Challenges in the Bicycle Industry: Post-Pandemic Discounts Persist

The bicycle industry is currently facing significant challenges as the aftereffects of the COVID-19 pandemic continue to exert pressure on retailers and manufacturers. The sector, which once experienced a surge in demand due to health-conscious consumers seeking outdoor activities, is now grappling with surplus inventory and declining sales.

Recently, a coalition of bicycle retailers and the VSF, a manufacturers' and dealers' association, issued a warning regarding the dual challenges of rising costs and intensified competition. This situation has compelled many firms to implement substantial price reductions--often exceeding 25%--to stimulate sales.

During the pandemic, an unprecedented interest in cycling emerged, largely fueled by the desire for fitness and outdoor recreation as a means of avoiding virus transmission. However, this surge in demand coincided with severe disruptions in global supply chains, particularly concerning components and bicycles manufactured in Asia, which were often delayed in transit. Retailers, anticipating ongoing demand, increased their orders, leading to an overwhelming surplus of stock once shipments finally arrived.

Burkhard Stork, the head of the Zweirad-Industrie-Verband (ZIV), noted that the industry has yet to fully recover from the pandemic's impact. While inventory levels have improved since last year, the market remains challenging. Many retailers are offering discounts on models from the most recent catalog, even before the spring sales season officially begins. This trend is exacerbated by the fact that many consumers have already upgraded their bicycles during the pandemic, leading to a decrease in new purchases.

As a result, high-quality mountain and gravel bikes, which have only recently hit the market, are being sold at steep discounts. In the open letter from retailers and the VSF, they describe the current environment as fraught with significant challenges and shifting customer preferences.

The rise of electric bicycles has also transformed the market, contributing to higher average prices for sold bikes. Leasing options for bicycles have seen steady growth; however, the market has recently cooled, as noted by industry experts. Retailers are now facing increased pressure due to demands for larger discounts and stricter conditions from suppliers.

The situation is particularly dire for smaller retailers, who have been struggling to maintain profitability amid ongoing structural changes in the industry. The consolidation of retailers is expected to intensify, with many smaller stores already facing difficulties in acquiring stock.

Stork has called for a coordinated effort within the industry to address these challenges and sustain the bicycle leasing model, which allows employees to lease bikes through their employers, similar to car leasing arrangements.

Looking to the future, there is hope that the second-hand market for bicycles will provide renewed opportunities. The ZIV is advocating for a model similar to the automotive sector, where leased bikes are resold after the leasing period ends. This would enable a robust secondary market, potentially driving down prices and boosting sales.

To facilitate this transition, dealers will need to adopt digital tools to assess the condition and usage of returned electric bikes, ensuring they can offer warranties on second-hand products.

Additionally, there is potential for growth in the fitness sector, as the WHO encourages individuals to engage in regular physical activity. Advocacy for health incentives from insurance companies could further stimulate cycling activity, particularly among those utilizing electric bikes.

Furthermore, the push for sustainability is driving demand for bicycles, as companies seek to reduce their carbon footprints. The integration of bicycles into urban transport systems is increasingly viewed as essential for the successful implementation of environmental initiatives.

As the season approaches, industry leaders are optimistic that favorable weather conditions, including a late Easter, will bolster sales, as good weather is crucial for the bicycle market.