OPINION: THE MOUNTAIN BIKE INDUSTRY IS IN A TOUGH SPOT AND YOU SHOULD CARE

Mountain biking has been on a roller-coaster ride of highs and lows since its inception, but the last few years in particular have been rather unique. The sport’s popularity hit an all-time high during the pandemic when people had time and money on their hands. What better way to spend it than out on the trail? Bikes and parts became scarce; if you could find it, everything was fetching top dollar.

Then, as suddenly as it all started, things took a hard 180-degree turn. We have received a few letters asking about brands that have gone out of business and what’s generally going on with the bike world on the business side of things. As a self-proclaimed industry insider who regularly talks to other arguably more inside insiders, here is my take on mountain biking from the business side of things and why it should matter to you.

FACTS
The pandemic-related mountain biking craze set off a chain of events that few seemingly saw coming. Most brands were seemingly doing their best to get their hands on whatever they could, desperate to keep up with the demand. They have to look into their crystal ball and carefully place their orders. Buy too much and they’ll be stuck with overstock; order too little and they miss out on sales.

Sales seemingly wound down as fast as they went ballistic. Some brands saw it coming, while others kept buying like the craze would never end. As the buying frenzy started cooling off, supply started catching up with demand. You could say that the supply chain experienced an accordion effect. And, it all happened right as inflation spiraled out of control and people simply had less disposable income to spend. It was, and still is, the perfect storm.

What happened next seemed impossible to many, including myself. Seemingly successful brands like Nukeproof, Vitus and Guerrilla Gravity suddenly shut their doors as investors pulled out, likely seeing the end of record profits. Then, more financial trouble has followed for other significant brands. We’ve seen brand CEOs ousted, marketing departments slashed and layoffs begun in the name of “consolidation.”

The fact is that most brands and even bike shops are heavy on inventory. One might think that this situation just affects the greedy brands who over-forecast, but that couldn’t be further from the truth. Even brands who saw everything coming and ordered conservatively can’t move that product unless they discount it, because everybody else is.

RUMOR MILL
Here’s where things get spicy. We’ve been talking to a lot of folks over the last few years, and some of the things we’ve heard seem crazy. Since we have not been able to confirm these stories, we will call them what they are—rumors. These rumors include big brands with factories full of bikes; some are said to be sitting on as much as three years’ worth of inventory!

There are also stories of brands that can’t pay their bills and are in real trouble. And, what about all the new factories that were created to keep up with the pandemic demand? The craziest of these rumors are brands destroying products before they even leave the factories because they will lose less money by doing so than by selling it at a discount. It’s hard to say what’s really going on, but if even some of this is true, we may not have seen the last of these brands going under.

SO WHAT?
I know what you’re probably thinking: I don’t work in the bike business. I just ride them, so why should I care? Well, there are a few reasons. Brands are doing everything they can to move inventory. This means incredible deals for riders, as seemingly everything is on sale. Those same bikes and parts that were scarce in 2020 and 2021 or even marked up above retail are suddenly being blown out. Brands are even resorting to “buy a bike, get one free” type of specials in a clever way to move twice as many bikes in a single transaction.

As great as these sales have been for the average rider, they have had a negative impact on bike shops. Many of these shops were placing huge orders when it was hard to get anything, and they were paying full price. Fast-forward a year or two and many are sitting on that inventory as manufacturers slash prices, and some are even selling consumer-direct and undercutting the shops that kept them alive. As a result, many are struggling and some are going out of business. This is a great time to support your local bike shop. You may not need them now, but there will come a time when you do—and where will you go?

The general consensus among insiders is that this situation is going to last about a year before things start leveling out. The biggest takeaway for the average rider is that there’s never been a better time to buy. There are insane deals out there, so get them while you can!