Microshops and Major Chains: Economies of Scale in the Bike Industry

 If anyone really gave a crap, that could be the title of a doctoral thesis or seminal study of the current state of bike retail economics. However, just as bicycles themselves are everywhere you look and yet often never seen until after the moment of impact, so does the sprawling global bicycle economy never outshine the public's concern with the global petroleum economy. I'm in the business, and even I can't be bothered to dig up statistics, if there are any, to support my observations.

Occasionally I will do a web search to see what bike shops are operating in a 50- to 100-mile radius, more or less. Who is still open? Who is new on the scene? From one search to the next, which of the new startups kept going? For most of the current century, I noticed small, very focused shops starting up in small towns that weren't always on major through roads. Some had luxurious looking websites while others were distinctly more quirky. At the same time, the consolidation trend among the major players had been driving big shops into more concentrated population areas. Most of the big shops are bike-only, but some multi-sport shops have managed to retain their accounts with Specialized or Trek, at least for now. With those two, you're only as good as your last quarterly sales figures. If you can keep up your representation while still selling downhill skis and hockey equipment, great.

Support from suppliers turned into demands for fealty way back in the 1990s. It wasn't complete and abrupt, so some of us managed to drag out the divorce, but seeing the end of the relationship as it played out in 2021, the path becomes clear. In the current climate, some small manufacturers have considerable prestige in their categories, but boutique builders are usually not for the poor and middle class. The major chain brands offer a full spectrum from the staggeringly expensive down to the pricey-but-approachable and cheesily equipped low end bikes. The microshop end of the retail spectrum may not be cheap, either, although their low overhead can allow for some very competitive prices if the sole proprietor can get by without hiring expensive help.

All help is expensive. As soon as a small shop needs a staff of more than one, overhead ratchets up. Each employee adds at least their payroll costs. On top of that, they cost money to train, and every staff member represents another chance that someone will make an expensive mistake, too. These days, with so many generations of parts and so much need for systems to be perfectly coordinated, it's really easy to order something that doesn't match, if you're in a hurry and trying to juggle too many responsibilities at once.

Because I wasn't a bike nerd from early in life, and I'm not much of one now, I learn new history every day from bike nerd social media. Often it's historical tidbits about small bike brands from back in the last century. Some were very small, artisan outfits. Others were small factory operations. From the late 19th Century into the early 20th, bikes played a solid role in European colonialism. Motorized vehicles weren't ubiquitous, so the force-multiplying capability of the bicycle made it a legitimate and respected tool. Bikes held a big role in citizen transportation in Europe and the UK through the end of the Second World War. Throughout the period, with the primary material being steel, production of bikes was highly scalable from a local builder up through big factory operations like Raleigh. Even in the US, before the explosion of affordable automobiles, bikes played utilitarian roles in areas where the distances covered and loads carried fit their small size and low horsepower.

Bikes illustrate the problem common to all human powered vehicles: the vehicles change shape depending on their intended use. You wouldn't take your $14,000 S-Works Tarmac to the downhill mountain bike course any more than you would show up at the nearest criterium on your $9,000 Trek Rail. And I just noticed: Mountain biking is still cheap fun! Only $9,000 as opposed to $14,000. That's a whopping five grand in your pocket to spend on beer or put toward a tricked-out van to drive to trail systems around the country. Those examples are less than a sliver of the variety of shapes and sizes of machine that can be called a bicycle. They do represent the challenge facing a shop because their support needs are quite different. You will spend a lot more money over the brief, tumultuous lifespan of your mountain bike than you will on the road bike in the same amount of time. Whoever does your maintenance and repairs has to be ready for you. Trash a rim so that the tubeless tires no longer seat? Thrash your rear suspension pivot bearings? Blow up a shock? Snap a derailleur hanger and bend a $750 rear derailleur? Gotcha covered! Maybe.

Granted, most riders don't fall into that price range, but occasionally someone will treat themselves to a really nice bike without considering the downstream -- or downhill -- costs of ownership. Even the mid range will take a bite out of your paycheck. And it all has to work pretty near perfectly, or it doesn't work at all. What you'll limp out of the woods on is one thing. What you'll put up with day after day in your chosen form of active leisure is something else entirely. That POS needs to shift cleanly. The dropper post needs go up and down like an elevator in a classy hotel. The rear suspension linkage can't be sloppy. All of the bike's joints need to move as smoothly as a leaping gazelle in the prime of life, before it becomes creaky lion bait. Someone has to keep that mechanism in satisfactory condition so that you can take it out in the dirt and pound on it again. Maybe that's you. Maybe that's someone else. Whoever it is needs tools, parts, and work space.

Forty-four years ago, when I got out of college and based my personal economy on using a bike for transportation, I realized that I couldn't count on a shop for repairs, because I had to leave for work before they were open and didn't get back from work until they had closed. Already steeped in a self-reliant philosophy from my early mentors, I invested in tools, and tried to keep commonly needed parts on hand. I wasn't likely to break anything unusual on my commutes, so I only needed inner tubes, maybe a tire, and cables. Racing, I might break something more unusual, but more likely it just picked up another battle scar and kept going. It wasn't until I rode in the local cyclocross series that I tore off a derailleur and learned about that little peril of trail riding.

I couldn't afford to ride mountain bikes these days. Not the way they're being ridden now, anyway. Biking was great for a working class person when the equipment was solid and simple, because the biggest expense really was the purchase of the bike itself. Learn to maintain it, and decades of fun stretched before you. When it moved off road, potential damage increased in frequency and expense, but a smooth rider might still enjoy many trail miles without having to fuss too much over maintenance or replace an expensive part. You had to work within the limitations of the simple equipment. More demanding riders pushed for better adaptive equipment to meet their needs, driving the costs up for everyone, and flushing casual participants out, or relegating them to crappy, cheap versions of the state of the art. Now your routine expenses include renewing your brake fluid and rebuilding hydraulics as necessary, replacing your tubeless tire sealant at the recommended intervals (LOL), and rebuilding your shocks at the appropriate times, on top of gear adjustments, chain lube. Fine if you're into that, but added costs that the ancestral bike never had.

All of these factors are widening that gap between the small specialist and the corporate cornucopia. In an area like ours, no longer truly rural, but still with a much smaller year-round population than summer population, survival depends on being able to exploit different revenue sources. Some of our winter customers are also summer customers, whether their primary residence is here or not, but a good percentage seems to come only for one season or the other. We couldn't survive as a bike-only shop, let alone as a narrowly focused category shop. In bike season we still have customers who need service in several bike categories, but we only have the same space and limited personnel to meet those needs when demand is at its highest. In bike stuff demand tends to go from nil to highest overnight some time in the spring, and remain near peak until late summer or early fall. I wouldn't have time to rebuild your entire suspension in peak season even if we did have the parts, tools, and dedicated work space. And in what you consider the off season, we're servicing a completely different set of customers with completely different workshop needs. So the fickle and needy bike customer looks elsewhere for quicker gratification.

In the outdoor outfitter store where I worked for a few years in the 1980s, we had some climbing hardware, an ice axe, and a few pairs of top-of-the-line full-shank leather boots. We almost never sold any of it, but customers looked for things like that as proof of our worthiness to sell them fabric-and-leather lightweight hikers, day packs, synthetic-fill sleeping bags, and cheap tents. It enhanced their shopping experience, and didn't cost us too much, because the equipment was changing fairly slowly at the time. Once in a while we would sell a pair of the heavy boots to someone who couldn't be talked out of them, even though they would have been better served to get a mid-weight, even if it was full leather, but that was very rare. Otherwise, they just stood proudly at the top of the boot display, showing that we really spoke mountaineering here.

In the bike business, browsers will judge the worthiness of a shop by what bikes and accessories are on display. Because the up front cost is much higher, and bikes are made obsolete every year by their manufacturers, we can no longer keep what we called drool bikes in stock to impress the tourists. If your drool bike is out of date, it makes you look as bad as if you didn't have it at all. I've had strangers greet me perfunctorily, cruise the lineup, and walk out with a smug smile. They don't want to engage until they've judged us by appearance. If we don't display whatever the secret token is, we're not worth their time. I'm not much of a people person, so I don't mind when someone doesn't want to talk, but as a clinical thinker, it provides me with information about the impression we create. Is it worth what we would have to pay to set a more attractive tableau for these browsers? The calculation never ceases, but so far the answer is no. We continue to hang on in the precarious gap, neither micro nor major, pulling in bare sustenance.

E-bikes aren't bikes

 What has two wheels, handlebars, a crankset with pedals, and weighs fifty pounds? The answer could have been one of the first "safety bicycles," but these days it's a smokeless moped, aka an electric bicycle.

The first e-bikes we saw in our shop had throttles. I don't recall that they had pedal assist. Pedal assist required more sophisticated electronics than anyone had been bothered to design. Just as with a gas powered moped, the pedals were a technicality, and largely decorative. On the original moped, you needed them to spin up the engine to start it. On the smokeless version, you didn't even need to do that. Theoretically, a rider might pedal the hefty beast on the flats and down hill, using the throttle for quick acceleration and hill climbing. In reality, the pedals were used as foot rests as the riders buzzed around on battery power alone. 

The machine evolved. Now all of the classes have pedal assist, and the lowest category has no throttle override.

The first e-bikes we saw did not look like conventional bikes. The designers made no attempt to mask its difference. Later, Tidal Force came out with a line that was much more based on standard bike configuration, using a lot of available parts. If nothing else, it proved that most of those parts were completely inadequate on a vehicle that weighed about twice as much as a meat-powered bike. Brakes and suspension forks in particular flexed alarmingly. Engineers learn through failure. Tidal Force soon sank.

Motorized bicycles have a place in the transportation mix. But for bike shops they represent a trap. A big shop, perhaps controlled by a big company, can support that company's offerings as well as the parent corporation is willing to provide, but that is only a tiny fraction of the wide selection seeking to attract consumers. The different brands use a lot of parts in common, but a bike shop will need to gear up with a complete electrical department to be able to service them. In the meantime, all of the different shapes and sizes of e-bike demand a huge investment and vast floor space to present them to potential customers. 

Two smokeless mopeds I worked on yesterday had stickers from Electric Bikes of New England on them. I have not been there, but I've known about them for years. Places like that represent the best retail channel for consumers who want to buy in person, rather than roll the dice to buy online and have the bike shipped to them. These things arrive now almost fully assembled, along with instructions that have the words "Don't Panic" in large, friendly letters on the cover. Well, maybe not those exact words, but written to coax the reader through the remaining simple processes to put their vehicle on the road. We get to assemble a lot of those for people who still could not be convinced to take up the tools provided and follow the steps in the manual or the assembly video that a QR code links to.

We work on just about anything vaguely resembling a bike that someone brings us. This has included pedal-powered outboard motors, scooters, and actual bikes covering a span of more than 70 years. But we can no longer sell a decent representation of everything that falls under the general heading of bicycles. The categorization of purely pedal powered bikes already exceeded the capacity of any small shop. E-bikes represent another whole division, not just a category. They have to be designed around their motorized nature, not just modified from the roughly 150-year-old pattern of the evolved bike frame. All that remains is the basic premise of a two-wheeled vehicle straddled by a rider. The parts are connected in the same orientation as on a conventional bicycle, but the frame they're hung on is more of a fuselage. The form has evolved to the needs of the actual vehicle.

Bikes are everywhere. Bike parts aren’t.

Ever have one of those days where you’re occupied for hours getting nothing done? That’s most days in bike repair.

Diagnosing a bike repair requires multiple steps. What system is malfunctioning? Can it be adjusted, or is something outright broken? If something is broken, can it be fixed? If not, can it be replaced exactly? If not, can some other part fit? Is the exact part or the substitute part actually available? How long will it take to get here? What will it cost? Can I fake it with salvaged parts or widgets in the various boxes and bins we've accumulated?

Multiply the process by the number of broken parts on the bike. Add one more repetition for every additional part that turns up while you’re working on what you already identified.

A large shop, perhaps part of a chain of shops, in a heavily populated market area might manage to have a phenomenally well-stocked parts department. If a rider never leaves such an area, or only does so briefly -- and is ridiculously lucky -- they might not run into a problem with parts availability. But lots of riders live in smaller population centers or travel outside of the zone that Big Bicycle considers worthy of their attention. There are no parts stores, like NAPA, O'Reilly, VIP, for bicycles.

Mountain bikes often show up encased in dried mud. Their riders tend to delay maintenance and repair until the bike is completely unrideable. I had one this week that looked like it had been buried in a salt marsh for a couple of years. These modern marvels of trail mastery have lots more moving parts than their ancestors did in the 1990s, mostly so that their riders can propel them with less caution at higher speeds under the influence of gravity.

Road riders don't tend to bash their bikes as hard and frequently. Their bikes show up with overuse injuries because they don't take hard hits that show dramatic symptoms instantly. Shift cables quietly fray under housings and bar tape. Chains wear. A broken shift cable can jam an entire shifter. Worn chains wear rear cogs too badly to accept a new chain. Gravel bikes borrow from both road and mountain categories.

Even casual recreational bikes can be disasters. People bring in a bike they bought in 1998 and say that it's only 15 years old, and that we just worked on it recently. A check of our extensive records might show that "recently" was three years ago, and the problem it had then was completely unrelated to the one it has now. Bikes are taken for granted until they fail too completely to ignore. Sort of like cars, only without the built-in weather protection of body work.

Bicycles have always challenged mechanics with different dimensions and standards applied to overall mechanisms that operated the same way. Into the beginning of the 1980s, these were mostly nationalistic variations in thread pitch and some tubing diameters. From the late 1980s onward, these differences were mostly corporate-driven, related to indexed shifting systems. These affected whole drive trains, as companies messed with cog spacing to match proprietary click shifters.

Initially, the click systems used modified progressive levers. The lever would stop in a different, distinct position for each gear. This meant that the rider usually had the option to switch to friction shifting if the synchronization went out. So the companies had to mess with cog spacing to make the stops adapt only to their patented parts. By the time SRAM beat Shimano in an unfair trade practices lawsuit, Shimano's unfair trade practices had already given it market dominance, so cog spacing became more or less standardized on their pattern. The other format was Campagnolo's, but Campy has always been a luxury brand.

Index-only shifters make perfect adjustment and synchronization essential. A bike that was high end when new from the late 1990s through today might have eight, nine, ten, eleven, or twelve (sometimes 13) cogs on the rear hub. Drive trains have to match all the way through by brand on the more recent bikes, as SRAM and Shimano have kept the Shifter Wars raging. As with every war, the civilian population suffers much more than the actual combatants. Do you have three, two, or one chainring? By extension, front derailleur or no front derailleur? Well into the 21st Century, the sheer number of speeds was a selling point. Three in the front and nine in the rear makes 27. Three in the front and ten in the rear makes 30. But as chains got skinnier and shifting systems had to handle more chain angle, the industry singled out the front derailleur as the source of all evil. Your high end bike now will have only 12 speeds and damn proud of it. In other words, we're back to the same gear range we had in 1980 with two in the front and six in the back, only it all costs at least three times as much and is far more failure prone. Progress!

Riders mostly don't pay attention to any of this. They buy a new bike and treat it they way they have always treated a bike, expecting the same longevity and reliability. A younger rider who has only ever known finicky index-only shifting will have worse "good old days" to look back on compared to an old geezer who remembers friction shifting and well crafted simplicity, but they both can share the realization that things have gotten steadily more costly and fall apart sooner.

We haven't even talked about suspension, disc brakes, or tubeless tires yet. A guy came in with a sheared off alloy spoke nipple on his mountain bike wheel. With a tube-type tire, it's a quick and simple fix. With a tubeless tire, its a time-consuming, messy, costly process that involves completely redoing the rim tape. An air-tight seal is absolutely essential to tubeless tires. You can't maintain that if you peel back a section of rim tape to drop in a replacement spoke nipple. The guy bought a handful of brass nipples and went off to try his own luck with it. He is free to try cutting a hole and patching it afterward, and then dealing with the almost inevitable failure of that patch, leading him eventually to redo the tape completely. That requires completely cleaning and drying the rim before meticulously applying your tape of choice and remounting the old tire or replacing it because you discover that the sidewalls are too broken down to reseal. Even applying a patch won't work unless the work area is perfectly clean and dry. 

An inner tube will press a rim tape repair into place, while also not depending on it. A tubeless tire does not have that advantage. Air pressure alone will not press the patch more firmly where you want it. Air pressure alone will work its way into any area of weakness and turn it into a leak.

Every customer who comes in interrupts the flow of work already in progress -- or the treasure hunt for needed parts so that work can continue. It's not their fault, it's just how things go. Their questions need answers. Their bike or bike part needs preliminary diagnosis. It's important to share information and knowledge, but in the meantime the bike on the stand is just sitting there. And the new work probably triggers more treasure hunting for some part we either hadn't bothered to stock or just ran out of.

COVID's killing Specialized

 Specialized Bicycles is dumping small dealers like a centipede shedding injured legs, in a desperate attempt to save itself from the mess that the bike industry started making for itself back in the 1990s, when technofascism combined with outsourcing to create the repeated waves of obsolescence poured on consumers from factories in distant lands.

When the pandemic hit, it wiped out production first, because the factories were all in areas close to the source of the disease. Because of the nature of the disease, and the inertia of human greed, the illness managed to spread rapidly around the world, taking down all of the systems of the global economy. Then the guidelines of social distancing led to an unprecedented surge in outdoor activities, including biking. Shrunken supply met voracious demand.

I don't know how many -- if any -- of the other major companies, like Trek or Giant, are also shriveling under the strain. Specialized was our last major line. Major or minor, we have had no bikes to sell since the spring of 2020 anyway. Almost none, anyway. We received the odd token here or there as supplies dwindled.

Specialized thinks that it is acting in its own best interest, but how are the hundreds of customers who have bought Specialized bikes from us over the years supposed to get the proprietary parts that the industry has made the norm since the epidemic of "innovation" that hit us in the 1990s? Maybe consumers will be able to order directly from Specialized and then go to a derelict dealer like us to have the work done. Maybe the era of the independent bike shop is truly over, and customers with a bit of mechanical inclination will become their own mechanics, under the tutelage of online video experts.

Many more people are trying to do their own work now, bringing them face to face with the obsessive changes forced on them by an industry interested solely in pumping complete bikes out of massive factories, year after year. Maybe consumers will achieve what beleaguered shops had no hope of doing. Maybe they will rebel and vote with their wallets for technological stability and real product support.

It's a long shot. I tried to wise people up when the whole mess was getting started in the 1990s. Instead, they lined up in hordes to lap up the sweet bait that the industry poured out for them. Because riders in a boom don't generally last longer than the brief lifespan of an abused bike, most of them were gone too soon to have to deal with the ephemeral nature of the innovated bicycle.

Most of the innovation has gone into how to make mid-level and entry level bikes reprehensibly flimsy. A year or two ago I was saying that a good $500 bike was a thousand dollars now. Recently I had to revise it to at least two grand, and even then the $500 bike of the 1990s has much more solid basic componentry. It may not have all the moving parts and modern look, but it has a better shot at longevity.

Longevity is out of fashion. Indeed, as we screw up everything from the environment that supports all life to the democracy that supports diverse cooperation, longevity may be an unrealistic goal. Live hard! Die young! Have nothing but fun and go out in a fireball.

In the end, Specialized probably won't die from the pandemic. It will probably shrink to a manageable size, as other companies that have been in its shadow grow to similar size, and serve whatever there is of a riding public in smaller, more regional ways. One can only hope that this leads to some standardization of componentry and simplification of design so that riders are confident venturing beyond the reach of their specific brand's kingdom.

 In the 1970s and early '80s, bikes were simple enough and used enough similar standards to allow small shops to serve riders at all levels at least well enough to keep them riding. The first edition of Sutherland's Handbook was about a quarter the thickness of the tome by the turn of the century. Simplicity allowed for a broader base of support, spread among more manufacturers and independent retailers.

What Price Respect?

Google fed me a link to this opinion piece in Cycling Industry News, titled, "It's time for the bike industry to have some self respect." In it, James Stanfill president of the Professional Bicycle Mechanics Association, lays out an excruciatingly detailed case in favor of continuing training and qualification standards.

Stanfill makes some great points about what makes bike shop work a temporary phase for workers who pass through the industry on their way to something that actually pays decently. However, in his call for retailers to reallocate their budgets to cover the frequent training and retraining needed to keep up with modern technology's rapid pace of obsolescence he assumes that a shop has the money to reallocate. He also assumes that consumers will be willing to pay the higher prices that go along with a general rise in overhead. Bike shops don't have CEOs making billions who can give up their bloated compensation to redistribute the wealth to the workers. The industry as a whole will have to figure out how to get customers to respect them, before we can afford to adorn ourselves with our own new self respect.

Key to that "self respect" is Stanfill's assertion that shops need to be able to measure and present their qualifications to assure entities like insurance companies that they are meeting standards of safety and competence when providing highly complex equipment to the public. He also calls on mechanics to seek professional training and certification where available to make themselves more desirable to this new breed of self-respecting shop. Be ready to fork out on your own for a recognized training course because you take that much pride in being a bike mechanic. What was once a pretty good gig for someone with a modicum of mechanical aptitude is attempting to become a career path akin to auto or aircraft mechanics.

In capitalism, if you don't have plenty of money you are a failure and deserve to die. But in the real world, many areas with a small population have been served by small shops that were able to subsist for decades on a pretty slim margin with incremental investments in tools, and an experiential approach to learning about new things.

For a century, bike shops came in all sizes. Frequently they were small places, sometimes ill-lit, and merchandized by people more attuned to wrenches and grease than to point of sale marketing. Experienced mechanics could train new mechanics at the work stand. What mattered was the quality of the merchandise and the mechanical work, not whether they had a stunning atrium, or row on row of fashionable clothing. If you rode a bike a lot, you appreciated the rough practicality of basic black wool shorts.

All things evolve. Changes can bring improvements as well as unhelpful complexities. They are driven by the desires of existing enthusiasts, but also by public interest. When bikes were simple and people were content with it, a rise or fall in demand only meant changing the rate of production. Things would go obsolete as better things replaced them, but within a narrow range of functions. Weird derailleur systems gave way to the parallelogram, and then to the slant parallelogram. Caliper, cantilever, and drum brakes coexisted using the same basic leverage ratio. Every system of a bike was closely enough related to its forebears that you could figure out a lot based on what you already knew.  You could get deeper into it and become an inventive machinist if you wanted to, but you didn't have to.

Mountain biking pushed a lot of improvements in durability and function as bikes were subjected to consistently rough use. Prior to that bikes had received plenty of mistreatment and neglect, but they weren't advertised for the purpose, the way mountain bikes were. The bike industry had to back its claims with machinery that could withstand the kind of boisterousness that the pioneers of clunking had established as the standard. On the road or trail, user groups appeared to have a contentious relationship. In research and development, designers were borrowing from both categories to improve each of them. Versatile riders were doing both on- and off-road riding to improve their abilities.

All analyses lead back to the stresses placed on retailers and repair facilities by relentlessly mutating technology and category specialization. So I won't flog that again. I merely note that your chances of finding a place that can take care of your particular bike needs get slimmer and slimmer in the face of economic reality. Bike shops will become dependent on climate and population density to maintain a large enough size to remain viable in all categories, including smokeless mopeds. In addition, consumer costs will rise to reflect the greater expense the retailer faces. Training and higher wages cost money. That money comes entirely from consumer spending. When consumers can no longer afford to spend in sufficient volume, they will receive less of something in return, whether it's product selection, service quality, service speed, or the convenience of having any kind of shop within 20 miles.

For the moment, such vast numbers of archaic bikes remain in use that a small shop can eke out a living from the customers who need work on those. As they inevitably dwindle away, the next wave of well-used crap that replaces them will have increasingly esoteric needs, more difficult to meet.