinking his manufacturing process to quicken production.
The bike side of the business occupies a small space in the back of the 1,300-square-foot shop, but Salvatore said revenue is evenly split between coffee/food and bikes. The shop offers baked goods, sandwiches, soups and soft drinks. Unlike the bike business, the café is busy year-round, helping him retain staff during the slow winter months. “It also helps create a sense of loyalty and community with customers, a place where people can gather,” he said.
Manuel Tenorio wants to own Chicago’s high-end mountain bike business, and it appears he’s well on his way. His off-road sales grew more than 30 percent during the recession. It’s no surprise given his approach: the store has a wet bar, a few large-screen TVs and a well-appointed and relaxing room set aside to discuss custom frame orders and builds.
“Many shops don’t want to be committed to mountain bikes in Chicago. It’s a bit of a drive to get to good trails. But we dove in and are committed and it quickly spread by word-of-mouth that we were the place to go for high-end mountain bikes,” Tenorio said.
His fit and custom spec’ing showroom is set apart from his main show floor, and that has paid off with increased sales of high-end road and cyclocross bikes. Tenorio also has seen sizable sales growth from South American customers, which he credits to being open to international business, the city’s tourism appeal and its accessibility through Chicago’s O’Hare International Airport.
Still, Johnny Sprockets is a full family shop offering a product range that starts with balance bikes. Commuter bike sales are strong, as are hybrids.
To keep his staff busy and employed in the winter, Tenorio runs service specials. His critics say the discounts cannibalize service business during peak season. “But it seems like the more our service business grows over the winter, the busier we are during the summer. Our service business just keeps growing,” he said.
Mark Mattei is a walking compendium of cycling lore; an avid collector of historic bicycles, cycling literature and toys; and a successful retailer who has been in business since 1973. But more important, Mattei is a thoughtful man.
“When someone comes in and they want us to fix their bike—that’s just such a wonderful thing; that’s just a delight,” he says as we tour the upper floor of his 4,000-square-foot store that he moved into in 1978. “We may have someone out front with a wheelchair that needs some work; we’re going to fix it for him. We just don’t turn anyone away,” Mattei adds.
By his own admission, Cycle Smithy isn’t a boutique shop, but Mattei sells plenty of Specialized, Cannondale, Litespeed, Spot and Gunnar bikes, and his staff works with Waterford for custom builds. But for Mattei what’s interesting about bikes is their place in time and history.
Attached horizontally to the upper-floor ceiling are more than a dozen bikes, and each is a part of cycling history—whether it’s a 1996 GT time trial and track bike or a unique Japanese commuter built by Bridgestone that reflects the whimsy of an Italian automotive designer. Or that circa 1860s Bone Shaker.
Others hang from the wall, and Mattei takes us to a 1935 Elgin Bluebird—a bike that sold for up to $69 at Sears during the Great Depression. Most bikes sold for around $20 then. Think of the TV show "The Jetsons," and this bike symbolizes the future as the nation struggled through the 1930s. (You can see it on the Cycle Smithy website. Click on "Bicycle Museum.")
And there are others, many others. By Mattei’s calculation he owns some 300 bikes. He frankly admits that his wife, Gretchen, gave him permission to basically stuff the top three floors of their home with memorabilia. One floor is filled with toys. Yes, Mattei admits he can be a bit of a pack rat.
Nonetheless, he’s pleased to see the growth in Chicago’s cycling culture, particularly the commuting market. And, he adds, he’s very pleased to see mainstream manufacturers building bikes that adults can ride.
“It’s nice to see them making bikes for the more mature user with flat bars and more upright seating that they can ride while wearing more casual clothes,” he said. It’s back to the future at Cycle Smithy.