SRAM's Grip Tightens: New Drivetrains, Old Inventory, and the Independent Shop

Here is another piece about how SRAM is continuing to dominate the drivetrain market. I don’t want to keep writing about this specific topic, but it is astounding that with each new product release, SRAM is continuing to crush their competition, and widen the gap between them and their closest competitors. Yesterday, SRAM released the new Rival and Force groupsets, and unsurprisingly, they were able to bring some of the selling features that make the current generation Red special, and trickle them down to more approachable price points. The result of this, is two really competitive groupset options for everyday riders. I’m not going to talk about the specifics of these groupsets as there is a lot of good reporting on this already. Rather, I’m going to talk about what these new products mean for SRAM and the rest of the cycling industry.

These groupsets, to me, mark an important moment for SRAM. Now, looking at SRAM’s catalog, there is a high level of cohesion and a distinctive feel throughout. If you looked at the silhouette of any of their current products, you could likely still correctly identify them as a SRAM product. Now that SRAM has trickled down the new road lever configuration and the direct-mount derailleurs to the budget road and gravel groupsets, this likely marks the end of the quick release schedule that we have seen in the last few years. Moving forward, I think this next chapter for SRAM will be one of focusing on adoption.

If you compare any of the SRAM products to their closest competition, in my opinion, they are better in almost every way. This includes metrics like price, weight, ease of installation, performance, appearance, and desirability. SRAM knows this, and now, they are going to continue to remind people of this. I suspect that they will do this in two main ways. Most obviously, they will continue to spend money to sponsor important athletes and events in the cycling world. This includes Tour de France riders, MTB racers, and social influencers. Secondly, and more interesting to me, is that they will continue to make the SRAM ecosystem even more compelling by doubling down on the level of integration between their whole portfolio of brands. This is likely the next main focus for SRAM.

This new product release means a few things for the cycling industry. Firstly, these updates are significant enough that they make the outgoing products significantly less desirable. As a result of this, bike shops and dealers, large and small, are going to need to figure out how to deal with the inventory (of complete bikes) that they have in stock with the old stuff. Likely, this old inventory will need to be discounted as its appeal is undermined by the new products. This comes at an already tough time for dealers as they are already facing inventory challenges because of consumers slowing down non-essential spending.

Looking forward, SRAM’s new frontier of leveraging their ecosystem to create new experiences will create new value in the industry. However, it is unclear what these areas will be, and if any other part of the industry will be able to capitalize on this new value creation. 

For independent bike shops, these new products can be seen as a positive for creating the cycling experience even better than it already is. However, SRAM having such a big lead over the competitions can not be a good thing. This is because of SRAM being able to act in a more monopolistic way. This could include forcing lower margins on wholesale items, or more restrictions on how the shop conducts business like servicing restrictions and more controlling requirements. Behavior like this would likely be detrimental to the already struggling bike dealers. There could be some parallels to how Apple limited a majority of the independent electronic repair shops from repairing apple devices.  

This time period in the story of the cycling industry is continuing to look more and more unlike anything we have seen before. I am excited and grateful to SRAM that they are creating such an interesting narrative for me to cover as this story continues to unfold. Tomorrow’s story, I will speculate about what I think SRAM’s next big play will be, and spoilers, it has something to do with the Hammerhead computer that they have been giving away to their most important customers.