How a Slowing Economy Will Help Bring Balance Back to The Bike Industry

Independent bike shops are the backbone of the cycling community; they support cycling culture at the local level. Over the last five-plus years, despite a strong economy and increased bike sales, many stores have struggled to keep their doors open. This puts the cycling community at risk of losing vital contributors to the industry.

Looking ahead to this summer, it seems the broader economy is slowing, which will put pressure on both consumers and businesses. However, despite the challenges that come with an economic downturn, I’m optimistic that this disruption could bring balance back to the bike industry. As the economy weakens, bike shops may face less sustained competition from online sellers. This could shift the industry away from a race to the bottom on pricing.

Independent bike shops have long struggled to compete with online sellers and direct-to-consumer brands. The hard truth is that online retailers can offer lower prices than traditional brick-and-mortar stores. They often sell at price points where local shops can’t make a profit – allowing them to gain more market share while local businesses fight to stay open.

Since COVID, market dynamics have made it difficult for shops to offer competitive prices. Most bikes sold have been in the mid-to-upper price ranges – segments where online sellers have the biggest advantage. Customers in these brackets tend to shop around for the best value, and there are plenty of options online that match their needs, often at lower prices than traditional dealers can offer. However, with the economy shifting, we may see enough disruption to fundamentally change which segments of the industry are most profitable and what types of business models are sustainable.

A slowing economy will hurt both businesses and consumers. But online bike retailers are particularly vulnerable. Their business models often depend on large, debt-financed inventory purchases, making them highly sensitive to changes in demand and borrowing costs. If demand drops or capital becomes more expensive, their operations may become unsustainable.

Independent shops face those risks too – but they have some unique advantages that may soften the blow. Focusing on product sales first, local shops are positioned to serve two key market segments that are more resilient during economic slowdowns.

The first is the luxury market. High-end customers often buy the most premium products for reasons beyond specs or performance. They usually have enough disposable income to continue spending, even in a weak economy. Brick-and-mortar stores can uniquely serve this segment by offering a more exclusive, hands-on buying experience that online sellers can’t match.

At the other end of the spectrum is the low-cost transportation segment – customers who rely on bikes as affordable, essential transportation. These individuals will continue to need bikes, and local shops often meet this demand by selling pre-owned bikes at lower prices. This market is largely insulated from online competition, since the cost of shipping a low-cost bike often isn’t worth it.

All of this is encouraging in theory, but it won’t help if shops don’t survive long enough to benefit. During this period, stores must be especially mindful of how they spend their money. It’s easy to overbuy – especially when brands are discounting heavily. Crucially, businesses need to focus on what’s essential and identify where they can cut costs. With some luck and smart decisions, bike shops may emerge into a more sustainable landscape, where they’re no longer losing market share season after season.

No one (including me) knows exactly how the coming months will play out. But here’s my best-case vision for the future of the bike industry: independent bike shops will continue to be the backbone of the community and better capitalize on the value they create. We’ll see more shops specialize; either by targeting the resilient market segments I mentioned earlier, or by expanding their service offerings like repairs, bike fitting, tours, and rentals.

In the middle market segment (roughly $1,000–$5,000), I still expect many sales to go to online competitors. Customers in this range are value-focused and likely to cross-shop. But bike shops will need to actively reach out to serve these riders – showing how valuable independent stores are, both to individual cyclists and the community as a whole. Ideally, this will lead to more support for local shops over time.