Cycling has seen a massive increase in participation in 2020 with the UCI quoting an increase of 253% in late April in the Western USA, the UK Government claiming cycling had grown by 200% on weekends this year and similar spikes around the world. Cycling's position as a form of recreational exercise that doesn't require close contact with others has been a big draw for new or returning riders and this is boosted by less traffic on roads during lockdowns, a desire to avoid public transport and increasing government spending in cycling infrastructure.
It has been an incredibly prosperous time for the bike industry and our recent Revenue Round Up has shown record financial quarters from brands across the cycling umbrella. However, it has been a double-edged sword with demand outstripping supply, especially following factory shutdowns earlier in the year in Asia, and many brands running out of product to sell. The factories are now all at max capacity with brands trying to keep up with a backlog of demand while also hoping to capitalise on the current boom in cycling. This means lead times are over a year for some companies and there's no end to this unprecedented period in sight.
But what does this mean for the industry, when will stocks return to normal and how do we ensure this leads to a healthy future for cycling? We posed the following questions to the industry and answers from Orbea, Hope, SDG, Trek and Canyon are below
- How has your year been financially?
- Do you have supply chain issues? What kinds of production delays are you facing?
- When do you think supply and demand will equalize?
- How healthy is the bike industry going into 2021? 2022?
- What does the industry need to do in order to make the growth of 2020 sustainable?
Nick Howe, USA Country Manager - Orbea
How has your year been financially?Overall, we have had a very positive year. With the initial shut down in Europe, we certainly were affected early in the Covid19 crisis, but the resulting "boom" in sales more than made up for it, and we are ending the year in a very positive space.
Do you have supply chain issues? What kinds of production delays are you facing?When I posed this question to our global sales director to discuss this topic, his answer was an incredulous "of course!" Though we manufacture in Spain, we were still subjected to some of the shortfall of parts that the entire industry has seen over the past several months worldwide. With that said, we feel very lucky to have long relationships with really amazing vendor partners and they have worked extremely hard to fulfill our supply needs. That, combined with our unique position of owning and managing our own factories has helped mitigate the most arduous of these challenges. And, though we have all suffered on some level, we feel very lucky to have been able to continue supplying bikes even in the deepest wake of the pandemic.
When do you think supply and demand will equalize?We believe that the current state of empty product reservoirs (both at the manufacturing and retail level) coupled with significant pent-up demand, could lead to a parts shortfall that will last well into the Summer of 2021. This timeline could also be significantly lengthened If the increased global demand continues at its current increasing rate. To think that this product shortage could extend to 2022 and beyond is more than feasible.
How healthy is the bike industry going into 2021? 2022?There are many indicators to suggest that the global increase in demand for bicycles may be sustainable to upwards of 15%-25% of the recent jump. Things like the growing trend in e-bike adoption; the movement to outdoor and individualistic fitness pursuits; and the government-led push for bicycle transportation should support a trend along these lines. If we consider these factors and combine them with the retail side of the business receiving a much-needed cash infusion; this may be the best opportunity we've ever had to attain and promote industry health in every link in the chain.
The winner in all this is the end-user. Strong retailers offer consumers better shopping experiences, and strong brands combined with high demand mean more investment in innovation leading to better and better riding experiences in every category. Overall, it's an amazing time to ride.
What does the industry need to do in order to make the growth of 2020 sustainable?We have an opportunity right now like never before. As a collective, we need to start by having our collective voice heard. Help perpetuate trends like increasing investment in infrastructure; help continue the push towards outdoor fitness even after the Covid crisis is over; keep ourselves as an industry from overcompensating for the increase in demand; then brands and dealers can sustain the health that this global event has given us as its silver lining, and riders can look forward to ever-increasing access and experience.
Alan Weatherill, Sales and Marketing Manager - Hope
How has your year been financially?The bike market actually started this year a little down, reflecting a wider economic outlook. Then came COVID. As we have already reported, although the bike industry has seen massive growth this year and we are reporting a 25% increase in sales, locally we have friends in other industries who are really struggling with redundancies and factory closures.
Do you have supply chain issues? What kinds of production delays are you facing?Manufacturing most parts in house gives us more control, but we still have to buy raw materials. At the beginning of the pandemic we were holding increased stock of raw material to guard against the impending Brexit issues so this cushioned us from most of the supply issues. We also shutdown for a month at the beginning of the pandemic in the UK, then gradually opened up as we installed controls around our factory to create a safe working environment for our staff. This put us a little behind with orders to customers, but then the huge surge in orders now means that although our production is increasing we are still seeing demand outstripping supply.
When do you think supply and demand will equalize?This is almost impossible to predict. There are so many factors involved in this and we’re being extremely cautious in our future planning.
How healthy is the bike industry going into 2021? 2022?Cycling obviously saw a massive influx of new users earlier this year, with millions of people furloughed and also working from home, having more time to get out on their bikes. The great weather also helped. We’re thinking even if only 10% of these new cyclists continue to regularly ride, the industry will be in a healthy position moving forward.
What does the industry need to do in order to make the growth of 2020 sustainable?In the UK there have been huge moves to make cycling a transport option, not just a sport. This is where we need to be as an industry. We all love to ride on our local trails, but the more widespread the use of bikes, the more accepted cycling becomes, the safer it is for everyone to ride.
Tyler Anspach, - SDG
How has your year been financially? A complete rollercoaster. We started off the year with solid aftermarket and OEM numbers on the books then when COVID hit in late March, it was uncharted territory with quite a few order cancellations. But it soon became obvious that the boom was occurring. We had ample inventory to supply the initial surge, yet increased production lead times hindered our ability to fully capitalize. In the end, we’re just thankful to have plenty of work during these times and still finish off the year with substantial growth over 2019.
Do you have supply chain issues? What kinds of production delays are you facing? Absolutely, we’re encountering unprecedented delays. We actually submitted some 2021 blanket orders this past summer to help offset the long lead times into next season. Luckily, our Tellis dropper hasn’t been greatly impacted by supply chain issues but with the core of our business being saddles and having a popular new model like the Bel-Air V3, it’s impossible for us to scale up when our factory is at full capacity and extending lead times over 300 days. Additionally, we had re-examined some new product launches and push back to 2022, which obviously isn’t ideal.
When do you think supply and demand will equalize? I believe there will be some leveling out, but I don’t envision this occurring until the Q3 of 2021. At this time, vendors can finally deliver on the huge backlog and fulfill backorder demands. On the OE side, many of our partners have already pre-sold the majority of their ’21 bikes and forecasts are significantly higher for ’22, so it will be interesting to see how it all plays out.
How healthy is the bike industry going into 2021? 2022? The industry will definitely be off to a strong start in ’21, as current sell-through rates from our distributors and key accounts are trending exceptionally well during these typically slower months. But it really does depends on the supply chain, many of the larger players and those that control their means of production will definitely benefit. As a whole, I suspect the industry to remain quite healthy and to maintain numbers well above pre-pandemic times, especially with cycling participation up. While product flow for each brand/business is critical, it’s equally important to avoid any significant surpluses – a very likely scenario for some.
What does the industry need to do in order to make the growth of 2020 sustainable? Continue to work with local organizations to ensure there’s plenty of trails that contribute to rider progression. It’s amazing to see how many new riders are out on the trails, but having the best possible experience by way of suitable trails for their skill level is paramount. In addition, working with federal/provincial/state/private landowners to increase trail access and maintain existing networks should be a priority, as there’s certainly going to be more traffic on the trails with the increase in ridership.
Eric Bjorling, Brand Director - Trek
How has your year been financially?As with most of the industry, it’s been a very good year for Trek. Sales of all bikes and Bontrager accessories have been up in all categories.
Do you have supply chain issues? What kinds of production delays are you facing?Everybody has supply chain issues. Whenever you mix production delays with unprecedented demand, you’re going to have a hard time keeping up. Bikes truly are the sum of a lot of parts and it only takes one hiccup in the chain to slow everything down.
When do you think supply and demand will equalize?That’s the big question. We expect demand to remain strong well through 2021. We’re starting to see bikes roll in at a much better rate than earlier in the year but getting back to fully equalized will take a little bit longer. We think 2021 is going to be a great year for bikes.
How healthy is the bike industry going into 2021? 2022?Every company is different but the overall bike industry should be healthy for the next several years if it can make the right moves. The long-term health of the industry will be determined by how we support new riders getting into the sport.
What does the industry need to do in order to make the growth of 2020 sustainable?We need to welcome as many people as we can to cycling and encourage new riders to use their bikes. The way cycling loses is if all of these people turn around and leave their new bikes in the garage or basement because they feel that it’s not for them. We all have a big opportunity to change the world here and it starts with creating a great environment for people to enter the sport. Get them connected to their local cycling scene. Be inclusive. Broaden the base.
Vernon Felton, US Bike Product Director/Global Mountain Bike Marketing Manager - Canyon
How has your year been financially?First off, let’s take a moment to note that COVID sucks. Pure and simple. Our hearts go out to anyone and everyone who has been affected by this pandemic. There is a lot of suffering going on out there—lost loved ones, lost jobs, lost opportunities. It’s a sobering time. It’s also, as probably everyone reads this knows, been a boom time for the bike industry.
Clearly, no one in the bike industry saw this coming when we created our 2020 bike lines years ago, but one of the net results of so many people being told to stay home has been that a lot of people have rediscovered that bikes are rad and they’ve been out there getting their ride on. That has meant a bump in bike sales for every brand I know of, including Canyon.
Do you have supply chain issues? What kinds of production delays are you facing?Absolutely, delays have been a challenge…though it could’ve been worse given the global increase in demand for bikes and parts. Last Spring we definitely experience a few delays related to factory shutdowns in Taiwan. The materials were there, the workforce (for a time) was not. Stopping production, of course, was the right call—the act of building bikes has to take second place to the safety of the people who do the actual building of those bikes. As far as the current situation goes, many brands are rushing to submit their orders for 2022 bikes. It’s entirely possible that this could result in future shortages. We’ll see.
When do you think supply and demand will equalize?That’s anyone’s guess, really. I think the answer depends, to some degree, on the course COVID takes in the coming year.
How healthy is the bike industry going into 2021? 2022?Well, sales are up for most bike brands at this point. The same is true for a lot of companies that produce widgets that are suddenly in big demand. If any of you reading this had stock in Charmin toilet paper, your portfolio is probably looking strong right about now. Who’d have guessed…? But to get back to the big question, revenue is up at the moment, but past performance is no predictor for future results. If COVID hits the world hard this winter and we see massive global lockdowns, will people continue to buy bikes at the current rates or will they start tightening their belts? If people stop buying bikes or board games or bass boats (the last of these being an American trend), it certainly seems possible/plausible that there could be a significant decrease in consumption of things that don’t happen to be toilet paper or hand sanitizer.
I don’t have a cold, hard answer to your question, but I think it’s safe to say that the future is uncertain.
What does the industry need to do in order to make the growth of 2020 sustainable?Great question. I’ll personally give some of the same answers today that I’d have given you before COVID hit. A big part of the COVID boom has consisted of new riders discovering the sport, as well as former riders rediscovering just how awesome it is to escape the daily grind on a bike.
In other words, bikes suddenly made sense to people we (as an industry) weren’t reaching. We’ve always needed to reach more non-riders. Simple as that. We need to get more people rediscovering the outdoors and the sheer awesomeness of riding their bikes. That’s a significant challenge in some places where trail access is limited or (for roadies) in places where city streets don’t feel safe for riders.
So, we need to reach out to people who aren’t already attending the singletrack church. That’s easier said than done, for sure, but it’s necessary all the same. Starting young would help. In the United States, for example, a lot of kids stop riding bikes at an early age. Trail access sucks, or their parents don’t feel great about their kids roaming freely on bikes, or the lure of a video game is more enticing than catching air. Getting kids on bikes, making it part of the school curriculum (or, at least making it an after-class, school-endorsed activity) would be a great start. In towns where high-school racing is a thing, we’re seeing real growth in mountain biking. Likewise, I’ve seen a huge boom in mountain biking in towns that offer after-school mountain biking classes.
We also need to improve cycling accessibility in towns and cities that have limited trail access or downright unsafe city streets. Riding a bike should be fun. A lot of people either don’t have a place to mountain bike or, rightfully, are concerned that riding on the road is too great a risk. We need to change that.
Those are big things changes that require massive tweaks to the public infrastructure, but if the COVID bike boom carries along any lesson worth learning, it’s that the bike industry would be doing a hell of a lot better if riding a bike seemed like the right thing to do for a hell of a lot more people.