One reliable measure of industry uncertainty is the sheer number of people frantically trying to predict it.
In the December issue of BRAIN, my colleague Ray Keener interviewed 16 dealers nationwide (See Retailers paying bills while eyeing their crystal balls). Some are bullish on the coming year. The current bike boom will continue, they predict, and we're going all-in to get a piece of that action. Others aren't so sure and are being a little more cautious at bellying up to the preseason bar. And in both cases, many are placing multiple bets, spreading their business among a wider assortment of brands.
The supplier side is a little murkier since most don't disclose sales figures. But from what we can glean from publicly traded companies, businesses in all sectors of the industry are having an outstanding year: they're selling everything they can make, backorders and preseasons are stacked out more than a year in advance, and the market is clamoring for more.
From where I sit, the eventual outcome will come down to three interrelated but individually unknowable factors. In other words, the whole thing’s gonna be a triple-headed crapshoot.
COVID-19 slowdown and factory closures aside, some public companies have reported all-time record earnings (Dorel's Cycling Sports Group in Q3) or earnings per share (Giant globally in Q2). It's reasonable to conclude other suppliers are enjoying similar results.
And, as I pointed out back in September and again last month, some bicycle suppliers are exploiting the politics of shortage to increase their profits even further by transferring anticipation discounts, freight costs and other items to retailers for the coming season.
But what does all this mean for sales in 2021? As I've said before, I don't know and neither does anybody else. But from where I sit, the eventual outcome will come down to three interrelated but individually unknowable factors.
In other words, the whole thing's gonna be a triple-headed crapshoot.
1. How consumers respond to the COVID vaccine
There are now three COVID vaccines in the final stages of development, and news reports increasingly agree a majority of the American population could be inoculated (and therefore immune) sometime this spring.
In other words, right in time for cycling season.
The same motivations that got more Americans out on bikes in 2020 should be in place at least through the summer of 2021. Which, seems to me, makes it likely that the 2020 cycling resurgence will continue.
The 2020 bike boomlet or mini-boom or whatever-you-want-to- call-it happened in the context of working-from-home families cooped up together and discovering that riding bikes is a great (and COVID-safe) way for them to get out, exercise, and enjoy fresh air and scenery together. But what happens as parents return to work and kids return to school?
The answer is, I'm not entirely sure they will. First, it seems unlikely kids will go back to school with less than a semester remaining. The real back-to-school won't happen until fall, just like always. And, regardless of what American businesses want — and the jury's still out on that one — parents simply can't go back to the office while they still have kids at home.
All of which means the same motivations that got more Americans out on bikes in 2020 should be in place at least through the summer of 2021. Which, seems to me, makes it likely that the 2020 cycling resurgence will continue, at least through the traditional selling season. The only difference is it will be safer for people to get together in groups...which offers a whole new round of opportunities for dealers to organize local or regional group rides and for suppliers to support them. And that's good news for everyone.
It's still an open question whether the new commuting segment will go back to public transportation once they've discovered the convenience and health benefits of commuting by bike. For sure, some will get back into their cars or buses, but we also know that people who start cycling to work tend to enjoy it and tend to stay with it. Which means that at least part of the new commute bike market will still be with us into 2021.
2. The weather, just like always
This is hardly a revelation: clear skies and mild temperatures equal more people on bikes. That's never been more true than as a follow-up to the nascent bike boom of 2020.
Cycling follows the same group dynamics as any other trend. An increased number of Americans on bikes in 2020 means even more Americans are likely to take up cycling in 2021. People see their friends and families on bikes and have the opportunity to discover for themselves how much fun cycling is. And the coming post-COVID ability to ride in larger groups only adds to that trend.
The weather next year will have even more impact — whether good, bad, or indifferent — on bike sales than it usually does.
Of course, all of this assumes that skies remain sunny. Inclement weather, on the other hand, discourages all cyclists, and recreational/casual/commute riders in particular. So the weather next year may have even more impact — whether good, bad, or indifferent — on bike sales than it usually does.
3. The industry has to embrace the new reality
The 2020 boomlet isn't about five-figure racing or off-road machines; the sales figures have already proven that. It's about regular folks getting out and just having a good time with bikes. And the industry now faces the choice of either embracing that reality, or ignoring it. At its peril.
We can continue focusing on a predominantly male, predominantly white and predominantly aging customer base, or we can try reaching out to the other three-quarters of the potential cycling population.
We can reach out to families and commuters and recreational riders of all stripes, or we can stick our heads back in the sand and continue pitching ourselves entirely to the enthusiast segment. We can get behind e-bikes as just another way to enjoy cycling, or continue ghetto-izing them as a fundamentally different way to ride bikes. And we can continue focusing on a predominantly male, predominantly white and predominantly aging customer base, or we can try reaching out, for a change, to the other three-quarters of the potential cycling population.
Why is all this so crucial in terms of how 2021 will perform as a sales year? Simple. One of the largest determinants of how far the bike boom will surge and how long it will ultimately last is the degree to which the industry chooses to promote it.
This is a tough challenge for the business-as-usual crowd. You don't build a coast-to-coast network of family-friendly cycling events by writing another seven-figure check to a Tour de France racing team. The PR campaign to encourage more riders of all persuasions to get out on bike paths and trails is a lot different than producing another video of twentysomething athletes nailing heart-dropping jumps on virgin singletrack. And most important of all, you definitely can't expect different results from doing more of what you've been doing for the last 20 years.
Rick Vosper has been helping companies in the bicycle business solve marketing problems since 1989. Email rick@rvms.com for a free consultation.
