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<b>USA 2009:</b> Dark Clouds Over US Bicycle Market

Sales & Trends

In previous reports in Bike Europe the U.S. bicycle market was already playing in minor key. The economic recession has been given the bicycle market a hard blow despite the hope many people were replacing their car with a bicycle due to high gas prices. However, as soon as gas prices were lowered again, Americans put their bicycles back in the garage and got back in their cars. They proved to be less environmentally minded than many cyclist advocacy groups and the cycling industry investing in these groups, had hoped. As a result bicycle sales really fell back in 2009 to the lowest level in the past ten years.

<b>USA 2009:</b> Dark Clouds Over US Bicycle Market

WASHINGTON, US – In previous reports in Bike Europe the U.S. bicycle market was already playing in minor key. The economic recession has been given the bicycle market a hard blow despite the hope many people were replacing their car with a bicycle due to high gas prices. However, as soon as gas prices were lowered again, Americans put their bicycles back in the garage and got back in their cars. They proved to be less environmentally minded than many cyclist advocacy groups and the cycling industry investing in these groups, had hoped. As a result bicycle sales really fell back in 2009 – to the lowest level in the past ten years.

U.S. Bicycle Market Consumption 2000-2009 (x 1,000)

 
2005
2006
2007
2008
2009
Domestic
production*
53
120
64
80
44
Imports*
19,719
18,139
18,162
18,497
14,844
Total
consumption*
19,772
18,259
18,225
18,577
14,888
Percent + / –
+7%
-7.6%
-0.18%
+1.9%
-19.9%

Source: Gluskin Townley Group
*Excludes exports

The U.S. market was estimated at 14.9 million bicycles in 2009, a decrease of 19.7% from 2008 and a drop of 3.7 million bicycles, of all types and wheel sizes. This represents the most dramatic decline in U.S. market consumption of bicycles in the past decade. When seen from the perspective of the past ten years, the 14.9 million bicycles sold in 2009 is well below the average in overall market consumption of 18.4 million units during the last ten years.

The declining market becomes even clearer when taking into account that many in the North American bicycle industry regard bikes with wheels smaller than 20-inch as toys. According to the statistics, market consumption of 20-inch wheel and larger bicycles dropped by 24.3% from 13.5 million units in 2008 to 10.2 million last years. Without doubt we might recall 2009 as the worst year for the total U.S. bicycle market in the last ten-years. It is clear that the recession is giving the bicycle industry a heavy blow.

The downward market trend does not come as a surprise. Earlier the Bicycle Product Suppliers Association (BPSA) already reported on a 9% drop in shipments to dealers in the US during the first three quarters of 2009 and a double digit increase in inventory. According to the BPSA this was caused by among them anticipation on the upswing in the sale of commuter bikes in 2008. In 2009 this market collapsed accounting for a 214% increase in inventory over 2008. Also the number of road bikes that are still in stock is higher than usual. In Europe Accell Group reported on a turnover drop in the bicycles in North American at their subsidiary, the Seattle Bike Supply (SBS). Turnover of bicycle parts & accessories remained stable at SBS.

Declining sales are also putting pressure on the local production, or what’s left of it, like Cannondale’s decision to outsource a larger portion of their output to low cost labour countries. Domestic production in the U.S. started to decline in 1996, and imports started to increase that same year. Two years later imports were already capturing 87% of the market, increasing to 98% in 2000 and 2001 and just over 99 percent from 2002 through 2009. What is left of the local production is some high end models at Trek and Cannondale as well an expanding group of very small manufacturers annually gathering at the North American Handmade Bicycle Show. Last year imports took even a larger share of the market with 99.7%.

Participation in cycling

Advocacy groups and local governments have put a lot of emphasis in getting more people cycling on a frequent base. In 2009 some North American cities even saw the introduction of bike rental systems. Cycling in the U.S. is not just about transportation but you’re making a statement when seen on a bike in the street.

Despite many reports on cycling accidents, the bicycle has been put in the spotlight positively in the past years as a real alternative for a car with many positive side effects on the environment. Since 2006 participation, meaning someone seven years of age or older who participates in riding a bicycle six times or more a year was growing steadily again. According to an inquire by the National Sporting Goods Association this upward trend came to an end in 2009 as participation decreased again from 38.7 million people in 2008 to 38.1 million in 2009.

Retail channels

The 19.7% drop in sales has not caused a big change in market shares between the four major categories of retail. Of course the mass merchant channel, responsible for the largest portion of the market, took the biggest loss in units. The mass merchants’ market share was down only one percent point although they sold nearly 2.9 million units less last year compared with 2008. 60% of the mass merchant channel is made out of the four large retailers, Wal-Mart, Kmart, Target and Toys-R-Us.

These retail giants are mainly supplied by Pacific Cycle, Dynacraft Bicycles, Huffy Bicycles, Rand International and Kent International. It is estimated that this retail channel does 25% of the annual aftermarket business at retail of an estimated $777 million.

The bicycle shops and the Outdoor Specialist Retail had to accept a decline of only 181,000 units. This retail channel is made up of 4,256 independent shops mainly supplied by Trek Bicycle, Giant Bicycle. Specialized, Raleigh America, Cannondale, Schwinn, GT, Haro and Redline plus over 250 additional brands and suppliers.

The bike shops might not have the largest market share in units, but they sell the most expensive bikes taking the biggest portion of the market in terms of turn over. In the U.S. the bike shops represent just over 50% of the amount of money spend on bicycles accounting for $1.3 billion US. The average price of bikes sold by the bike shops was $499 US while the average price for the total U.S. market was only $177 US. This is the result of the average price charged by the mass merchants of only $78 US.

U.S. Bicycle Market Trade Channels 2007 – 2009

Channel
2007 Units
(x 1.000)
2007
Share
2008 Units
(x 1.000)
2008
Share
2009 Units
(x 1.000)
2009
Share
Mass Merchant
13,305
73 %
13,747
74 %
10,868
73 %
Chain Sport Goods
1,276
7 %
1,115
6 %
595
4 %
Bike Shops+OSR*
3,098
17 %
3,158
17 %
2,977
18 %
Others
547
3 %
371
3 %
447
3 %
Total
18,259
100 %
18,225
100 %
14,888
100 %

Source: Gluskin Townley Group
* Outdoor Specialty Retail

 

 

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