The Perfect Storm - The Story of Bicycle Retailing
Part 1: The Emergence of the Mass Merchants and the Bike Boom
by John Neugent
John Neugent probably knows more about bicycle wheels than anyone else alive. Maybe more about bikes as well. He's spent his life in the bike business, at every level. He now owns Neugent Cycling, a firm devoted to delivering world-class equipment at the lowest possible price. If you are in the market for a set of wheels, please, check out John's site. He really knows his stuff. —Chairman Bill
The Perfect Storm – The Story Of Bicycle Retailing
The Perfect Storm was a book and a movie that describes the story of the Andrea Gail, a fishing boat that underestimated the confluence of two weather fronts and a hurricane – the perfect storm. In much the same way, bike shops have been lately riding into the headwind of a perfect storm.
In this series of short articles, I will document the story of bicycle retail from the 60’s. Through it all, bike shops (which will be my name for the independent bike shop) have changed with the times. Like all retailers, they had to adapt to changes in both technology and competition.
Part One – The Emergence Of The Mass Merchants And The Bike Boom
In the early 60s, the only real competition bike shops had were mail order catalogs like Sears. There were no bike specific mail order catalogs. Many bike shops operated out of their garages and a good portion of them also sold lawn mowers (even in the late 70s one of my best customers was a shop called Wheels And Reels). There were no industry statistics available and the business was largely in kid's bikes.
The first discount store I can remember opened in the early 60s (in Willimantic CT at least) and Sam Walton opened Walmart in 1962. By the time I got into the industry (1973) bike shops hated the mass merchants not only because of their pricing but also because of their quality. Since the mass merchants didn’t service bikes, the bike shops often had to deal with fixing a problem that couldn’t really be fixed without an expensive part upgrade.
Then the bike boom hit. I was not around for the beginning but managed to get in just as it was almost over. At first it was just in juvenile bikes—the Schwinn Stingray and Raleigh Chopper—but the Baby Boomers who bought them went on to buy 10-speeds. In very large numbers. My first 10-speed was a Hercules (made by Raleigh) purchased from Miles Bike Shop (a shop I would later buy). I wanted to use it to commute to work. It had 10 speeds with a 48-50 front chainring and a 14-21 freewheel. The reason it didn’t have wider gears is because the derailleur technology at the time couldn’t handle it. In fact, it could barely handle those.
A typical low-end European bike of the 1970s, a 1976 Raleigh Record. Note the steel cottered crank and plastic Simplex derailleurs.
From 1970 through 1974 sales doubled and most were now adult bike sales where there was much more money to be made. Schwinn (the biggest brand) had recently eliminated all of their local distributors and was now dealer direct. They initiated Schwinn Concept Stores. Money was growing on trees for a few years and everyone was willing to invest. The mass market retailers were caught flat footed because adults were more interested in quality. From '72 through early '74 bike shops could sell anything they could get.
In 1973, I became a partner with Scott Johnson in Sunshine Cycle in Willimantic CT (now called Scotts). Scott was selling everything he could get and I was out of a job. In a new retail operation, even when things are growing at a dramatic pace, it’s often smarter to get a partner because they work for far less than an employee. That was not Scott’s motive but it proved to be true.
We bought out Miles Rogers in June of 1974 with the proceeds we received when the town decided that they wanted to redevelop our spot on Main Street. I moved into Miles’ shop in July to set it up for the move. I was very concerned about getting work done outside of dealing with customers and hoped no one would come in.
But then, nobody came in.
A distributor I worked for later told me sales in 1975 were off 40% from 1974. It all started in July of '74. Bike companies were threatening us with eliminating us as dealers if we didn’t accept orders we didn’t need and would have a hard time paying for. It went from flood to drought in a few months.
The change is not consumer driven as much as it is technology driven. While shops don’t have to deal with such a sharp downturn as the mid 70s, the solutions seem a little more desperate. International laws on retail vary widely. In most or all of Europe, it’s illegal for a brand to dictate retail pricing. In the US it’s also the law, but brands can dictate MAP (minimum advertised price). While all legal systems are mired in local laws, the Internet has made it possible for people to sell in different markets and avoid local laws. Our government has been caught totally flat footed on many new changes created by the Internet. But more about that in the next segments.
John Neugent was was one of the first to establish quality hand building in Taiwan around the turn of the century. He now owns Neugent Cycling, a firm devoted to delivering world-class equipment at the lowest possible price.