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Canada 2007: Mass Retailers Continue To Rule The Market

0 306 Sales & Trends

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MANITOBA, Canada - The decision was made by the Canadian International Trade Tribunal (CITT) in December of 2007 after an exhaustive review. In officious language it was announced in the Canada Gazette, the official newspaper of the Canadian Government, that the Special Import Measures Act of December 9, 2002 concerning importation of certain bicycles from the Peoples Republic of China, and Chinese Taipei would be continued. A further review would be made at some future date.

IBD Supplier Bicycle Sales 2006 (in units and in CAN$)*

 
Unit
Sales in Can$
26 inch Bikes
184,451
88,066,713
Youth Bikes
59,522
8,440,126
Road Bikes
31,078
31,636,313
Hybrid Bikes
65,426
19,875,938
Tandems
334
226,001
Miscellaneous
515
231,026
Total
341,326
148,476,120
Source: Bicycle Trade Association of Canada, BTAC
* Estimated sales based on data capture of 65% of IBD bicycle suppliers
** At wholesale

What this all meant was that bicycles with a wheel diameter of sixteen inches and larger, and with an FOB price from China or Taiwan of a value less than CAN$ 225.00 (€ 141.85) would continue to be assessed additional duty. The amount of the additional duty averaged out at about 30%, but would depend upon which factory was making the bicycles. However, despite the renewed additional duties the mass merchants like Wal-mart continue to offer ultra low priced bikes and with that control over 75% of the 1.3 million sold annually in Canada.    

Mixed feelings

After more than a year of meetings, written submissions by interested parties, and speculation in the Canadian Press, nothing much had changed. One thing that did change however, was that the order that had lead to additional duty on frames from both China and Taiwan was cancelled.

The result of the CITT ruling was met with mixed feelings. The Canadian manufacturers were satisfied, especially with the decision to exempt frames from the order as they were able to take advantage of inexpensive aluminium frames manufactured in China, which they were not equipped to make in Canada.

The importers of bicycles were not pleased and saw the decision as an attempt to protect the domestic manufacturers and the somewhat less than eight hundred jobs in Canadian factories. They pointed out the health benefits of cycling in a country with increasing incidence of obesity and other problems of a society reliant upon the automobile for transportation, and where schools were placing less emphasis on physical fitness. Was not the bicycle going to do its part in combating global warming? Bicycles were good things and should be made something that everyone could afford.

Different supply channels

A closer look at the structure of the bicycle market shows that there are two completely different supply channels. The mass merchants such as Wal-mart, Zellers, and Canadian Tire Corporation, sell bicycles and other sporting goods along with a whole range of other products, ranging from clothing, food and toys, to garden centres and automotive repairs and parts, to pharmaceuticals and maybe a restaurant. Bicycles are put on display racks in the spring, sold very much on their price, to attract customers into the stores, and are sold off at clearance prices at the end of summer to make room for the skis and skates and other winter goods.

About 78% of bicycles in Canada are sold through the mass merchants. It has been increasingly noticeable that the mass merchants do not have as large a section for bicycle parts and accessories as they did a few years ago. The bicycle of today is becoming more specialized from a servicing point of view. The evolution of better gearing, braking, and suspension systems and the complexity of parts necessary for these bicycles create something as a headache for the non specialist bike store.

A visit to a Canadian Tire Store shows bicycles supplied under the Supercycle house brand, which are either imported or manufactured domestically, Schwinn bicycles made in China or Taiwan by Pacific Cycles, supplied through Dorel Industries Inc. in Montreal, and Raleigh bicycles from Raleigh Canada. The majority of bikes sold by the big chains are mountainbikes or children’s bicycles.

Canada is a good country for mountainbikes, the long cold winter is very hard on the road surface and a mountain bike will deal with the cracks and potholes which appear as the snow melts. Many Canadians own a cottage close to a lake and a mountainbike is the answer for getting around on the rough tracks and gravel roads of cottage country.

Dealer

A visit to an independent bicycle dealer will show a very different picture. The owner or manager in charge realizes that to be successful he must offer a full range of bicycles and parts and accessories, many of them will also have a comprehensive range of clothing for racing, touring, and commuting. There is a well equipped repair department with certified mechanics and specialist tools ready to provide service and repairs for the customers.

The dealer will provide information to the buyer on the different makes and types of bicycles available, help him to decide on the most suitable model for his needs, and see that the bicycle is not only the correct frame size, but that it is also set up correctly and in good working order before the customer gets out on the road. There will usually be a free of charge check and adjustment offered after a few weeks. Service is the name of the game, and the dealer wants his customer to return to his store for future purchases. Bicycles range from highly expensive racing bikes for both road and mountain bike racing, through sport and recreational hybrid or trekking bikes, and town or comfort bikes.

Trek has a very trendy lightweight commuter bike, the Soho, complete with disc brakes and a fancy coffee cup mounted on the down tube, a perfect machine for going to Tim Horton’s, Canada’s favourite coffee and doughnut shop. Tim Horton’s are also a major sponsor of Canadian athletes, including the national cycling teams.

There is also a niche market for single speed messenger style bicycles. Who needs the complication of multiple gears while speeding on a short trip through the city traffic? Children’s bicycles do not form a very big section of the mix, and only the more expensive models are carried.

Canadian Dollar

The Canadian dollar has strengthened over the last year to be on par with the US dollar, which means that imports from the USA  are now a good buy in Canada, consequently Trek and Specialized are seen in increasing numbers, and the recent take over of Cannondale by Dorel promises to make them a bigger part of the equation. Electra Bikes are making a good impression with their flat foot technology, the shallow seat angle, the relaxed frame design, and the forward mounted chainset, together with balloon tyres, make a comfortable riding machine, which appeals to both the young riders wanting to look cool as they cruise to the local hamburger joint, and the older rider going for a little outing in the park.

The bright lime green Electra Townie made from 6061 aluminium tubing is surprisingly light in weight for such a solid looking machine and is good value at CAN$580 (€ 365). Giant Cycles continue to be one of the leaders of value for money bicycles in Canada, as they are in many parts of the world.  Domestic manufacturers and suppliers such as Raleigh, Procycle, Devinci, and Norco continue to hold there own with the IDB’s in spite of the increasing presence of USA brands. Imports are primarily from China with the mass merchants, while Taiwan still has most of the better imports with the IDB’s. The increase in oil price is affecting the freight cost of everything, and it is estimated that the cost of freight on a bicycle from China will increase by three to four dollars.

E-Bikes

Electric bicycles are slowly appearing in a few IDB’s, and Canadian Tire is showing two Schwinn models made by Currie Technology of Chatsworth, California under license from Pacific Cycles and Dorel Ind.. The future for these machines is still to be determined, but the increasing price of gasoline is giving them a chance for good publicity. Politicians continue to promise more and better bicycle paths, and the reduction of taxes on bicycles, but meanwhile they are very busy with other matters, and the Canadian market continues once more to wait and see.

by John Palmer last update:29 Aug 2008

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