We have been informing you since the beginning of the year; the cycling industry is going through a tough time. Another warning sign was raised in April when Shimano announced a dramatic drop in sales. In the following months, bicycle manufacturers gave signs of something similar.
The latest bad news comes from two large groups with stores and distribution centers. On the one hand there is Signa Sport United of English origin with online stores such as Wiggle and Chain Reaction Cycles, and on the other the German Tennis Point GmbH group with online stores such as Biketester and Probikeshop. More details soon.
Everything that goes up, comes down
Thanks to COVID, the cycling industry experienced its wonderful years, which, by the way, did not last long; from 2020 to 2022. Everyone wanted a bike back then and bicycle and component manufacturers did not reach each other. This huge desire to pedal millions for health reasons, plus distribution problems caused prices to skyrocket. Huge profits for these companies, mergers and acquisitions between them and aggressive expansion plans.
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Despite these ridiculous prices of bikes and components people kept buying, but everything has a limit and also people’s interest changes according to the context in which they live. In order not to make this story long I will say that sales were down, companies were left with a lot of inventory and adjustments and cuts came sooner rather than later.
The problem is that for many this has not been enough and they have had to close their doors; the latest to do so have been English-based Signa Sport United with online stores such as Wiggle and Chain Reaction Cycles, and on the other the German Tennis Point GmbH group with online stores such as Biketester and Probikeshop.
All these stores are e-commerce and you have probably visited them at some point. But the case of Signa Sport United is special because it is also a bicycle manufacturer; VITUS and Nukeproof. The latter is a small brand whose forte is the English market, but VITUS has a little more importance. They recently introduced the Venon, a beautiful competition gravel that we here at GravelBikes review. In fact, we have reviewed many VITUS models for their great price-value ratio. You can consult the respective articles here.
The beautiful VITUS Venon, recently introduced, will the brand disappear? Image: VITUS.
It is not clear if the fall of Signa Sport United also consigns the two bicycle brands to the drawer of history. Personally I would say that VITUS has more opportunities to sustain itself either independently or if it is acquired by one of the big brands or by some investment fund.
Bike brands also make adjustments
The bad news also comes from the hard-nosed bike manufacturers. Days ago the colleagues of Weekly cycling reported that Bianchi announced the layoff due to “substantial challenges” in the cycling industry. According to the note, the Italian brand will lay off 25 employees from its central offices in Treviglio, Italy. They may seem few to you, but it is 11% of their workforce, considering that they do not manufacture the bicycles, but manufacture them with suppliers.
No brand seems to be saved, not even Bianchi, one of the most legendary. Image: Bianchi.
What’s Next: Will Consumers Win? Will prices drop?
According to some estimates, the value of the bicycle industry worldwide is around 61 billion dollars. It is a very fragmented industry in terms of brands and most components. Perhaps the group segment is saved, with Shimano and SRAM being the big ones in this market, but strong brands such as the Taiwanese microSHIFT and several Chinese brands are on the rise.
This has stuck them to these two brands. The sales of Shimano fell 13% in the first half of the year with respect to the same semester of the previous year. SRAM reported last August that it would lay off workers at its Taiwan plant.
For its part, the number one manufacturer to date, Giant, also reported 5.44% lower revenue in the same period, according to Forbesand its sales in Europe fell 12% and in the US a monstrous 44%. Other brands such as Specialized, of which Merida holds 49% of the shares, or Trek do not disclose their sales, but given the situation in the industry, it is a fact that they have also been hit by the crisis.
There are then the brands and manufacturers of the industry at the hardest of the hurricane during this 2023. Analysts consider that by 2024 the situation will stabilize and that the prospects are encouraging, since today there are many more cyclists than before and people’s awareness of caring for the environment will grow, leading to greater use of alternative means of transport, such as the bicycle. But while these better times come, many brands and manufacturers will suffer or disappear, including the entire ecosystem around them as brick-and-mortar retailers, hit by online sales. Those who wanted to eat the cake in one bite during the wonder years are the ones who have the best chance of not giving it up.
Several bike e-commerce sites will not survive the crisis. Chain Reaction is one of them. Image: Chain Reaction website.
But what about consumers today? Waiting for the ridiculous bike prices to drop and apparently something is happening. Just do a quick Google search on gravel bikes or accessories and you’ll notice that there are plenty of discounts available these days. In the same places of get moving y Chain reaction cycles there are very attractive offers, by closing, from gravel bikes and accessories to clothing.
Do not wait to see pre-pandemic prices (2019-2020), as this is impossible due in large part to inflation. But you can find very good discounts on certain brands/models.
Is it time to buy a gravel or expensive accessories? Is possible. Your wallet will decide.
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The post ANALYSIS: CRISIS CONTINUES IN THE CYCLING INDUSTRY WITH CLOSURES AND LAYOFFS OF STAFF first appeared on GravelBikes.
The post ANALYSIS: CYCLING INDUSTRY CRISIS CONTINUES WITH STAFF CLOSURES AND LAYOFFS was published first on totGravel.