Tag: Brick and Mortar

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USA Bike Brand Closures 2024

115 Brands left the US market with 60% closing, 30% going back to Europe and the rest ceasing bicycle sales

It is no secret that the bicycle industry struggled globally in 2024. The US market saw significant financial turbulence with brands entering liquidation, bankruptcy, and restructuring. Earlier this year, I reported on the number of brands closing exceeding 2023. At the time, 25 brands had closed or left the US market. With continued headwinds, this figure greatly increased.

115 bicycle brands have left the US market in 2024

This dramatic increase in closures represents a greater than 4 times the volume of closures in 2023. In late 2023, brands tried to free up inventory space and reduce overhead by aggressive discounting. Much of this discounting was at a loss, with the hope that a return to form in 2024 could heal the wounds. Unfortunately, many smaller brands did not have robust financials, leading to more vulnerability. That is where the large number of closures come in. Many large organizations can restructure, but the options for smaller brands with less recognizable IP are much more limited.

As you can see from the chart above, the majority of these brands closed their doors entirely, while a smaller portion simply stopped selling bicycles. Nearly one third of brands that left continued on after abandoning the US market, retreating mostly to Europe. The European continent is not safe from the economic woes of recent years, so this represents more of a simplifying of their businesses by returning to home countries. In 2023, there were only a couple of brands leaving the US market for Europe, as US ebike growth appeared to be continuing strong.

Brand Channel Distribution

After the exodus of brands from the US, 889 brands remain selling brands in the country with landed inventory in the US. Of these, the distribution strategies remain fairly stable, with Direct to Consumer (DTC) being the most common available option due to the low barriers to entry.

There has been a slow progression of DTC brands trying to gain a foothold into IBD and ROM channels in order to further their distribution. This channel shifting will become evident as more details emerge from the People for Bikes DTC project launching to members early in 2025.

What is in store for 2025?

Looking ahead to 2025, it is hard to miss all of the headwinds for the US bicycle market. Brands who focus on core financials and cash flow management will fare better than those who overextend themselves. Some of the major uncertainties are:

  • Potential Tariffs further increasing prices
  • Heavy 2023-2024 discounting depleting available demand
  • Long term bicycle sales declines
  • Strained personal finances of consumers

With all this said, it is likely that 2024 represented a peak of brand closures. 2025 may still exceed 2023, but I expect it to fall well short of the 115 brand exodus we saw in 2024. There are some early signs of life with used bike prices beginning to recover, and unit inventories reaching normal levels. If brands can digest more of their high dollar inventory, they will be in a better position as the market turns.

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How do brands sell their bikes?

One of the projects in our road map is to develop a global view of all of the bicycle brands competing for consumer’s attention. A consequence of this is that we get to shed light on how different brands choose to distribute their products. We’ll begin with a brief look at the US market, then pivot to show the contrasts in the Australian market.

The chart above shows just how many brands are competing in the US via DTC approaches. Keep in mind that this is the number of brands, not how many units they sell. 80%+ of the more than 900 brands in the US bicycle market sell bikes direct to consumer. Whoa, that’s a big figure! Compare that with 44% in IBD and 21% in ROM. That’s a lot of jargon we threw your way, so lets pause here and define them.

  • IBD – Independent Bicycle Dealers. These are what most people would think of as a bike shop. For the purposes of our data, we include all bicycle dealers, whether they are owned by a bicycle brand or by a local entrepreneur.
  • ROM – Rest of Market. This has been defined by the Circana (formerly NPD and Leisure Trends) as mass merchants, Amazon first party, and online retailers.
  • DTC – Direct to Consumer brands sell their bikes directly from their owed websites, with physical inventory in the united states.

Naturally, this leads to the question of how large each of these markets are in total bike units and dollars. People For Bikes is the best source for this information. They provide their members with access to aggregate Circana data on IBD and ROM. Our company, Bicycle Market Research, has been working with People For Bikes to develop DTC and Second Hand bicycle market monitors in order to clarify how large these previously unknown segments are. In her 2024 overview, Jenn Dice, People For Bikes’ CEO announced plans to release some of this data in 2024. So stay tuned, and become a member if you’d like to benefit from greater insights into the US market.

Next, lest pivot to the Australian market to show how a much smaller market compares in their distribution.

Serving the ~ 25m population of Australia are 230 distinct bicycle brands. Although this is small compared to the 900+ brands in the US market, it does represent a brand to population ratio. In the US, there are ~300,000+ residents for each brand in the country. Australia is less than half of that at ~110,000 residents per brand. This makes competition between brands more challenging.

Looking at the Venn diagram at the top of this article, we see the channel distribution choices made by Australian brands. Here we have grouped IBD and ROM into a Retail category. Overall, 31% of brands choose to distribute via the Direct to consumer channel, while 85% distribute through retail. These ratios hold steady when we filter for brands selling electric bikes. These ratios are dramatically different than seen in the US. If we look at the breakdown by category below, we can see some strong differences between DTC and Retail markets in Australia.

While ~60% of brands offer electric bikes, regardless of channel, this diverges with Road and Mountain bikes. Here, traditional retail is much more likely to offer these bikes than DTC brands. This continues to a lesser degree in other categories. As most would guess, only a small portion of brands offer folding bikes. What was a surprise is how few brands offer kids bikes. This is because there is a long tail of specialist brands who focus on one area of the market. Those would offer a wide array tend to be more established and likely take a large share of the kids bike unit sales due to their better brand representation.

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Yelp and Bike Shops

Map of US states with Average Yelp rating of bicycle businesses

Coming from a background in brick and mortar retail, Yelp has been an omnipresent consideration since they rose to the top of review sites. Many retailers complain about the challenges of working with reviewers, and the semi-opaque rating system. As I’ve pivoted to focus on the data side of retail, I became curious what data there is to substantiate or refute some of the claims of retailers. Thankfully, Yelp provides a well documented API for interacting with their services.

Methodology

After signing up for Yelp’s API access, I was able to check for batches of bike shops in cities around the country. Overall, I checked the top 1,206 most populous cities in the country, looking for the key work “bike shop” within 25 miles of the central coordinates. By approaching it this way, there is a lot of overlap, so I then filtered for duplicate listings.

However, since in the US, Yelp’s categorization does not break out bicycle shops as a dedicated category, I looked in the general “bicycle” category, with the stated keyword. In total, I found 7,654 unique listings. There may be some businesses operating multiple DBA’s, but the total number is close to the figures reported by Georger Data Services of the number of bike shops in the US.

Insights

Within these numbers, we can see some interesting niches within their names:

  • 261 references of rent or demo ( 3.4% )
  • 73 references of tour ( 0.9% )
  • 179 references of repair or service ( 2.3% )
  • 480 references of ebike, e-bike, or electric ( 6.3% )
  • 53 references of mobile ( 0.7% )
  • 163 references of Pedego ( 2.1% )
  • 289 references of Trek ( 3.8% )

Overall, most of these businesses are highly regarded on yelp, with nearly two thirds of shops being rated a 4.5 or 5 stars. If we bring in rating of 4, we exceed 80% of all businesses. This flies somewhat in the face of conventional wisdom that yelp is challenging to navigate with customer reviews. Very few shops are rated at the bottom of the yelp scale (2.5 or below). Overall, this shows an alignment between the consumer perception of the importance of these ratings to businesses, and the scores that are used in these calculations. It should be noted that Yelp does have a business friendly policy when it comes to removing listings. In particular, references to employees individual names often fall under their privacy guidelines.

Ratings by State

The following map shows the average rating of these businesses around the country. Originally, I had the lower bound in red, but when this turned out to only be slightly below 4.0, it felt disingenuous to show it in red, as it might mislead people to think they are worse than they are. Nearly all states fall within a narrow range between 4.2 and 4.4. The outliers below 4.1 and above 4.6 generally have lower numbers of bike businesses, indicating that as the number of businesses increases, the average rating regresses to the national mean.

Overall, it seems that Yelp can be a good source of finding bicycle businesses in the United States. In addition, most of these businesses are highly regarded on the platform, with only limited outliers. For the genuine frustrations that retailers feel with ratings systems like Yelp, they may not deserve the villainous light that people often cast on Yelp. At least not in aggregate.