Have you bought a new bike lately? If so, you’re lucky.
Demand for bikes has been booming since the pandemic began. The market research firm NPD group says sales of bikes, parts and accessories climbed 75% last April compared to the year before. But supply is tightening because of global supply chain snags.
Kargel says her shop stayed open as a bike repair service during lockdown. In the beginning of the pandemic, she worried about bike sales because people were fearful and staying indoors.
“It took only two weeks to realize that all of a sudden bikes were in demand,” Kargel says “Then the lines started and then the web store sales literally blew up in a way that no bike shop would have ever experienced. We've never seen anything like it.”
As the end of the year loomed, she says the shop’s bike orders were months late. Kargel ordered thousands of bikes to pre-sell — yet, some customers ended up waiting a year to receive them.
The main reason for the global supply chain issues remains uncertain. However, she says the surge of the delta variant has caused problems for factories in Asia. Shimano, one of the largest global bike parts suppliers, closed its biggest Malaysia factory due to COVID-19.
“There are shipping container shortages,” Kargel says. “The largest supplier that did push back the bikes to September used the inability to get their product out of the port because there's no containers [as an excuse].”
And there’s also a shortage of bike parts, which leads to a scarcity of specific types. In Canada, she says only 5% of bicycle tubes that were ordered last year came into the country, for example.
Bike shops are now buying products for next year's products, she says, and it’s difficult to order with the tight supply change because she needs to guess what people will need.
“Then, I actually have to subtract products that haven't even shown up that I ordered a year ago,” Kargel says. ”It may be an abundance that I will never get through.”
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Bike prices increased due to the demand, Kargel says, but it was the supplier's choice. Some higher bike prices made it uncomfortable for her to sell based on the quality of the product.
Bike shops placed enormous orders at a regular wholesale price — not a discounted clear out price — so every bike in every store cost top dollar, she says.
“If we all of a sudden have a surplus and the consumer starts to ask for the discount and our competitors give in to that, we will now really start to see a problem,” Kargel says. “So you're going to see the loss of a lot of smaller guys.”
This segment aired on August 13, 2021.