The above title is taken from a BRAIN article “Saris Cycling Group, a victim of the ‘Covid whiplash,’ restructures for sale” that appeared online June 29. According to this article, “…the company is the victim of the ‘Covid whiplash,’ which left it with excess inventory, especially of trainers, when the market dried up this spring.”

This last part is, to me, the most interesting. I started actively marketing and selling data and statistics to the American bicycle business in 1990, because it was one of the few things my non-compete with the Schwinn Bicycle Company, from which I had just resigned after 24 years and four months, allowed me to do and still stay in the bicycle business. I quickly found the American bicycle business is research averse.

From 1990 to the present, new younger owners and managers have expressed more interest in research and data, but overall the American bicycle business has still maintained its arms-length relationship with good quality consumer studies and findings, and relied more on the opinion of dealers, sales reps and “gut-feel.”

The bicycle business is not alone in this, and quite frankly, “gut-feel” has been more right than wrong, but also limiting for many companies and brands over the years. Good quality consumer research studies and reports, like those conducted and published by the Bicycle Market Research Institute, National Sporting Goods Association, National Bicycle Dealers Association (NBDA) and Sports Market Surveys, have also been consistently correct and strategically predictive of the future, but the bicycle business was still reluctant to make the investment when they had good old “gut-feel” to fall back on, and were happy with all the money they saved.

As I said in another article this month, that was then, this is now. Good old “gut-feel” never got the vibe from the unprecedented shifts, changes and disruptions of the Covid-induced consumer market of the 2020-2021 period, and was of no help in moderating or mollifying the bullwhip effect we have talked about since the fourth quarter of 2020.

Simply stated, the bicycle business, like just about every other business in the U.S., tossed Just-In-Time (JIT) inventory management because they really didn’t have much choice at the time, and adopted Just-In-Case (JIC) inventory management that condoned hoarding and ordering as much as you could get as often as you could get it. This in turn encouraged and fostered the bullwhip effect.

Consumer demand was running red hot in 2020, and the one thing I argued about at the time, and still think should have been included in the industry conversation, was a careful study of the history of the data, the historical facts, which clearly showed 2020 was not another bike boom, and as such warranted the high-quality consumer research Sports Market Surveys subsequently conducted for the NBDA in 2021.

The conventional wisdom in 2020 and 2021 was that the unprecedented surge in bicycle sales was going to continue, or at least the bicycle business could assure its continuation through advocacy and lobbying, without regard for either what the NBDA consumer research indicated or the American consumer.

This leads to “Consumer spending growth slows in May, as higher prices weigh on the economy,” an article that appeared in The Washington Post June 30.

The huge unknown in the uncertainty of the last 30 months, over and above the pandemic, the supply chain disruptions, the war in the Ukraine and inflation, has been the American consumer!

The June 29 BRAIN article about Saris Cycling Group says, “…the market dried up this spring.” Consumer demand “dried up” and the company procured inventory like consumer demand was going to continue. The disconnect was between what the company thought or was told consumer demand was going to be, and what it actually was.

The June 30 Washington Post article reports: “Americans are still spending, but at a slower pace than a few months ago, a sign that the biggest part of the U.S. economy is beginning to moderate.”

The article goes on to state, “This year, the U.S. economy unexpectedly shrank in the first three months. On Wednesday, the BEA said the contraction was even deeper than expected. It revised down its gross domestic product reading by 0.1 percent to a 1.6 percent annualized rate after factoring in slower-than-expected growth in consumer spending in the first quarter.” In other words demand “dried up.”

The signs are there, and all the American bicycle business had to do was recognize them and discuss them. One last point from the June 30 article, “Consumer sentiment fell to its lowest level ever in June, according to a closely watched survey by the University of Michigan, with nearly half of Americans saying inflation has eroded their living standards.”

The reality, the suddenness and severity of the Saris Cycling Group financial situation, inventory vs. sales and the resulting sale of the company in the next 60 days is, unfortunately we believe, just the beginning.

Rather than go forward into the fog of total uncertainty, we advise bike shops, brands and suppliers to work with the NBDA and sponsor, purchase and use the consumer research that the dealer association has and will be conducting with Sports Market Surveys. There is no future in continuing to be research averse.

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