Pedaling higher profits amid gas squeeze

bikeshopforrealRising gas prices are fueling bicycle sales in Richmond, especially for services and parts to tune those old clunkers gathering dust in the back of the garage.

“It’s been really interesting with gas prices – we’ve gotten a couple of calls with people commuting more. They ask about routes and best practices,” said Champe Burnley, a board member of the Richmond Area Bike Association (RABA).

“It’s very rewarding to see that. People looking at cycling not only for recreation but for transportation needs.”

That’s been good for the area’s bike shops. Richmond-based bike retailers like Braden Govoni of Carytown Bicycle Company, say the up-tick in business is a welcome surprise.

“We were looking at March and April as our big months because historically that’s how they are, but when the gas prices started rising this summer, we definitely saw an increase in sales across the board,” Govoni said.

Richmond has a particularly strong bike subculture (one of the strongest outside of Brooklyn according to the types of ride around on single speeds). A Google search turns up at least 16 bike shops in the Richmond area, with many more in surrounding localities. RABA says its membership rolls have grown by almost 50 percent in the last five years to more than 700 members. Hikers along the James River say they see more and more mountain bikers careening around curves.

A survey completed by Bikes Belong Coalition found that the majority of retailers have seen increases in sales and services this year, and many believe that high gas prices are causing the increase.

Seventy-three percent of retailers said that they are selling more bikes in 2008 compared to 2007. Eighty-four percent said that they are selling more parts and accessories. And 88 percent said they are selling more service.

Bikes Belong Coalition is a national bicycle advocacy group based in Boulder, CO. They surveyed 152 bicycle retailers from 39 states, as well as Washington, DC.

Ninety-five percent of retailers said that customers cited high gas prices as a reason for their bicycle-related purchases. Eighty percent said that gas costs were helping them sell more bikes for transportation purposes. Eighty-six percent said that sales of accessories were getting a boost based on problems at the pump. And 89 percent said that they were selling more service and repairs thanks to rising fuel prices.

Govoni, who owns Carytown Bicycle Company, said that he has noticed a big spike in the summer months in terms of sales and repair services.

Customers are citing high fuel costs as one of their reasons for looking into bikes, Govoni said. But they’re not just buying low-end commuter bikes to get them from point A to point B. And they’re not buying those cheap mass-market Huffys or Mongooses that are available at Wal-Mart for under $100. Govoni has seen an increase in sales for all types of bikes, as well as increases in service requests and accessory sales.

A store manager at another Richmond bike shop — who asked that his name and the name of the shop not be used — said that sales started climbing in May and have been strong through the summer. He said that he has heard consumers voicing complaints about high fuel costs, and he thinks that the increase in sales can be at least partially attributed to these costs.

However not all stores seem to be enjoying a boom. Cobblestone Bicycles in Ashland closed earlier this summer. A bike shop employee at another store said it was because of increased competition by Performance Bike, a national chain with operations in Richmond.

And not everyone thinks that $4 gas is behind the spike in sales.

“I think it would take something crazy, like $5 a gallon, for people to put down the keys and put their legs over a bike,” said Chip Atkins, manager at Pibby’s Bicycle Repair on West Marshall Street in Richmond.

Atkins said that he has not seen a significant increase in business based on the high fuel costs. He did note that the cost of bike materials like tires and tubes has been increasing, and it’s driving up costs for everyone, from the distributor down to the consumer.

In some areas, accessories and services are selling faster than bikes.

“I’ve seen an increase in used bike inquiries and customers walking in looking for bikes in lower price ranges. A lot of times [they end up] not buying because we are unable to get a price low enough,” said one Illinois-based retailer in the Bikes Belong survey.

The result is an influx of shoppers looking for accessories and parts for their old, rusty bikes that have been, up to this point, collecting dust in the garage. They’re also seeking repairs on these old bikes, in an effort to make them safe enough to ride again.

“Our Service Manager estimates that 70 percent of the repairs we are doing relate to customers getting old bikes in shape in order to ride for transportation,” said a Texas-based retailer in the survey.

Bike repairs and services are generally billed at an hourly rate; anywhere from $30-$60 per hour, depending on the type of work that needs to be done.

“We are selling out of baskets, racks, helmets, mirrors, and bells like never before,” said a retailer in Massachusetts, showing that people are doing what’s necessary to get their bikes back in working order.
Annual bike sales bring in an estimated $6 billion in the U.S., according to the National Bicycle Dealers Association. About 18 million bikes have been sold annually in the U.S. over the past five years.

Bikes cost anywhere from a little over $100 to well over $3,000, depending on type and model. A brand new Schwinn World GSD commuter bicycle retails for $529.99.

But standard bicycles aren’t the only way to beat high prices at the pump. Scoot Richmond saw a 28 percent increase in sales of their scooters and mopeds from May to June, proving that people are willing to try something new in the face of high fuel costs.

And just last year, Schwinn introduced a line of electric bikes ranging in cost from $1,500 to $2,500. The bikes, which are immensely popular in Europe, combine conventional pedaling with a battery-powered motor, resulting in a contraption that rides like a scooter with a little extra leg work.They can go about 20 miles before the battery must be recharged. The cost? 10 cents.

Alec Depcrynski covers transportation, commercial real estate and retail for BizSense. You can reach him via email at [email protected]

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