The bicycle industry is emerging from unprecedented growth momentum.It ended 2021 with $8.3 billion in U.S. sales, which is 45% higher than 2019 compared to 2020 despite a 4% drop in revenue.
Retailers and manufacturers must now set their sights on four key initiatives that will lead the industry to another great year in 2022: inventory management, optimizing prices, investing in key categories, and earning additional profits through add-on sales.
As one of the largest bicycle categories, the electric bicycle (electric bicycle) business will grow 39% year-on-year in 2021 to $770 million.Looking at those numbers, e-bike sales outpaced road bike sales, which fell to $599 million.Both mountain bikes and kids’ bikes will exceed $1 billion in sales in 2021.However, both categories saw single-digit declines in sales.
Notably, some of these sales declines have less to do with demand and more to do with inventory.Some bike categories simply don’t have enough inventory available during key sales months.Effective inventory management in key bike categories will continue to be an area of focus as the industry continues to move forward through the rest of the year.
NPD Retail Tracking Service data, which includes inventory data from independent bike shops, indicates that the industry has enough inventory available to sustain growth in 2022.Certain product categories, such as front-suspension mountain bikes, have double their inventory levels in December 2021.Road bikes are an exception, as December 2021 inventory levels are 9% lower than 2020 levels.
The current build-up in inventory in the bicycle market is developing in what some economists describe as a bullwhip — an initial shortage of supply that dries up, which leads to overstocking, which leads to overstocking.
As mentioned above, the net effect of the bullwhip presents a second opportunity for the industry: pricing.Retail prices across all bike categories will increase by an average of 17% in 2021.Given its particular inventory challenges, the average price of road bikes rose 29% over the calendar year.This increase is of course to be expected, as reduced supply usually leads to higher prices.
With a healthy supply of products on the market, and consumer interest in cycling, the industry is primed for clever promotions, fighting for the best prices, maximizing profits for suppliers and retailers, and working to keep dealers Clean future of inventory.
The four categories that will benefit from continued investment and attention are e-bikes, gravel bikes, full-suspension mountain bikes, and trainers and rollers.
For the e-bike category, which has seen year-over-year growth since the day I walked through the doors of NPD nearly seven years ago, investment opportunities abound.New designs, reduced component prices and associated lower average selling prices, and a growing and educated consumer base all point to continued success in the bicycle category.
Gravel and mountain bike designs cater to different consumer needs and may point to general design philosophies that the industry should embrace.Race- or function-specific designs are falling out of favor as consumers turn to more versatile bikes that they can ride anywhere and on any surface.
Trainers and rollers offer different types of opportunities.Consumers have shown a reluctance to engage in gym-based activities, but noted in the NPD Consumer Survey that they do want to get fitter.
Home fitness equipment including bike trainers and rollers can now provide a more immersive experience in the comfort of our homes, and the fusion of virtual reality and fitness is just around the corner.
Finally, NPD data shows that additional sales opportunities can be gained by selling add-on products, including helmets, bike locks and lights, and other accessories.Revenues from bicycle helmet sales are down 12% in 2021, three times the rate for the industry as a whole.This marks an opportunity for retailers to sell helmets alongside bikes, which hasn’t happened yet.
As cyclists start using bikes for commuting purposes again, we can expect growth in the accessories side of the market.
Post time: Mar-04-2022