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Fred Clements: Are bike retail salaries too low?

Published March 3, 2014
A blog by NBDA executive director Fred Clements

Editor's note: This blog post was written by Fred Clements, executive director of the National Bicycle Dealers Association. Clements' previous blog posts can be read on bikedealerblog.wordpress.com.

Customer service is a great tool for building long-term relationships with bike shop customers.

But good customer service requires qualified and motivated people on staff, and this is not easy to achieve or maintain. Staff issues are frequently cited as one of the most vexing challenges for retail bike stores. Why? One reason is that it’s hard to recruit the talented people you need when offering the relatively low wages available in bike retail.

Bicycle mechanic salaries made the news earlier this month when Bicycle Retailer and Industry News reported on a blog post that had gone semi-viral (by bicycle industry standards anyway), with 197,000 views as of this writing.

Donny Perry, a global development manager at Specialized, posted a presentation in mid-February  that called out the substandard average pay offered to bicycle mechanics.

He noted that the average bicycle mechanic earns just $22,337 per year (according to Salary.com). This compares with $23,013 for high school dropouts, $25,188 for janitors and $29,962 for gardeners. The average wage for a full-time worker in the United States is $40,584, according to the U.S. Census, and some of the average wages for mechanics are below the survival level in many urban areas and nine states, Perry noted.

His goal was to open a discussion on improving mechanics' pay, and maybe help the profession become more than a labor of love for the good people who help keep us all riding.

The NBDA’s 2013 annual retail survey generally supports the numbers Perry cited on bicycle mechanics' pay. A junior mechanic earns an average $15,336 per year, and a senior mechanic $27,606, according to this report.

But employees in other bike shop jobs aren’t buying mansions, either. On average, the people most responsible for customer interaction are paid at about the same rate or even below that of mechanics. Junior salespeople earn an average of just $15,000 per year, and senior salespeople $27,622.

Is moving into retail management the answer? It helps a little. A sales manager takes home $32,286 per year. While this is well above the janitor benchmark, it still lags significantly below the nation’s average salary for full-time employment.

What about store managers? They earn $40,301 per year.

And storeowners? The average bike shop owner earns $49,877 per year. This is well above the national average for all workers, but this is not easy work by any means. Consider the average bike shop owner is responsible for running a business with average gross sales of $891,084, with 7.3 employees, about 5,000 square feet of real estate, and all the challenges inherent in running a viable brick-and-mortar business in the Internet age. An owner-operator definitely earns his or her salary.

Do the numbers point to any possible solutions? Maybe a few, or at least to some directions to explore:

Productivity may be a metric to watch. The average full-time equivalent employee is responsible for $134,854 in revenue in the average bike shop. Beat that number by a lot, and maybe the employee can be paid more and the store can also benefit. For mechanics, industry lore proclaims that if a mechanic can be about 70 percent efficient (70 percent of their time on the clock is billed labor), that is considered a pretty efficient operation. Most stores operate below that number. Could that be a good number to shoot for? Could improved productivity lead to greater profitability and ultimately higher wages?

Size matters. Owners of stores with $2 million or more in sales earn an average of $71,595, compared with just $30,611 for those under $300,000 per year. Even senior mechanics do better in bigger stores. A senior mechanic earns $34,500 in a store with $2 million and more in sales. The message from the research: More dollar volume seems to create a little more room for higher salaries.

Profitability. The NBDA’s Cost of Doing Business study shows that the average store earns a 5.8 percent profit as a percentage of gross sales while high-profit stores (the top 25 percent) earn 15 percent. The differences are concentrated mainly in two areas: expense control and efficiency. High-profit stores generate more money per square foot than the average. They also devote more of their available square footage to selling areas, and less to warehouse or offices. They also keep other costs low, including occupancy expenses and general and administrative expenses. Watching the details may be dull work, but it makes a big difference in profitability and may give stores greater financial flexibility to pay good people a little more.

The bicycle industry is not alone in offering relatively modest wages for retail work. According to Salary.com, the average retail cashier earns $19,788, and retail salesperson $29,000. But given the importance of customer service and relationships to our industry’s future, finding ways to financially reward excellence and keep good people employed is worth some effort. Loving what you do is a beautiful thing. At some point you also need to eat.

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