I admit it, I cruise bikerumor.com every now and then. Yesterday I was surprised (as was bikerumor) by Trek’s purchase of Electra Bicycle.
I added a comment to the thread, and since it aligned with some of my other thoughts on the industry, I decided to repost it here:
Our family was in the bike business from 1978-2011 selling nearly every brand of bicycle you can think of (and a bunch you might not be able to) at one time or another.
One major challenge to growing the bike market as a percentage of the population (it is growing in numbers, but shrinking in population participation percentage) is making sure that new riders buy the bikes they need for them to have fun (and to become a “cyclist”), not necessarily the bikes that the big 3-5 brands are selling (and dealers are under pressure to sell to meet commitments for terms and discount levels).
Something that makes cycling special is all of the various ways the sport can be enjoyed. In the pursuit of homogeneous volume, individuality is lost. We have seen the disappearance of some great brands through this process, several that have been purchased (or otherwise consumed) by Trek in the past 10-15 years. (Klein, Bontrager, Gary Fisher, LeMond)
The Big Box Business Model
The epitome of the volume sales model is the big box store which every cyclist recognizes is a significant challenge to getting more riding buddies. Big box store bikes are not fun, and do not encourage people to continue to ride.
It isn’t easy for a person newly interested in cycling to understand the difference between lots of marketing and product availability (ie. Specialized, Trek, or Target, Walmart) and purchasing the experience that they require in order to enjoy and remain involved in the sport. If it’s difficult to believe that the Specialized & Trek business models are similar to the mass market (Target, Walmart) models, all one has to do is look back to the late 1990′s when Specialized announced it was canning Independent Bike Dealers for mass market retailers. (Which, I’m sure many remember backfired terribly and Specialized nearly went bankrupt.)
In order for this potential new cyclist to buy the “right” bike that keeps them involved in the sport the dealer needs clear & unique options, sales management and sales people that truly care about helping people becoming cyclists (lifetime value of a customer vs. a one-time sale) and the financial ability to sell every option with the same enthusiasm. This is a very hard thing to do as a dealer when a large chunk of your inventory dollars are tied up with a single vendor and payments are coming due!
Grow or Die
It’s difficult to blame Trek or any other company for wanting to improve their business through whatever methods deliver greater revenue or lower costs. Likewise, Independent Bike Dealers want, or even need the same things, and the easiest route to getting these business improvements in by being a Specialized, Trek, Giant, or Cannondale dealer. However, I’m not sure the all out pursuit of these goals is what’s best for cyclists or growing the percentage of population that rides regularly. Lots of bikes are sold, but not near as many cyclists are made.
In the 4-5 years that our family sold Electra, I was amazed by all of the casual folks that became regular riders through their comfortable and reasonably priced bikes. Did they create a lot of hard core road racers or mountain bikers? No, but I certainly saw many migrate from Electra to hybrid to casual roadie or recreational trail rider. The vast majority of Electra buyers rode their bikes at least semi-regularly, bought accessories (sometimes lots!), and often bought additional bikes to support other types of riding.
Trek builds some great bikes (I even raced one a long time ago), and certainly they’ve built a successful business, but I’m not sure if the cost to the cycling community was worth it – even though it’s possible to argue they built cycling’s “mass appeal” in the 1990s & early 2000s with Lance. (This discounts the fact that overall population participation was much higher in the early 1970s.)
Electra is an amazing gateway bicycle brand that I hope doesn’t become debris along the trail like Klein & Gary Fisher.