I have been struggling to understand why American consumers’ demand for new bicycles (as defined by CPSC) has ebbed since the end of 2022. After digging into the available data and information emerging about the economy, the American consumer, and the dynamic changes brought about by the pandemic, I offer the following working theories for your consideration:
- Future bicycle purchases were pulled into the pandemic years. Four percent more Americans seven years of age and older rode six days or more in 2022 over 2021. This can be interpreted as more people purchased during the pandemic, and now they are riding what they purchased. Replacement is pushed out to the future.
- New bicycle riders who had never ridden before purchased during the pandemic. Some new riders continued to ride, but since they purchased recently, replacement is pushed out to the future.
- As retail prices increased during the pandemic, fewer consumers were interested, as inflation dominated spending that shifted from goods to services, and within services during the last half of 2022 and first half of 2023. Note: While sales and discounted prices are attractive, the retail price points from which they are calculated have stayed elevated because of significantly higher landed costs during the pandemic. They have not yet been lowered to reflect lower replacement costs because of inventory.
- The explosion of discounts is attracting some hardcore enthusiasts and some consumers with an interest in purchasing a new bicycle. They are generating some foot traffic and purchases, but are not attractive to the middle and low end of the new bicycle market that doesn’t have much disposable income. Overall, the sales and discounts have not quickly nor significantly reduced the large inventory overhang that amassed through 2021-2022.
- The Circular Economy is now acceptable to a greater portion of American consumers, making used bicycles of all types and prices attractive. Used bicycles have increased in purchases by consumers. The bicycle industry can only estimate the number of used bicycles that are sold annually.
- During the pandemic, a whole new category in the form of electric bicycles captured the imaginations of consumers. E-bikes had been available for over 20 years, but during the pandemic new subcategories were introduced, including low step-through, 20, 24 and 26-inch fat tire, folding, off-road with mid-drive and hub motors. The bicycle industry can only estimate the number of these new categories of electric bicycles that are imported into the U.S., with many being sold directly to consumers, and others being delivered directly to consumers via the de minimis exclusion.
Note: I am using the definition of “bicycle” found in 16 CFR Part 1512 that includes pedal-only bicycles and bicycles equipped with a maximum 750-watt electric motor capable of reaching a speed of 20 m.p.h. with or without a throttle. So called Class 3 and out-of-class e-bikes are also shoe-horned in this definition.
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