4/07/23 Can we call monetary policy a “blunt tool” anymore … Marketplace. The Fed raised interest rates from basically zero to about 5 percent in the past year, but the unemployment rate is still historically low. Can we call monetary policy a “blunt tool” anymore? Maybe it’s just dull and rusty. Fitch Rating economist Olu Sonola told Marketplace he started wondering whether COVID has messed with macroeconomic theory the same way it’s messed with downtown office buildings. “What the pandemic has done is introduce a number of variables and elements into the equation that the people who wrote macroeconomic textbooks just didn’t think about,” he said. Most econ textbooks don’t have chapters on revenge travel, boomer retirements, or long COVID, which have kept labor demand higher and supply scarcer. Anil Kashyap, a professor at the University of Chicago’s business school said part of this is just delayed pain. Multiple companies are still paying workers with the help of low-interest loans they took out before rates spiked. “There’s a bunch of businesses that have loans and bonds that were about zero that are going to need to refinance,” Kashyap told Marketplace, and “when they do, they’re going to face a much higher cost of capital.” HPS Analysis: Peter Drucker warned: “The greatest danger in times of turbulence is not the turbulence – it is to act with yesterday’s logic.” Olu Sonola may be among the economists who have figured out that the pandemic did introduce a number of variables that not only make it impossible to go back to the way it was, but have made the tools employed by the Fed to tame inflation less effective. Add to this the bicycle businesses that took low-interest loans to finance high-cost inventory, paid outrageous transportation costs, and acquired premium warehouse space. Many of these companies are now facing a pile of excess inventory that is going to have to be refinanced at much higher interest costs, if the businesses can even find the required refinancing. This all leads to the potential for long term turbulence.

4/08/23 The very busy ports of Los Angeles and Long Beach are effectively shut down LAist. The ports of Los Angeles and Long Beach were effectively shut down April 7 because of worker shortages. The lack of activity at the ports – typically some of the busiest in the world – comes as contract negotiations have been underway for months. Shipping operators say the shutdown is because of a work stoppage by union dockworkers, but the union disputes that claim. The Pacific Maritime Association (PMA) put out a statement April 7 saying that the ports had been effectively shut down after the International Longshore and Warehouse, Local 13 (ILWA) union took a “concerted action to withhold labor” at the ports the nights of April 6 and the morning of April 7, leading to widespread worker shortages. According to the PMA, the lack of workers the night of April 6 meant “a majority of the jobs for last night’s shift went unfilled, including all jobs for cargo-handling equipment operators needed to load and unload cargo.” The ILWA, which represents 22,000 members at 29 West Coast ports, says its workers are not withholding labor. In a statement, union officials said that on the night of April 7 thousands of dockworkers attended a monthly union meeting, which they said in a statement is a “contractual right.” The said workers took April 8 off to observe religious holidays. HPS Analysis: During the last quarter of 2022, the shut-down of the two busiest ports on the West Coast would have been national news with headlines in every major media source in the country and statements from the White House. The fact that this was not headline news, and went almost unnoticed, is testament to how much the economic situation has changed in the first quarter of 2023. Overall consumer demand has ebbed, and as a result imports have subsided, and the pressure on the supply chain has deflated to the point that the shut-down of the two busiest ports for imports into the U.S. didn’t raise an eyebrow anywhere, including the bicycle business. The dockworkers contract expired in July 2022, and negotiations have obviously gotten a bit testy, but the greatly-reduced pressure on the supply chain will lead to a new contract by this summer.

4/10/23 The fastest-growing industrial production line in the U.S. right now may be the building of the factories themselves The Wall Street Journal Logistics Report; Assembling Factories. Construction spending related to manufacturing reached a record $108 billion in 2022, with new factories rising in urban cores and rural fields, desert flats and surf towns. The Wall Street Journal reports that much of the growth is coming in high-tech fields like semiconductors and electric-vehicle batteries that are backed by government incentives. But it is also being driven by companies that once relied exclusively on lower-cost countries for manufacturing and now are responding to shifting supply-chain imperatives. Such companies and brands are found in apparel and the bicycle business. Arnold Kamler, CEO of bicycle company Kent International, which started assembling bicycles in South Carolina in 2014 from Chinese-made parts, is quoted as saying, “We are hoping some of our competitors will join us in producing bikes here, which would encourage more companies to make the component parts here.” HPS Analysis: Reshoring, as HPS has opined in this newsletter, is difficult at best. Kent International is a supplier to Walmart, and responded to the largest retailer of bicycles initiative to support American made products by working with the state of South Carolina to open Bicycle Corporation of America (BCA) in 2014 as the largest bicycle assembly operation in the U.S. It has been a struggle, including the imposition of punitive Section 301 tariffs on imported componentry from China. While Kent still imports the majority of the complete bicycles it sells to Walmart from China, it has sustained BCA, and is working hard at encouraging Japanese, Taiwanese and Chinese component manufacturers to commit to manufacturing facilities in the U.S. that will be the foundation of reshoring bicycle manufacturing. The quicker the whole of the American bicycle business joins together to make this happen, the quicker reshoring of bicycle manufacturing will become a reality.  

4/10/23 Banks are spooked and getting stingy about loans – and small businesses are suffering … NPR Economy. Weeks after the collapse of two big banks, small business owners are feeling the pinch. Bank lending has dropped sharply since the failures of Silicon Valley and Signature Banks. That not only hits businesses, it also threatens a further slowdown in economic growth while raising the risk of recession. Credit, after all, is the grease that helps keep the wheels of the economy spinning. When credit gets harder to come by, business starts to squeak. Even before the two banks failed last month, it was already more costly to borrow money as a result of the Federal Reserve’s aggressive interest rate hikes. Other lenders are now getting even stingier, spooked by the bank runs that brought down Silicon Valley Bank and Signature Bank. The Federal Reserve Bank of Dallas surveyed 71 banks late last month, and found a significant drop in lending. Weekly loan data gathered by the Federal Reserve also shows a sharp pullback in credit. HPS Analysis: The SBA defines a “small” retail business as one doing $7.5 million in annual gross revenue or less. This means the vast majority of bike shops in the U.S. are “small” businesses, and if they rely on a line of credit from their local bank, they need to communicate their requirements going forward and determine (1) if they will be considered eligible for a loan and/or line of credit and, (2) if their bank will have the liquidity to offer loans to “small” businesses and, (3) if they will be able to afford the interest rates that their bank is going to charge. It is a balancing act, and bike shops and “small” suppliers will need to watch their financials carefully to maintain revenue coming in balanced against the cost of doing business, and maintaining a positive cash flow as consumer demand and economic conditions evolve between now and the rest of this year.  

4/11/23 Pon.Bike turnover doubles to €2.4 billion in 2022 Bike Europe. According to Bike Europe, 2022 was a historic year for Pon Holdings with sales exceeding €10 billion (euros) for the first time in the company’s history. The bicycle cluster, Pon.Bike, contributed significantly following the acquisition of Dorel Sports and the ever-increasing demand for e-bikes. CEO Janus Smalbraak also states that order books are currently full. The article goes on to state that the revenue of the bicycle division almost doubled from €1.3 billion in 2021 to €2.4 billion in 2022, due mainly to the acquisition of Dorel Sports, which was bought for US$810 million (€740 million) in early January 2022,  about 14 months ago. Pon is now considered the largest bicycle manufacturer in the world. Pon.Bike has given the starting signal for the construction of a state-of-the-art bicycle factory in Lithuania, where around 500,000 e-bikes and other bicycles will be produced each year. In addition to the manufacture and sale of bicycles, Pon.Bike is also active in parts and accessories, and new services such as leasing and subscriptions. Smalbraak is quoted as saying, “The hefty investments in cycling infrastructure, particularly in Europe and the U.S., will continue to give the sale of e-bikes, in particular, extra support. The economy faces headwinds in 2023, especially in Europe and the U.S. Economic slowdown will also affect us, as well as the still faltering delivery of parts here and there. At the same time, we have started the year with full order books for our automotive, bike and equipment and power divisions.” HPS Analysis: Pon is a privately held company, and this kind of detailed financial information is not normally available to the public. Smalbraak has been interviewed in Australia and Europe, and has been very forthcoming in discussing their Pon.Bike subsidiary. Bike Europe declaring that Pon.Bike is, by their calculations, “… the largest bicycle manufacturer in the world” is significant. Cannondale is the Pon.Bike brand competing as a multinational with Trek, Specialized and Giant. While Trek owns two bicycle manufacturing plants in Europe, it is still Giant’s largest OEM customer, and is dependent on OEMs in Asia for most, if not all, of its branded bicycles and e-bikes sold in North America. Specialized is 49 percent owned by Merida, the second-largest OEM in Asia, and the source of a large percentage of Specialized brand products sold in North America. Giant Manufacturing Company has been considered the largest bicycle manufacturer in the world, and all of its brand name bicycles and e-bikes sold in North America are imported from Asia. The bottom line – currently none of the top four specialty bicycle brands, Trek, Specialized, Giant, or Cannondale, are manufactured or assembled in the U.S. However, when Pon acquired Dorel Sports, it also acquired a warehouse and assembly facility under construction in Savana, Georgia. That facility has since been completed by Pon.Bike, and is currently operating. Pon.Bike owns 17 bicycle and e-bike brands, and it is just getting started in the U.S. Pon.Bike may be able to convince Asian and perhaps European component manufacturers to come to the U.S., and with Kent International, may represent the financial investment in the U.S. market that will foster reshoring of bicycle assembly and manufacturing.

4/12/23 Uber is funding an e-bike trade-in program to curb battery fires CNN Business. Uber is funding a new program that aims to get electric bikes with dangerous non-certified lithium-ion batteries off New York City streets. The company said April 12 that it will soon allow the thousands of New York City delivery workers who use e-bikes the ability to trade-in their bikes for newer, safer models. The news follows a string of fires caused by lithium-ion batteries. Part of the issue is that not all lithium-ion batteries are created equal. UL-certified electric bikes and scooters from reputable retailers undergo extensive battery safety tests. But other online marketplaces, which some delivery workers may have turned to for more affordable options in the absence of company-provided options or subsidies, often make it hard to tell the origin of these products, and the quality of their batteries. To get more UL-certified e-bikes on roads, Uber is now partnering with e-bike company Zoomo to offer credit to delivery workers willing to swap their existing e-bikes for ones with higher-quality batteries. It will also offer rent-to-own pricing models and priority access to repairs and services. Uber is also piloting a trade-in program with The Equitable Commute Project, a non-profit, to provide a discounted UL-certified e-bike in exchange for a noncertified e-bike. HPS Analysis: Uber is funding a trade-in program that can actually work to prevent lithium-ion battery fires. Much of what the New York City Council has passed into laws that take effect on or about September 16, 2023, are going to be difficult to enforce, and are forward-facing. They will do little or nothing to eliminate the noncomplying bad actors that are already in use, and that will be shipped into N.Y. City over the next five months, and pose the most risk. The Uber trade-in program will get these noncomplying bad actors off the streets and into a recycling program where they will no longer present a risk to public safety. The American bicycle business and its trade associations need to offer as much assistance to Uber as possible to make this program a success.

4/14/23 Industry groups react to Congressional scrutiny of de minimis Sourcing Journal. Industry trade groups are addressing concerns raised in a congressional letter to the Department of Homeland Security, which fingered companies like Shein and Temu for exploiting the de minimis “loophole” that allows smaller shipments from China to enter the country unchecked. Under Section 321 of the Tariff Act of 1930, as amended by Congress and signed into law by President Obama, overseas makers can send shipments valued under $800 to a shopper’s doorstep without having to report data on county-of-origin or manufacturer. It is estimated that 2 million direct-to-consumer (DTC) shipments a day, or 730 million per year, are entering the U.S. annually under the de minimis exception with no customs inspection, and paying no duty or tax. The letter underscores the rising alarm on Capitol Hill about the issue, focusing primarily on the issues of forced labor coming out of Xinjiang province in China. In addition to Shein and Temu, Amazon and the Footwear Distribution and Retailers of America (FDRA) are supporting the de minimis exception, and cautioning Congress from harming American shoe brands and consumers by doing away with de minimis or reducing the allowable value. HPS Analysis: The problem for the American bicycle business is the number of low-cost dodgy e-bikes, and more importantly replacement lithium-ion batteries and chargers, that are coming into the U.S. DTC under the de minimis exception. The lobby for continuing the de minimis exception with the current $800 value is well funded by some very large companies. PeopleForBikes (PFB) has come up with an excellent suggestion to simply add e-bikes, lithium-ion batteries and chargers to the list of items exempt from de minimis, allowing the shoe retailers and clothing brands to continue DTC sales. HPS and others believe the low-cost dodgy e-bikes and replacement lithium-ion batteries and chargers entering the U.S. DTC under the de minimis exception are the primary cause of the fires and deaths in New York City and elsewhere in the U.S,. and urge the bicycle business to get behind the PFB initiative. 

4/18/23 U.S., allies, weigh how to reduce economic ties with China Wall Street Journal Economy. The U.S. and its allies are grappling with how to pare their economic relationships with China, attempting to limit ties in certain sectors they view as strategic, while preserving broader trade and investment flows with the world’s second-largest economy. The Group of Seven (G-7) advanced democracies, consisting of the U.S., Canada, France, Germany, Italy, the U.K. and Japan are, growing concerned that China, a dominant supplier of many goods and materials, could cut off key exports in the event of a conflict or another pandemic, as Russia did with natural-gas exports during the war with Ukraine. “So the lesson from that for all of us has been: Let’s do that hard work now on the front end,” said Wally Adeyemo, deputy Treasury secretary. The International Monetary Fund (IMF) released a report the week of April 10 echoing its previous warnings against carving the global economy into competing geopolitical blocs by the U.S. and China. Such a split would lower global trade and growth, the multilateral financial organization warned. New laws enacted last year offer major subsidies to lure key clean-energy and semiconductor technology companies into the U.S. The administration has restricted the export of advanced semiconductors and related equipment into China, and is preparing new curbs on investment in the country. HPS Analysis: The G-7 is way above the reach of the bicycle business, currently import dependent, with the majority of imports originating in China. The twist is the majority of the Chinese bicycle/e-bike export manufacturing to the U.S. is still owned or controlled by the Taiwanese. It is now well known that China considers Taiwan, an independent democratic island, a part of mainland China, and has threatened invasion to get it back. With this said, high-end bicycle products consumed in the U.S. originate in Taiwan, and mid- to low-priced products originate in Chinese manufacturing facilities. An example is Giant Manufacturing Co., a Taiwanese public company headquartered in Taiwan, has seven manufacturing facilities in China. Bicycles and related components and accessories certainly aren’t semiconductors or microchips, but they are an important non-tech industry to Taiwan. The G-7 focus on China and the growing anti-China political actions on the part of the U.S. make it vitally important for the whole of the American bicycle business, including all channels of trade, to join together in supporting a near-shoring and re-shoring initiative. 

4/18/23 This is what Americans really think about climate change … Electrek. Pew Research Center surveyed nearly 11,000 American adults in March and the results revealed how Americans view climate change. Nearly 7 in 10 Americans (69 percent) want the U.S. to take steps to reach net zero by 2050, thus adhering to the Paris Agreement. The same percentage (69 percent) also wants the U.S. to prioritize developing renewable energy over fossil fuels. Two-thirds of Americans said that big businesses and corporations aren’t doing enough to reduce the effects of climate change. Of Americans, 58 percent feel their state elected officials aren’t doing enough, and 55 percent believe that the energy industry isn’t doing enough to address climate change. Around 50 percent of Americans think they’re personally doing enough to help reduce the effects of climate change. Americans’ political affiliation, and whether they acknowledge climate change, is a serious problem that affects how they perceive climate impacts at the local level. With this said, Pew found that the majority of Americans are wary of moving completely to renewable energy. Around 3 in 10 (31 percent) want the U.S. to completely phase out fossil fuels. Adults between the ages of 18 to 29 are more open to the idea of phasing out fossil fuels altogether. HPS Analysis: Tell me if you think HPS is wrong in thinking that climate change and weather are two of the 10 most important topics for, and influencers of, the bicycle business going forward. I have not yet witnessed the American bicycle business declare its 100 percent support for the Paris Agreement, and embrace all aspects of sustainability. But as Gen Z gains more influence and purchasing power across the economy, the bicycle business, like all businesses, will have no choice if it is going to remain relevant to consumers. The current economic situation affords the bicycle business a huge opportunity to break-away and get out front on environmental issues and initiatives.

4/19/23 Utah is in a state of emergency as melting snow is likely to cause months of flooding … NPR Weather. A state of emergency was issued in Utah April 18 by Governor Spencer Cox after record levels of snow have started to melt, causing flooding. The melting could continue for months and cause avalanches, landslides, mudslides and rockslides, the governor’s order said. The Utah Division of Emergency Management has already deployed more than 1 million sandbags throughout the state to prepare for the flooding. HPS Analysis: Utah is a great place for bicycling, and months of flooding has the potential to keep too many bicycles in storage. The bicycle business can’t do anything about the snow-melt induced events, but it can tap into the National Weather Service ( and provide up-to-date advisories to bicycle retailers and riders in and around the state of Utah to avoid hazards, and direct them to safe routes and trails to ride. The National Weather Service Climate Prediction Center Long Range Forecasts are posted regularly, and provide 8- to 14-day precipitation and temperature outlooks, as well as monthly and seasonal precipitation and temperature outlooks. The National Weather Service Climate Prediction Center is a resource bike shops can take real-time advantage of to provide a service to customers’ growing need to know what the weather conditions are for bicycle riding in their communities.

 4/19/23 U.S. economy stalls as credit narrows, Fed’s Beige Book says … Bloomberg Economics. The U.S. economy stalled in recent weeks, with hiring and inflation slowing, and access to credit narrowing, the Federal Reserve said in its Beige Book survey of regional business contacts. “Overall economic activity was little changed in recent weeks,” the Fed said in the report published two weeks before a meeting of the policy setting Federal Open Market Committee. “Several districts noted that banks tightened lending standards amid increased uncertainty and concerns about liquidity.” Overall price levels rose moderately during this reporting period, though the rate of price increases appeared to be slowing,” the Beige Book said. Consumer spending, which accounts for two-thirds of the US economy, “was generally seen as flat to down slightly,” the Fed said. Wages remained elevated, but showed some moderation, and the labor market showed signs of loosening up, according to the report.  HPS Analysis: This is the first Beige Book since the banking crisis precipitated by the SVB collapse that showed lending volumes and loan demand generally down, and lending standards tightening in several districts. Keep in mind that the Beige Book is generally reporting what the Fed wants to achieve with its interest rate increases, with the stated goal to put the brakes on consumer spending, and slow down business expansion, neither of which is helpful to bike shops or the specialty bicycle channel of trade.

4/20/23 The question isn’t whether to shop, it’s whereBloomberg. After a brief burst of in-store activity, there are signs consumers are returning to their online spending ways. Are retailers ready for the next wave of e-commerce? The long-running tussle over how people shop, online or in-store, has a new wrinkle. Coming out of the worst of the pandemic, stores got a new lease on life. Shoppers freed of mask mandates bumped up traffic, and retail landlords experienced the kind of swelling demand they had all but forgotten. The respite has been brief, with signs that people are returning to their old online ways. And really, that reversion seems inevitable, given how accustomed we’ve grown to the ease of online shopping and free returns, a process that the pandemic only turbocharged. Now, as the dust settles from the whiplash of COVID spending habits, the real test of strength for retail’s online businesses is beginning. Data last week showed back-to-back declines for retail sales at primarily brick-and-mortar stores, while spending grew online. Year-on-year online prices have been falling for seven consecutive months, drawing shoppers. The question this raises is whether traditional retailers have successfully absorbed the lessons of the pandemic, and whether the billions of dollars pumped into e-commerce technology and supply chains will be enough for them to hold on, or even flourish, in the next era of online shopping. There’s little doubt that stores will always have a place in our modern era of retail, though their ubiquity and utility are changing. Stores have more success now as a “vibe” that embodies the company’s brand, and as a place to show off new merchandise, and quickly exchange or return products. As retail companies struggle to find the right online-offline balance, our shopping-scape will continue to morph even as our passion and need for shopping remains intact. HPS Analysis: What this article is confirming is what HPS has been advising bike shops since pre-pandemic – become omnichannel, and develop a commerce-enabled website with supporting policies and procedures. The NBDA has a group of associate members that provide all the online, web, and omnichannel development services required, and they will help shops with a budget to make it happen. The April 14 article in Bicycle Retailer and Industry News (BRAIN) announcing that “Erik’s Bike Shop now selling Specialized bikes online” signals this trend, along with the graph at the bottom-left of the interview on page 16 of the May 2023 print issue of BRAIN. The article is titled “Better decisions with more data sources,” by Ray Keener. The graph at the bottom of the article is titled, “Pre-Pandemic & During & Post-Pandemic.” In referring to this graph, Patrick Hogan, PeopleForBikes senior research manager, told Keener “Potential customers didn’t think their local bike shop would have bikes in stock, so they planned to buy a bike from another source. You can see by the graph that Amazon was the big winner.”

4/20/23 Quality Bicycle Products releases 2022 Impact Report …BRAIN. Quality Bicycle Products is releasing its first ever annual Impact Report. In it, readers can learn about the company’s B Corp score, DEI (diversity, equity, and inclusion) initiatives, sustainability practices, community-building efforts, and advocacy work. The report features digestible infographics, the voices and action of changemakers within the company, industry and communities, and goals for the journey ahead. “We hope that, as you scroll through this document, you find inspiration and gain a better understanding of what we’re all about at Q. This report highlights where our values and priorities are as a company, and showcases all of our incentives in one place,” said president Rich Tauer. Click here to access the whole QBP Impact Report. HPS Analysis: Qualifying to become a B Corp is a big deal, and HPS will strive to follow Q’s example as it grows, but we would like to know why more companies the relative size of Q have not applied to be certified as B Corps. Q is now the only business of any size in the American bicycle business that is a B Corp, and we respectfully submit that while difficult,  it is the responsibility of everyone in the bicycle business to seek and attain what Q has. We urge everyone in the global bicycle business to read the QBP Impact Report, as we stand on the edge of a turbulent and challenging time. The bicycle business talks about diversity, equity and inclusion, while a B Corp takes action and publishes an annual B Corp score, including its DEI initiatives.

4/21/23 A corporate credit crunch is just getting started … Bloomberg. There are worrisome signs of corporate distress in the wake of the banking crisis, raising the specter that a pullback in lending will drag down the economy. A month after the collapse of Silicon Valley Bank, the U.S. appears to have avoided the worst-case scenario, a rapidly-escalating financial crisis, and markets have responded. And yet, just below the surface, signs are mounting that credit is drying up in pockets of the economy at a worrisome rate. Small businesses say it hasn’t been this difficult to borrow in a decade. The amount of corporate debt trading at distressed levels has surged about 300 percent over the past year, effectively locking a growing swath of businesses out of financial markets. Bond and loan defaults have ticked up, and the Federal Reserve says banks have tightened lending standards. Corporate bankruptcies are on the rise, too, particularly in the construction and retail industries. HPS Analysis: There has been a dark shadow growing in my mind ever since it became obvious that record amounts of inventory have been backing up in the American bicycle business channels of trade, as retail sales have declined to the lowest level since the trade association started record keeping in 2016. I have repeated Bill Austin’s mantra that “inventory is evil!” as often as I can. This is true in part because if it isn’t turned into cash, it eventually has to be re-financed, and that becomes increasingly difficult, and weighs negatively on the financial statements of large and small business when consumer demand keeps ebbing. The U.S. economy has reached a point where credit lines to small businesses are becoming non-existent for a combination of reasons, while consumers are turning back to online retailers. The NBDA has formed an alliance with the League of American Bicyclists at just the right time for combining resources to reach out to both bicycle-ebike riders and non-riders to bring the JOY of cycling back to American communities, and in the process turn inventory into sales and participation opportunities.  

4/24/23 NY Sens. Schumer and Gillibrand advocate for lithium-ion battery federal legislation … BRAIN. New York Senators Chuck Schumer and Kristen Gillibrand said during a news conference April 23 that they support federal legislation to regulate lithium-ion batery safety standards in the wake of increasing fires caused by the devices. N.Y. Fire Commissioner Laura Kavanagh accompanied Schumer and Gillibrand at the news conference, as did the family of a Queens 8-year-old girl who was killed last fall in a fire started by a lithium-ion battery. ”Without federal legislation, and so many of these batteries come from across state lines, or made overseas, or made in China, we will not have a complete and strong solution,” Schumer said. HPS Analysis: A house bill had-been introduced by Representative Ritchie Torres (D-N.Y.) when this news conference took place, and Senators Schumer and Gillibrand subsequently introduced a companion bill in the Senate. Commissioner Kavanagh said during the press conference that New York City has experienced 63 fires and five deaths caused by lithium-ion batteries this year. HPS is of the opinion that Senator Schumer is correct, in that it is going to take federal legislation directing the Consumer Product Safety Commission to remove e-bikes that do not comply with UL 2849, and lithium-ion batteries that do not comply with UL 2271, from exposure to the public. The legislation also needs to exempt e-bikes and lithium-ion batteries from the de minimis exception. Uber also has the right idea, and while waiting for congress to pass legislation, the bicycle business needs to join the effort to subsidise a complete e-bike trade-in program, and a lithium-ion battery replacement program that includes chargers, matched to compatible electric propulsion systems and recycling.

4/25/23 Shimano bike-related sales fall 17 percent; operating income falls 32 percent in Q1 … BRAIN. Company-wide, Shimano is forecasting that net income will be 46 percent below 2022’s results this year. Shimano’s first-quarter net income in its bike division fell 16.8 percent from last year, while its operating income in the segment was down 31.8 percent. After issuing a negative forecast for the full-year performance at the end of its fiscal year, Shimano again revised its forecast for ordinary income and net income for the first half of this year, and its forecast net sales for the full fiscal year. HPS Analysis: There is more, and it boils down to the largest bicycle component manufacturer to the world-wide bicycle business is forecasting a down year. HPS thinks the real story is told in the chart that accompanied this article in BRAIN more so than the press release or the bits that attempt to put a happy face on this situation. Take a good look at this chart that Shimano attached to the press release:

From the left, the chart starts at the first quarter of 2018, two years before the pandemic, and it shows both Shimano revenue (in millions of yen) and operating income (in millions of yen). You can see the dip when COVID-19 hit in Q1 2020, the growth in both revenue and operating income to Q4 2022, and the drop off and decline in Q1 2023. The percentages in the press release and the BRAIN article are all from Q1 2022, and not the peak revenue and operating income in Q2, Q3 and Q4 2022. Shimano is following accepted accounting practices and norms, but this chart leaves little doubt that there was a lot of money made during the pandemic. It is also interesting to note that at the end of Q1 2023, Shimano still had lead times out into the end of 2023 and early 2024, and in April 2023 lead times on most components were within 90 days. In these challenging times, a great deal more transparency would be very helpful to the overall American bicycle business, including bike shops.

4/26/23 Rad Power Bikes lays off employees for the 4th time in the past year … GeekWire. The Seattle-based e-bike company confirmed the latest round of cuts on April 26. It did not provide an updated head-count, or information on what positions are being affected. Rad Power Bikes slashed 100 positions in April 2021, then made another 63 cuts in July, and had its third round of layoffs in December. The company now has around 400 employees, according to Linkedin. “We hoped the changes we implemented last year would put Rad in a better position to withstand the current economic downturn,” the company said in a statement to GeekWire on April 26. ”However, given current market realities, we are forced to further reduce the size of our team. This unfortunate measure is necessary for Rad to correct course and become a sustainable, enduring business.” Rad launched in 2007 and began selling e-bikes directly to consumers through online sales in 2015. It grew into the leading e-bike seller in North America and raised $304 million in 2021, part of two separate cash infusions to fuel its capital-intensive business. Rad was valued at $1.65 billion in October 2021, according to PitchBook, making it one of a handful of “unicorn” startups in the Seattle region. HPS Analysis: Rad Power Bikes has been in business for 16 years, and in addition to its DTC business it operates seven retail/service centers around the country. Its rapid growth during the pandemic has been impressive to watch, and its being valued at $1.65 billion in October 2021 put it up with Giant, Specialized and Trek. When PeopleForBikes dropped the NBDA from its board of directors in February 2021, the seat was offered to Rad Power Bikes. The list of investors is also impressive, and includes Fidelity Management & Research Company, Counterpoint Global (Morgan Stanley), Vulcan Capital, Durable Capital Partners LP, The Rise Fund (TPG’s multi-sector global impact investing strategy), and funds and accounts advised by T. Rowe Price Associates. In addition to layoffs, Rad has faced multiple challenges recently, including a wrongful death lawsuit, a lawsuit related to property damage, and the recall of nearly 30,000 units due to a safety issue. Along with Aventon, Super73 and Juiced, Rad Power Bikes has led the New Wave of DTC retailers that surged, marketing and selling moped/motorcycle-inspired e-bikes in the U.S. market from mid-2020 through the present. The American bicycle business is experiencing a shake-out, and some of the New Wave DTC brands were bound to experience difficulty. We will have to see how Rad Power Bikes management guides the company in the difficult months ahead.

4/26/23 Record number of foreign brands at Sea Otter Classic … Bike Europe. With the U.S. lacking a well-attended Eurobike-like event, Sea Otter is now a must-attend event of the North American cycling season for brands, industry leaders, top retailers and the media. That the show has an international draw was confirmed by CEO Frank Yohanan, “This year we had 125 brands from foreign markets in attendance, a record.” This year, the vast majority of the top brands sold in North America were in attendance with more than 1,000 brands on display. This is an increase from approximately 900 at the previous edition in 2022. There were a few notable absentees, including Trek and the Pon.Bike family of brands. There was also a record attendance of more than 80,000 visitors, including a strong influx of European and Asian C-level leaders who can now travel freely, and wanted to check in with North American customers following the global pandemic. The industry-level discussions centered around two prime topics in and around the tents and displays at Sea Otte, the reflection of first quarter results on 2023 figures, and the potential e-bike sales this year. It seems that most companies are planning for lower sales versus 2022, which came in at a healthy $7.4 billion (€6.8 billion). Most industry leaders are hoping for a modest 10 percent increase in revenues compared to the pre-COVID runup results in 2019, which had sales of $5.7 billion. The retailers are in most cases overstuffed with inventory that came in during the second half of 2022, and most of this bike inventory is still sitting at retailers’ showrooms waiting to move in Q2, when sales are strongest for most of the country. This issue is compounded by excess inventory sitting at supplier warehouses that will likely take most of the year to ship to retailers, and ultimately sell to consumers. While U.S. inflation has slowed somewhat to a more modest five percent clip, the higher costs of company borrowing in the eight to nine percent range, combined with excess inventories, will likely result in more bikes being sold at a discount, which will mean retailer and brand margins will likely compress in 2023, hurting earnings for most brands. The second topic of discussion was how much further would e-bike sales grow in 2023. In 2022, e-bikes accounted for 19 percent of the total market in revenues, or approximately $1.4 billion in value. This represents only 6 percent of unit sales. It feels like everyone is optimistic that e-bike sales still have room to grow to somewhere between 22-25 percent of forecasted 2023 dollars. HPS Analysis: Mix 80,000 cycling enthusiasts with 1,000 brand sellers, including 125 brands from foreign markets, interpreted through a European filter, and you get an overly-optimistic reading of the U.S. bicycle market at the beginning of the second quarter of the year. The Bike Europe reporter has good data that seems to be accurately presented, but the financial impact of the bank crisis on the small businesses that make up the majority of the American bicycle business is, in our opinion, under-reported or misunderstood. A 10 percent increase in American bicycle business revenue in 2023 is beyond modest. It is, in our view, an impossibility. We see the probability of growth in the e-bike segment, with some gain in 2023, but 22-25 percent of 2023 dollars is a bridge too far.  

4/27/23 Lyft says it will cut more than 1,000 people in new round of layoffs … Wall Street Journal Business. It’s been a tough few months for Lyft. The budget shortfall of $2 million that led Minneapolis to suspend its bike-share program, which was managed by Lyft, has transit advocates worried more cities could follow. In 2018, Lyft acquired Motivate, the largest bike-share operator in the U.S. When it took over the company, about 80 percent of all bike-share trips were in cities where Motivate was in charge. The latest cuts impact 26 percent of the company’s more than 4,000 employees. Lyft said it is also scaling back on hiring, and eliminating over 250 open roles. In a securities filing, the company said it would incur $41 million to $47 million in severance and other related costs in the quarter that ends June 30. While Motivate employees have not been specifically referenced so far, there is concern in the bicycle ride-share community that Motivate may be downsized or withdrawn from certain markets. HPS Analysis: Between 2010 and 2021, people in the U.S. have taken 500 million trips in total on shared micromobility, station-based bikes, dockless bikes, and electric scooters. Some bike shops don’t like bicycle ride share, while others support it in their communities. Our common objective, between all channels of trade and all organizations is simple: get more Americans on bicycles. Bicycle ride-share programs accomplish this objective in large measure. While Lyft and Motivate are for-profit corporate entities, their demise and leaving bicycle ride-share programs across the country abandoned, is a large step backwards. The bicycle business can reach out to the North American Bicycle and Scooter Ride Share Association (NABSA) to determine what can be done as a community of interest to provide bicycle ride-share services to millions of citizens living and working in cities across America.     

4/27/23 ‘Mobility’ market remains a good long-term investment, financial advisor says … BRAIN.John Bastian is bullish on the long-term prospects for the global bicycle industry. But he’s cautious on its short-term prospects, as world events roil the marketplace. Speaking at the recently concluded Sea Otter Classic Summit, Bastian, director of Baird’s outdoor products sector, used a slide to offer some perspective on the financial scope of the industry, a $70 billion global sector. And, he noted, cycling is the second-highest participation activity in the U.S., with only hiking ranking higher. Baird, however, said the current environment for mergers and acquisitions is suffering from the ongoing war in Ukraine, persistent inflation, fears of a recession, higher interest rates, and turmoil in the small to mid-size banking market best highlighted by the sudden collapse of Silicon Valley Bank. In short, he said, “investors are sitting on a lot of dollars.” Despite financial headwinds blowing across all markets, Baird is “bullish” long-term on investments in the “mobility” market, a phrase seen often in Europe but less so in the U.S., Bastian said. He noted in a series of slides that the cycling and outdoor markets tend to be “recession resilient,” participation rates appear to be higher than pre-COVID numbers, and trends in the electrification of wheeled products is accelerating. “People went to spend more time on their hobbies and that’s driving the outdoor segment,” he said. Bastian cited demographics as an important factor, and referenced the e-bike trends in Europe and Asia compared to the U.S. He pointed out that non-cyclists make up a significant portion of new entrants into the e-bike sector. “To be clear, we expect strategic and existing investors to continue making investments,” Baird research finds. And e-bike brand winners are attracting private equity investment with the top 10 brands controlling 70 percent of the U.S. market. HPS Analysis: John Bastian and Baird’s presentation about the mobility market is a breath of fresh air, and I am sorry I could not attend the Sea Otter Summit to listen to him in person. From the BRAIN article, I surmise he presented sound research and logical analysis of the mobility market both short-term and long-term, with a realistic view of what the American mobility sector faces the rest of 2023.

5/1/23 Regulators seized First Republic Bank and sold it to JPMorgan Chase, the latest attempt to end the U.S. banking crisis that began in March …The New York Times. First Republic failed despite receiving a $30 billion lifeline from 11 of the country’s largest banks. It will go down in history as the second largest U.S. bank by assets to collapse. HPS Analysis: It isn’t over ‘till it’s over. We will have more analysis for you in The Micromobility Reporter June issue.

Contact Jay Townley:


The NBDA News Hour focuses on the news and articles contained within The Micromobility Reporter, getting a more in-depth view from a first-hand seat with the experts on the Human Powered Solutions team. This week’s topics include the major trends for early 2023 featuring 33 top items to watch, bicycle industry in a state of continuous oversupply, e-bike safety bills passed in New York, and consumer spending habits.


Rick Vosper’s Op Ed in the March 13 online issue of BRAIN shined a bright light on the fact that the American bike shop channel of trade has too much bicycle inventory because, “year after year, we keep ordering too many bikes,” and then scramble to put them on clearance. “And this insanity has been business as usual for our quirky little industry ever since the end of the Great Recession in 2009,” Rick wrote.

I believe he peeled back an inconvenient truth about the bike shop channel, and the mainstream top-tier brands fighting over bike shop floor space through restrictive and one-sided authorized dealer agreements, until the Covid-19 pandemic drove seismic shifts in consumer buying habits and demand.

From 2009 until 2020, the mainstream top-tier bicycle brands were aggressive in their efforts to “lock down floor space of key dealers in each market, thereby denying their competition access to those dealers” and their floor space.

Rick is careful to acknowledge that the tactic of restricting competitors’ access to floor space, and having too much inventory that had to be put on clearance year-after-year, may not have been a purposeful strategy, but “the net effect” was the same.

“In military parlance, a scorched-earth policy is a strategy that aims to destroy anything that might be useful to the enemy,” he wrote. For seven years, from 2009 until 2015, the mainstream top-tier bicycle brands slugged it out over bike shop floor space, and lashed out at any bicycle brand that attempted to get a piece of “their” floor space.

In the fall of 2015, Trek announced a Direct to Consumer (DTC) program as a marketing tactic that we assume was intended to change the game. In the five years between 2015 and 2019, Trek was alone among the top-tier bicycle brands in facing off in the new DTC market segment with Canyon, the European DTC brand that had entered the U.S. market.

Just over four years ago, in March 2020, a black-swan event, Covid-19, locked down the U.S. market. By the end of the second quarter, the global pandemic triggered increased consumer demand for goods, served to shift buying habits, and drove a surge in demand for bicycles that included new DTC bicycle and e-bike brands.

The mainstream top-tier brands found themselves in a different and more digital competitive environment. Cannondale announced a DTC program in 2020, and Specialized in the first quarter of 2022.

Bike shop gross margins on the sale of new bicycles struggled during this whole period, and in 2015 Trek began to aggressively purchase authorized dealers. 

Specialized began to acquire authorized dealers in 2021. Cannondale Sports Group was acquired by PON Holdings in 2021, followed shortly thereafter by PON acquiring Mike’s Bikes, a Northern California chain of bike shops that since has acquired an additional chain of bike shops. From this we conclude that Mike’s Bikes will be PON Holdings / Cannondale Sports Group’s entity for acquiring bike shops, although there is no announced policy or strategy, and we cannot yet define one.

It should be noted that Giant is definitely one of the top four mainstream bicycle brands in the U.S., but has not been buying its authorized dealers, and has maintained delivery of its DTC program through authorized dealers.

In his March 13 article, Rick also cites bike shop data from Georger Data Services (GDS). This Table has been constructed using the GDS data from the article.

The original purpose was to graphically show the number of bike shops in the U.S., and to also quantify the number of bike shops owned by mainstream top-tier bicycle brands, those that are independently-owned authorized dealers, and those that are independently-owned that are not authorized dealers of any of the four mainstream bicycle brands.

366, or 5.3 percent, of American bike shops are owned by one of the mainstream top-tier bicycle brands. Another 67.3 percent are independently-owned authorized dealers of one of the top-tier bicycle brands, bound by an authorized dealer agreement. This totals 72.6 percent.

1,876 American bike shops, or 27.4 percent, are independently-owned, and are not bound by authorized dealer agreements to any of the four top-tier brands, although they may have buy-sell or other types of dealer agreements with one or more of the estimated 400-plus bicycle and e-bike brands currently doing business in the U.S. market.

Before March of 2020, HPS believes that the majority of the 7,000 bike shops that GDS estimates existed in the U.S. when the pandemic was declared, were struggling to make a net-pretax profit on the sale of new bicycles.

As the 2021-2022 NBDA Cost Of Doing Business Study shows, the “typical” bike shop realized a net-pre-tax profit on the sale of new bicycles during the sales surge.

Keeping in mind that “typical” is the median, and the Cost Of Doing Business Study represents a mix of all the types of bike shops shown in the table. It is the net-pre-tax profit that bike shops will need to preserve in 2023 and going forward.

So far I have been referring to mainstream top-tier bicycle brands, including Trek, Specialized, Giant and Cannondale, as shown in the Bike Shop Count table. All four were founded between 1971 and 1975. All four became multinational pre-2000. Trek started to acquire retail stores in 2015, followed during the pandemic by Cannondale and Specialized (but not Giant). Trek led in establishing a DTC program in 2015, followed by Specialized and Cannondale during the pandemic. Giant’s DTC program only delivers through its authorized dealers.

A few of these new brands modified their distribution as the pandemic surge faded to include bike shops for delivery, service, and retail sales. Aventon and Flyer are examples. This in turn has placed the mainstream top-tier bicycle brands, and all the other brands selling through bike shops, in direct competition with each other, and created opportunities including profit and growth potential, for bike shops.

New bicycle and e-bike brands emerged between 2008 and 2016, including Rad Power Bikes, Super73 and Juiced, just to name a few. All of the “new” brands are built on complete DTC distribution that has changed the game relative to the competitive bicycle and e-bike retail landscape. This emerging new wave has also played a role in completely revising the bicycle/e-bike standards and regulatory landscape that is just getting revved up.

During the sales surge created by the pandemic, a lot of money was wasted. A lot of money was also made up and down the supply chain. BRAIN’s reported bicycle import data for 2020, 2021 and 2022 in the March 2023 print issue shows the world average cost per unit at $84.31, $96.93 and $146.17 for each of the three years. Note: I acknowledge that this could be F.O.B. or C.I.F. since it is not specified.

That means that from 2020 to 2022, the world average cost per bicycle unit increased by $61.86 – a 73 percent increase in three years! Inland freight and other costs were added, plus applicable surcharges, until a suggested retail price was paid by consumers.

Keep in mind that this analysis applies only to regular, or so-called acoustic bicycles, and does not include electric bicycles, primarily because of the convoluted and confusing customs data that is currently available, and that is virtually unusable. However, the average imported electric bicycles generally have a much higher value than the average non-electric bicycles. While the increase in value may not have reached 73 percent during the pandemic, it undoubtedly showed an increase because of raw material, component, U.S. duty (when applicable), and transportation costs. These costs, like with regular bicycles, were passed along in pricing to retailers and consumers.

Experts who have followed the NBDA Cost of Doing Business Study for decades have commented on how robust and profitable the “typical” bike shop and “high-profit” bike shop KPI’s were in the 2022 study, based on 2021 data. I have already commented on bike shops having to do everything they can to preserve this level of net-pre-tax profit.

Now let’s look up-stream from bike shops to the brands. Giant is the only one of the four top-tier brands in the U.S. that is public, but its financials are aggregated world-wide so there is no visibility for U.S. operations. The bottom line – there is no transparency so we can only make assumptions.

I believe a reasonable assumption is that none of the top-tier, or Big Four as they are sometimes called, wanted to lose profitability during the pandemic despite the turmoil. While the top-tier brands paid more than they ever had for imported products, they passed the increases on in the cost to retailers and consumers.

This leads to “greedflation,” and “price-price spirals.” Keep in mind that I have worked for one of the Big Four, and have an appreciation for how hard it is to accurately forecast and maintain any kind of profitability and growth in a competitive situation where there is cyclical over-stock-discount-to-clear-inventory, and profitable years are few and far between.

Greedflation is simply raising prices as long as consumers will pay them. I think it is a safe assumption that some and perhaps most brands, including those in the top-tier, and most retailers, raised prices during the pandemic because consumers were buying everything they could get their hands on, and paying whatever the price was.

Greedflation goes hand-in-hand with kicking just-in-time inventory management to the curb, and adopting just-in-case inventory management, as well as allowing the Bullwhip Effect to control the forecasting and ordering process. It was good for about nine to 10 quarters, from Q2 2020 through Q3 2022. I don’t think it was by design as much as it was the expedient thing to do under extremely turbulent and uncertain circumstances.

Right now, the bicycle business is going through a slump driven by the continuing turbulence, and evolving uncertainties. Greedflation drove retail prices up to levels that a growing number of consumers will not pay, and this is reflected in the discounting and pricing dynamics we are experiencing as the first quarter gives way to the second quarter, and the hope that Spring will bring back consumers to ride and purchase bicycles. As you know by now, HPS does not believe in management by hope.

By now you have noticed that raw material, ocean shipping, and domestic shipping costs have all decreased and some, like ocean shipping, have dropped like a rock since the end of last year. The price-price spiral is an economic term referring to companies hiking prices beyond an increase in their costs. Some economists are predicting that some companies have pushed their margins higher, and will continue to do so even as their costs fall away. If bike shop product costs do not go down as costs up stream go down, I am sure you can figure it out from there.

The problem is the inventory that was purchased when both product costs and logistics costs were high. I have said it before – brands and retailers paid more for the landed cost of products from late 2020 to late 2022 than ever before. Some of that high cost inventory is still in warehouses waiting to be sold at discounted prices.

The recent banking failures and the Fed’s latest interest rate increase have created a new set of uncertainties about the cost of money, and whether banks will be willing and able to refinance carry-over inventory that has been devalued, and continue to provide business loans going forward.

The future is what we make of it! Peter Drucker warned, and my thanks to Joe Marcoux ( for reminding me: “The greatest danger in times of turbulence is not the turbulence – it is to act with yesterday’s logic.”

Part of a business plan is quantifying simple things like close rates, and educating and training staff, including the owner, about the power of greeting and increasing close rates. Experts like Joe Marcoux and the NBDA can help, as can becoming a member of an NBDA P2 Group.

Bike shops must protect and generate cash flow and positive profitability. The hard work is crafting a written business plan that is shared with family and staff, and tracked, reviewed, updated, and revised every month, and more frequently if possible.

My good friend and colleague Fred Clements also opined during our latest podcast that what bike shop owners need to do is bring the JOY! Bike shops should not be gloomy places reeking of despair. This is the time for owners and managers to lead and spread the fun, the excitement, the JOY of changing people’s lives, and providing them with a product that will make a difference to them, their families, and their communities.



2/28/23 Trying to replace china’s supply chain? Don’t bother. Vietnamese factories were supposed to save globalization. It doesn’t look like that’s happening. Bloomberg. So much for the great Vietnamese supply chain that was supposed to replace China’s and save globalization. HPS Analysis: American brands, and in particular the multinationals, are finding it extremely difficult to extract themselves from mainland Chinese supply chains, and the Japanese, Taiwanese, Chinese bicycle manufacturing consortium. Vietnam, Cambodia and Thailand all looked promising before the pandemic, but their respective infrastructures and labor forces simply cannot sustain U.S. demand, even at reduced levels.  

2/28/23 Walmart partners with Citi on new supplier loan platform. Chain Store Age. Walmart’s latest fintech solution is aimed at small-to-medium-sized businesses (SMBs) in its supplier network. Walmart is connecting 10,000 U.S. SMBs with 70 lenders that provide qualifying businesses with loans of up to $10 million. HPS Analysis: Small-to-medium-sized U.S. suppliers to Walmart, like Kent International, now have access to loans up to $10 million. The U.S. bicycle business would be well advised to connect with its lenders to find out how it can emulate this loan platform.

2/28/23 Target Q4 sales, profits top estimates; gives cautious outlook as spending shifts. Chain Store Age. Target Corp. beat fourth-quarter expectations amid a “very challenging environment,” and said it plans to expand its owned brands as consumer spending shifted away from discretionary items. HPS Analysis: The second-largest retailer of bicycles in the U.S. has worked out of its inventory issues, and is warning about consumers shifting away from discretionary items to lower-cost private label products in a very challenging retail environment.

3/1/23 CPSC: The industry’s 3-class e-bike framework is not part of our statutes. Bicycle Retailer and Industry News. Consumer Product Safety Commission Chair Alex Hoehn-Saric told BRAIN the agency doesn’t recognize the industry’s three e-bike classes, but instead treats the regulation of e-bikes on a case-by-case basis. HPS Analysis: Manufacturers and brands should rely on the CPSC definition of a “bicycle” for testing, regulatory compliance and insurance, and not the three-class designations.

3/2/23 NY City Council passes lithium-ion battery safety package. Bicycle Retailer and Industry News. E-bikes will soon need to meet UL 2849 or similar certification, and batteries UL 2271. In order to be legally sold, rented, or leased in New York City, an e-bike needs to be certified to UL 2849, which is a standard that covers an e-bike’s full electrical system, including the battery, charger, and motor. Likewise, a powered mobility device needs to meet UL 2272, and all lithium-ion batteries sold separately must meet UL 2271. The NY City regulation goes into effect 180 days after enactment. HPS Analysis: New York City took appropriate action in the face of fires, injuries and deaths resulting from a recent influx of highly-questionable lithium-ion battery-powered micromobility products sold directly to consumers, and originating in China. The de minimis exception to U.S. law and customs regulations is one of the major problems allowing questionable products into the U.S. Testing, compliance and listing to UL 2849 and UL 2271, as well as CFR 1512 for all bicycle products as defined by CPSC, is essential from this point forward.

3/3/23 Top executives tackle biggest bike industry challenges at the 2023 Bicycle Leadership Conference. Bicycle Retailer and Industry News. PeopleForBikes’ 2023 Bicycle Leadership Conference (BLC) took place March 14-16, in Dana Point, California. It was a three-day event bringing together CEOs and other top executives from across the bike industry to network, learn, and tackle the biggest challenges and opportunities facing bicycling and the bike business. HPS Analysis: We received the agenda March 3, but beg to differ that the agenda was designed to “… tackle the biggest challenges and opportunities facing bicycling and the bike business.” We carefully read the agenda, and for the kind of coin this BLC cost attendees, we suggest a different focus at future conferences, with as much data as possible about why American consumers have reduced purchases of new bicycles (inclusive of e-bikes), how we integrate all styles, types and retailers of e-bikes into the bicycling community of interest, and how we shift our industry advocacy to meet the wants and needs of all bicyclists of all types.  

3/4/23 Over $30M worth of Funkos are being dumped. NPR Business. The maker of the Funko Pop! Collectables, plans to toss millions of dollars worth of its inventory, after realizing it has more of its pop culture figurines than it can afford to hold on to. HPS Analysis: According to this article, diminishing demand combined with a glut of inventory, is “driving the loss,” and the company’s decision to toss $30 million worth of product into the dumpster. While we think this is one of the dumbest ideas we have ever heard of, it is the result of accounting practice and tax law that makes this bad idea feasible for managers to execute. It also emphasizes just how evil inventory can be, and how bad a shakeout can be.

3/4/23 What New York’s e-bike law will mean to retailers. Bicycle Retailer and Industry News. Heather Mason, president of the NBDA, is advising bike shops in New York City to sell off any e-bikes that aren’t certified to UL standards before a new local law takes effect. HPS Analysis: Bike shops in NY City have six months, to sell existing inventory of e-bikes, which as Mason points out is more than reasonable. This anticipates two inventory turns per year, which is more than possible, even in a slow market. Concerns expressed in the article about brands not having enough time for testing and certification is also over-blown, given the number of qualified and listed testing laboratories in Asia and the U.S. Also, many e-bike system component manufacturers have already had their products tested, which means testing of complete systems will proceed quickly, and at affordable costs. This all means that in 180 days, NY City bike shops will be able to tell shoppers and customers that they are selling e-bikes that are certified to UL 2849, and if simple instructions about use, storage and charging of the lithium-ion batteries are followed, they are safe and enjoyable consumer products.

3/7/23 Vail closes 19 retail locations in Colorado. Bicycle Retailer and Industry News. Vail Resorts is closing 19 retail locations in the Colorado mountains. Most of the locations offered winter sports sales and rentals, but several also offered bike sales and rentals. The closures will cost 69 workers their jobs. HPS Analysis: It is always sad to hear about retail locations closing. This recent closing of eight Aspen Sports stores and demo locations in Aspen, six Telluride Sports locations, and Burton and Neve stores in Telluride, along with a Patagonia store in Snowmass, calls into question the business strategy and financial condition of the parent company.

3/9/23 Manufacturer refuses to recall $13 helmet sold at Walmart, CPSC says. Bicycle Retailer and Industry News. The Consumer Product Safety Commission is warning consumers to immediately stop using and destroy TureClos bike helmets, sold on last year, because they do not meet federal safety standards. The CPSC says the China-based seller of the helmets has refused to recall the helmets or offer consumers any remedy. HPS Analysis: This is the avarice of business at its worst. When Congress amended the Consumer Product Safety Act and took power away from CPSC to protect American consumers in favor of allowing businesses to make as much revenue and profit as possible, it sadly set up situations like this. All sellers, including Walmart, have an obligation to the safety of American consumers to take responsibility for the merchandise sold under their trade names.

3/10/23 Giant Group revenues up 12.5 percent in 2022 despite inventory challenges. Bicycle Retailer and Industry News. Giant Group’s revenue was up 12.5 percent, but net income before taxes was flat, and net income after tax was down 1.5 percent. The company said it still has excess inventory, but demand remains high for e-bikes and high-end bikes. HPS Analysis: The article also quotes Giant Group as saying: “At present, the balance of the supply and demand of the bicycle market has yet to be normalized.” The company said it took a ‘corrective mechanism’ to reduce inventory in the second half of 2022, but inventory reduction is still slow. In other words, Giant Group still has an inventory overhang that it is working at reducing at the end of the first quarter of 2023.” 

3/11/23 Silicon Valley Bank failure could have wiped out ‘a whole generation of startups’ NPR Technology. For tech startups, which for decades have relied heavily on Silicon Valley Bank (SVB), the bank failure set off a crisis that could have led to mass layoffs, or hundreds of startups collapsing, according to industry insiders. The government did step in to guarantee deposits, apparently rescuing well-known tech companies including Shopify, Pinterest, Fitbit, and thousands of lesser-known startups, in addition to established venture capital firms, like Andreessen Horowitz. HPS Analysis: If you had never heard of Silicon Valley Bank before this week, you likely have by now. According to Bloomberg, SVB was home to cash belonging to half of all venture-backed startups in the U.S. The question HPS is asking is: how many e-bike start-ups would have been affected by the SVB bank failure, and how many bike businesses have significant assets in other highly-leveraged banks? Our analysis indicates SVB was the victim of the Fed’s increased interest rate that in turn effected the value of SVB bonds, leading to the current financial melt-down and failure. The American bicycle business is relatively low-tech, and didn’t pay much attention to the SVB failure, as evidenced by the total lack of coverage by BRAIN. However, HPS confirmed that at least one of the “new” e-bike start-ups had all of its venture capital (VC) funding deposited with SVB, and could not get to its money to make payroll March 10, like a whole bunch of other start-ups with their VC funding frozen. While the news that the government stepped in was very welcome by all concerned, it pointed to another potential financial problem relative to the excess inventory being held by brands and suppliers, that may be overvalued.

3/11/23 What’s driving the battery fires with e-bikes and scooters? NPR Technology. As firefighters battled a five-alarm fire at a supermarket in the Bronx earlier this month, New York City officials gathered beside what they said was the cause of the fire: the blackened shell of what was once a sit-on electric scooter. “There is extraordinary damage. This entire building behind me is completely destroyed. The roof is caved in. There is nothing left. And it is all because of this one single bike,” said Laura Kavanaugh, the city’s fire commissioner. HPS Analysis: While it is clear that the cause of this devastating fire was an electric scooter, e-bikes are being painted with the same brush. Thank goodness there was no fatality. The recently-passed NY City law requiring testing and certification to UL 2849 is referenced in the article, as is the fact that CPSC is aware and in constant communication with NY City about the fires. The situation now calls for immediate action on the part of the bicycle business to inform and educate New Yorkers and the public at large about the safe riding, storage and charging of e-bikes, as well as their testing and compliance to and with UL 2849. The NBDA has already taken action to inform and educate bike shops in NY City, and it is now time for PeopleForBikes to step up and launch a comprehensive, city-wide e-bike and lithium-ion battery safety campaign.    

3/13/23 Gen Z spending gets supercharged by inflation and wage growth. Bloomberg The Close Americas Edition. Most people enter adulthood feeling broke and spending frugally. Not Gen Z. Spending by the youngest group of U.S. adults has been turbocharged by two once-in-a-generation drivers over the past year: decades-high inflation, and a tight job market that propelled strong wage growth. A boost in savings at the height of the pandemic also helped. Gen Z kept spending when other generations pulled back. Whether it’s out of necessity in the face of soaring prices, or because they can afford to splurge on travel and leisure, young adults today tend to be big spenders, credit-card data and surveys show. HPS Analysis: Gen Z is the generation born between 1997 and 2012. They are currently between six and 24 years old (nearly 68 million in the U.S.). HPS is wondering why the bicycle/e-bike business isn’t attracting and holding on to more Gen Z consumers. The NBDA Consumer Research, published in 2022, showed that Gen Z was among the first-time cyclists who purchased during the pandemic, but seem to be AWOL starting the last half of 2022, and going into 2023. Also, a high percentage of Gen Z bike/e-bike purchasers were women. This is among the challenges the bicycle business needs to step up, embrace and take advantage of going forward.

3/13/23 Why Fox News wants you to be afraid of electric bikes. electrek: MicahToll. Fox News is no stranger to the tactic of fearmongering as a way to stir up its viewers. But the media network’s latest misdirection campaign attempts to use fear to attack a surprising new target: electric bicycles. With a misleading story running last week entitled, “How e-bikes are exploding and killing people,” the media giant leaves little room for doubt about just how far it will go with misdirection to try to scare people away from the fastest-growing form of low-cost, efficient, and effective transportation. HPS Analysis: While it is true that micromobility devices, including e-bikes, have been identified as the source of a rash of lithium-ion battery fires fatalities in New York City, the problem is largely attributable to low-cost micromobility devices originating in China, and imported into New York City by a relatively small number of small retailers, as well as consumer-direct (DTC) sellers under the de minimis rule that bypasses U.S. Customs inspection, duty and taxes if a product’s F.O.B value is $800 or below. New York City now has a new ordinance requiring e-bikes to be tested and certified to UL 2849, and lithium-ion batteries to UL 2271. The ordinances become effective on or about September 20, 2023, giving retailers six months to sell off non-compliant products, and stock up on complying products.

 3/13/23 Vosper: Scorched earth: the strategic basis for continuous oversupply. Bicycle Retailer and Industry News. As HPS has noted, the strategic basis for continuous oversupply was not on the agenda for discussion at the Bicycle Leadership Conference (BLC) this year. As Rock Vosper pointed out, “We have too much bicycle inventory. Not just right now (when we have way too much inventory), but in general. That’s because, year-after-year, we keep ordering too many bikes and then having to put them all on clearance. And this insanity has been business as usual for our quirky little industry ever since the end of the Great Recession in 2009.” HPS Analysis: Vosper does his usual excellent job of bringing out the historical facts of the marketing strategies of major bicycle brands doing business in the U.S. market. He correctly refers to the “scorched earth” strategies of the top brands as “insanity,” but these strategies have purposeful thought behind them. Even more troubling is that a significant number of bike shop owners buy into it every year. However, HPS believes 2023 may be different because, (1) the pandemic-enhanced consumer demand that drove the bull-whip effect, and badly disrupted just-in-time inventory management, and led brands and retailers to pay more than they ever have in the history of our business for finished goods inventory that, (2) backed up in warehouses in unprecedented quantities as consumer demand ebbed away, and (3) the SVB collapse and a banking crisis changed the cost and availability of loans to refinance the excess inventory. This is a combination we have never experienced before, and it may make “scorched earth” look mild.

3/14/23 Revel Bikes manufactures 3D-printed carbon fiber protype bike. Bicycle Retailer and Industry News. Revel Bikes revealed what it’s calling the world’s first 3D-printed carbon fiber downhill mountain bike. The Rodeo is a concept bike for now, but the brand said it is a ready-to-ride fully-functional bike designed and manufactured in the U.S. HPS Analysis: We have been long time advocates of 3D printing and “additive manufacturing” as a methodology that can be employed to bring domestic manufacturing of bicycles and e-bikes back to the U.S. 3D isn’t a silver-bullet, but it is a viable technology that Revel Bikes is providing as a “proof of concept” model for others interested in reshoring to investigate. At the beginning of the pandemic in 2020, a contact who is in the prototype business suggested HPS investigate “pop-up” manufacturing that involves lots of 3D printers and digital files, instead of hard tooling, and a large capital investment. As the financial risks associated with sourcing in unfriendly geo-political regions increases, additive manufacturing in friendly geo-political regions becomes more attractive.

3/15/23 Supplier, Buyer relations are shifting again as pandemic strains ease. The Wall Street Journal. Big retailers are looking to reassert leverage in supply chains to rein in costs. The commercial relationships between retailers and their suppliers that shifted under the strains of the COVID-19 pandemic are transforming again as companies cope with continuing changes in consumer spending and high costs across their supply chains. “We’re starting to see the power shift a little bit back to buyers again,” said Rob Handfield, a supply-chain management professor at North Carolina State University. Many retailers placed big orders early last year, and rushed goods around transportation bottlenecks, to ensure they had enough merchandise on hand for the fall, when consumer spending typically increases heading into the winter holidays. The result was that many retailers ended up with excess inventories and too many of the wrong items in the wrong places as Americans shifted spending to services rather than goods. HPS Analysis: Mass merchant, sporting goods retailers, specialty outdoor and specialty retail brands, have all cancelled orders and reduced forecasts with their supply chains in Asia. These order cancellations and reductions have left many OEMs in China and Taiwan with excess component inventory, and reduced their work forces. At the same time, the retailers and brands want cost reductions as they re-asset their buying power. None of this is helping working relationships in the supply chain, and the large inventory overhang from components at OEMs in Asia, to finished goods in brand warehouses and bike shops in the U.S. The American bicycle business needs to focus on short-term and long-term solutions.

3/15/23 The unexpected American shopping spree seems to have cooled. NPR Economy. Retail spending declined 0.4 percent in February compared to January, the Commerce Department said. That’s after a surprise start-of-the year shopping spree that contradicted the Federal Reserve’s goal of cooling down the economy to fight high prices. People spent about two percent less on cars and parts, and 2.2 percent less at restaurants and bars, the latest reports on retail sales showed. People bought less furniture, fewer clothes, as well as home-improvements and gardening supplies. Spending at department stores dipped four percent. We don’t know the percentage, but people also spent less on bicycles and e-bikes. Inflation has been moderating since peaking last summer, but consumer prices in February were still six percent higher than a year ago. People have been shifting more of their budgets toward activities and outings, where prices continue to rise. In February, people spent 0.6 percent more at grocery stores, and 1.6 percent more on online shopping. And overall, retail spending remained 5.4 percent higher than it was a year before. HPS Analysis: It is clear that American consumers remained “resilient” throughout 2022, were still able to spend at a healthy clip, and through February 2023 have continued to spend, but not on bicycles or e-bikes. It seem obvious that the bicycle business needs to invest in good-quality and ongoing consumer research to determine why American consumers are not spending on bicycles and e-bikes, and determine what the industry has to do to attract consumers of all ages, ethnicities and income levels to bicycle/e-bike riding participation and purchases.

3/16/23 Import prices fall again, and are now helping to reduce U.S. inflation. MarketWatch Economic Report. The cost of imported goods fell 0.1 percent in February, and declined for the seventh time in the past eight months, helping to contribute to a slowdown in U.S. inflation. Over the past year, the cost of imports has fallen 1.1 percent, helped by a big reversal in the price of oil since last summer. That’s the first time import prices have shown a year-over-year decline since the end of 2020. As recently as a year ago, import prices were rising at a 13 percent pace. HPS Analysis: We have been vocal about the excess finished goods inventory stuck in the U.S. bike shop channel of trade. While imports of regular bicycles were down over 33 percent, and imports of e-bikes increased approximately 25 percent in 2022 over 2021, that inventory entered the supply chain when import prices were rising at a 13 percent rate, and much of it is sitting in warehouses at the highest landed-cost ever paid. That same inventory is being devalued daily by discounting and sale prices, some of which is generated by brand DTC sales tactics. Replacement inventory brought through the channel of trade today is at, or should be at, a significantly lower price.

3/17/23 U.S. tariffs on metals, some China goods, raised American prices. Bloomberg Economics. U.S. importers bore almost the entire burden of tariffs that President Trump placed on more than $300 billion in Chinese goods, raising the cost of goods bought by American companies, a report by an independent U.S. government agency found. The U.S. International Trade Commission, a bipartisan entity that analyzes trade issues, found an almost one-to-one increase in the price of U.S. imports following the so-called section 301 tariffs, it said in a report on Wednesday, March 15. The conclusions back the longtime assertion of U.S. Chamber of Commerce and independent academic economists that the cost of the tariffs hurt American firms more than those in China. HPS Analysis: Bicycles and e-bikes are the poster children of the section 301 tariffs. While actual 25 percent punitive tariffs have been suspended, they are still on the books, and the Biden Administration wants them as a bargaining chip in negotiations with the Chinese over future trade. The bicycle business has explained from the beginning that importers, retailers and consumers are paying the punitive tariffs as part of increased retail prices. During the pandemic, American consumer demand for bicycles and e-bikes drove the market, followed unfortunately by the bullwhip effect in supply, but channels of distribution found little or no price resistance until the demand ebbed, and consumer purchases of two-wheeled micromobility products cooled. At this point, the 25 percent punitive section 301 tariffs are baked into price structures. While they have undoubtedly contributed to inflation, they won’t be a factor in pricing calculations (read that as price reductions) until they are eliminated entirely.

3/17/23 Consumer sentiment falls for first time in four months – and that was before Americans knew about SVB. MarketWatch. A survey of consumer confidence fell for the first time in four months, reflecting angst among Americans about high inflation, and the health of the economy. The University of Michigan said most of the survey was completed before the collapse of Silicon Valley Bank. Consumer sentiment surveys help gauge how Americans feel about their own finances, as well as the broader economy. Americans worry about inflation, and a banking crisis may add to their anxiety. Sentiment fell the most among lower-income and younger Americans who tend to suffer disproportionately from high inflation. Some wealthier people with large stock holdings were also less confident in light of a recent decline in equities. HPS Analysis: Despite inflationary price increases, and eroding confidence in the economy, American consumers have continued to spend on staples and necessities, while shifting from goods to services, like eating out or ordering in. A fall in consumer sentiment doesn’t bode well for consumer spending going forward into the spring selling season. The bicycle/e-bike business has not kept pace with consumer spending since Q3 2022, and is approaching three quarters of slowing store traffic and ebbing sales, with consumer sentiment now falling as well. The bicycle business and its associations need to get serious about customer retention, close rates, and the outreach message.

3/20/23 Acer (yes, the computer company) is building a fancy electric bike with built-in AI. Electrek Micah Toll. The Acer ebli is a lightweight (35 pound) e-bike with 20-inch wheels, mono-fork, and features built-in AI designed to predictively control the transmission, and make use of collision detection sensors for a safer ride. There are also proximity unlocking features that automatically lock the bike when the rider leaves, and unlocks it when the rider returns. There also is a built-in GPS locator. The ebli has a belt drive, 160mm hydraulic disc brakes, airless tires, and 360-degree LED lighting. There is no throttle, and the 460 Wh electric battery has a range of 66 miles. The bike has a top speed of 15 mph with a 250W rear hub. The ebli removable battery serves as a portable power station to charge mobile devices like cell phones and computers. No price has yet been announced. HPS Analysis: To our knowledge, Acer is the first electronics company to jump into the micromobility arena. The fact that it is Taiwan-based and a recognized brand gives it, we believe, a major advantage over Chinese manufactured e-bikes, both from a logistics standpoint, and a geopolitical perspective. The fact that so much AI is packed into this design also gives it a hi-tech added value leg up over its rather large field of competitors. Like everyone else, we need to see the price, distribution and availability, but this latest entry in the e-bike market is most interesting.

3/21/23 CEO Ken Lousberg on SRAM’s global production strategy. Bike Europe. The announcement in February to build a new factory in Taiwan confirmed SRAM’s commitment to its largest production base. With the investment, SRAM is expanding its capabilities and capacity in Taichung. A week before the opening of the Taipei Cycle Show, SRAM CEO Ken Lousberg elaborated on the choice for Taiwan, and his market outlook for the months ahead. Asked if he expects the market to be on the positive side again in the second half of the year, Lousberg responded, “I think it will be stable by the second half of the year, but it will depend on the price point and channel position as to when things really start growing again. I’m sure every company will experience some kind of correction, as their part of the channel has to clear out first, and then we should see a positive turn. As a component manufacturer, we are always at the tail of the bullwhip, and it hits us last. For us, sales volumes will certainly go down from the highs we experienced in the last few years, but settle above per-pandemic levels likely before returning to a regular four to five percent annual growth.” HPS Analysis. We recommend you read this whole article. We don’t know Ken Lousberg, but found his comments to be very insightful. SRAM is clearly doing “something” relative to acquiring the German company Amprio, but is still reluctant to share details, but Lousberg did state, “The e-bike market is very important to us.” Imports of regular bicycles were down just over 33 percent in 2022, while imports of e-bikes are estimated to have grown by 25 percent in 2022. SRAM needs to improve its position to take advantage of the growing e-bike segment world-wide.

3/21/23 Will Taipei Cycle 2023 contribute to solving the industry challenges? Bike Europe. Taiwan’s bicycle industry was eager to show itself to the outside world again at the Taipei International Cycle Show March 22-25. After an absence of three years, one of the leading industry events opened its doors again. The industry is facing some interesting challenges which have become pressing over the past few years. Bike Europe feels it is time to discuss them face-to-face. The biggest topic for the international industry lays in the challenges to steady the huge fluctuations between production and demand. For two years, the industry faced a massive demand for products which it could not fulfill by any means. While manufacturing went at full capacity to meet demand, this situation flipped in 2022 to oversupply, causing high inventory on markets around the world. HPS Analysis: We don’t quibble with what Bike Europe expresses as “the industry challenges,” but we don’t think the Taipei International Cycle Show is going to be the place to resolve the challenges facing the industry. The reality of the situation is that good decisions demand good data (Pew Research Center). The bicycle/e-bike business in Europe has much better data than we have in America. As just one example, while Ed Benjamin does a superb job of pulling together U.S. e-bike import data from the fractured HTS system run by U.S. Customs, he will be the first to tell you the bicycle/e-bike business has to lobby hard to improve this vital data collection source so there is clear and concise monthly data on U.S. imports and exports of e-bikes that matches that collected and reported on regular bicycles. Also, the “Scorched earth: the strategic basis for continuous oversupply” issues that Rick Vosper writes about, will sadly not get resolved, by the Taipei International Cycle Show.

3/21/23 Electric bike tax credit bill reintroduced, providing up to $1,500 off new e-bikes in US. electrek Micha Toll. The Electric Bicycle Incentive Kickstart for the Environment (E-BIKE) Act has just been reintroduced to the U.S. House of Representatives. An e-bike tax credit has long been seen as a way to help get these effective small-format EVs into the hands of more Americans. To qualify, the e-bike would have to be priced at less than $8,000, and the tax credit would be allowed once per individual every three years, or twice for a joint-return couple buying two electric bicycles. The incentive, according to the author, is designed to make electric bicycles more accessible to lower income Americans. HPS Analysis: This is most welcome, and it will gain life expectancy if it can pick up bi-partisan support in the House and the Senate. Frankly, in the face of the bad public relations being generated because of the micromobility-related fires and fatalities, primarily in New York City, this bill give advocates something big and beneficial to talk about. This bill deserves loud and continuous support from all corners of the bicycle business.

3/21/23 Study: Gen Z consumers least likely to reduce spending amid inflation. Chain Store Age CSA. Gen Z, adults ages 18 to 26, are the least likely to report that inflation has impacted their spending, and they are most reluctant to reduce spending compared to other generations, according to a report by Jungle Scout, an all-in-one platform for e-commerce sellers. The report found that even amid inflation, Gen Z consumers are also setting a new standard for e-commerce, with 32 percent of shopping online at least once daily. This compares to 25 percent of Millennials, 15 percent of Gen X, and seven percent of Baby Boomers. HPS Analysis: Gen Z has shown up several times this month as being  big spenders in this inflationary economy. Some of us remember the BMX Boom that kept the bicycle business going between the 1971-1974 Bike Boom, and the Mountain Bike Boom of the 1980’s. Yes, Gen Z is young, but they just keep spending, very actively on-line. Staff for Gen Z, merchandise for Gen Z, use social media to reach out and market to Gen Z, and use your commerce-enabled website to sell to them 24-7.

3/22/23 The Fed raises interest rates again despite the stress hitting the banking system. NPR Economy. The Federal Reserve raised interest rates for the ninth time in a row on March 22, opting to continue its campaign against high inflation, despite stress in the banking industry following the collapse of two regional banks. Fed policymakers voted unanimously to raise their benchmark interest rate by a quarter percentage point to just under 5 percent, which will make it more expensive for people seeking car loans, or carrying a balance on their credit cards. The Fed will need to weigh the impact of the collapse of the two regional lenders in deciding how much to raise interest rates going forward. Since the collapse of Silicon Valley Bank and Signature Bank, other banks are expected to be more conservative about making loans. “Recent developments are likely to result in tighter credit conditions for households and businesses, and to weigh on economic activity, hiring, and inflation,” the Fed statement said. “The extent of these effects is uncertain.” Tighter credit conditions, like rising interest rates, lead to slower economic growth. HPS Analysis: “Credit is the grease that makes small businesses’ wheels run, and makes the overall economy run,” said Kathy Bostjancic, chief economist at Nationwide. “If that credit starts to get choked off,” she said, “you’re going to have a pretty big – I would expect – pullback.” The Fed wants to curb inflation, but rising interest rates also raise the risk of tipping the economy into recession. Fed policymakers aren’t projecting a recession. Members of the rate-setting committee expect the economy to grow 0.4 percent this year, and they expect the unemployment rate to climb to 4.5 percent, from 3.6 percent in February. The bicycle business and bike shops are now between a rock and a hard place. Get inventory and payables under control, to the extent possible, and make sure you communicate with suppliers about accounts payable. Be honest about what you can do, and hammer out a payment plan and stick to it. Reach out to your banker and make sure you communicate, and again, hammer out a financing plan, and stick to it.

3/23/23 Five ways the fallout from the banking turmoil might affect you. NPR Economy. The fallout from recent bank collapses and emerging rescues can seem both alarming and distant. Is your bank account safe? If it’s under $250,000, your money is fully insured by federal authorities under all circumstances. You might ask why you should care about what happens to banks if your money is safe. All the consequences are still playing out for the U.S. economy, small businesses like bike shops, and regular people. Here are five things to be aware of. (1) Will the banking turmoil trigger a recession? This depends on many factors, but banks may become more cautious about lending, resulting in less access to money for businesses and individuals. (2) Will getting a loan become even more expensive? The Fed answered this question March 22 when it raised interest rates. These rates guide how much people and businesses pay for various loans, and they’ve been rising for over a year. (3) Will the federal rescue trickle down to higher fees for regular bank customers? This depends on a number of things, including how successful the FDIC is in selling the failed banks’ assets, and the steadiness of the banking system. Similar failures mean more insurance payouts that could result in FDIC assessing higher fees on banks, who could then pass on the new costs to all their customers. (4) Could this make big banks even more powerful? This is a possibility if there is an exodus by depositors from smaller, regional banks, to bigger ones because of the perception of less risk forcing smaller banks to close or get absorbed into bigger institutions, leaving fewer lenders with more clout. (5) Does this mean a new era of less Silicon Valley innovation? Before its collapse, Silicon Valley Bank (SVB) did business with nearly half of U.S. tech startups, including those doing biomedical research. The SVB and Signature Bank failures may lead to a slowdown in lending to smaller, untested business ventures, or a slowdown in Silicon Valley startup spending overall. HPS Analysis: This banking turmoil boils down to tighter loan policies, higher interest rates, and higher fees going forward. The Fed is not, and does not want to be, the small business person’s friend until recession is under control.

3/23/23 Dialing back rebound projections. The Wall Street Journal Logistics Report. The much-anticipated rebound in demand in the second half of the year may be a bit farther off. Freight and logistics operators are starting to dial back their expectations for a recovery in time for the traditional fall peak shipping season, as retailers signal more caution in an uncertain consumer economy, and volumes moving through supply chains tail off more than anticipated. Nike, Target and Kohl’s remain guarded in ordering from suppliers, as they continue to dig out from a glut of inventory. Logistics executives have projected a recovery, as supply-chain disruptions have eased, and companies return to more traditional inventory replenishment cycles. Several say they remain optimistic, but note that the broader economy looks increasingly uncertain. HPS Analysis: As U.S. container imports from Asia hit a three-year low in February, the American bicycle business continues the shakeout as it struggles with an unprecedented inventory overhang and imbalance, as all channels of trade struggle to increase sales through March. It appears that the year will be determined in large part by how brisk consumer demand, store traffic, and retail sales are during the second quarter of the year.

3/26/23 Bicycle industry and advocates unified behind electric bicycle rider safety. Bicycle Retailer and Industry News. This press release headline was published as the League of American Bicyclists (LAB) kicked off its National Bike Summit in Washington D.C. March 27-29. PeopleForBikes and the LAB will launch a new electric bicycle rider-specific safety education program this summer. According to the press release, this first-of-its-kind campaign will help new and experienced riders understand best practices specific to riding an e-bike. HPS Analysis: This e-bike rider safety education program is, in our opinion, overdue. We urge PFB and LAB to reach out to the NBDA to join this initiative so that bike shops across the country will become centers for e-bike education and information.

3/29/23 How big a problem is greedflation? CNN Business. Inflation is ravaging shoppers’ wallets, and the Federal Reserve has responded by instituting a regimen of painful interest rate hikes that could land the economy in a recession. But corporate profits are surging. U.S. profit margins have reached record levels not seen since the immediate aftermath of World War II. How did that happen? Some economists are pointing to “greedflation,” the idea that companies are using high inflation rates as an excuse to price-gouge their customers while they bring in record profit margins. Between the end of 2020 and the third quarter of 2022, employee pay rose by 14 percent, but corporate profits grew by a whopping 28 percent. Instead of calling this out as the primary cause of high inflation, central banks have instead chosen to focus on rising nominal wages as threatening to embed higher inflation, the so-called “wage/price spiral,” referring to the Fed’s theory that wage growth has to slow down for prices to ease. Isabella Weber, an economist at the University of Massachusetts Amherst, outlined in a recent academic study what she calls a “price-price spiral,” where companies hike prices beyond an increase in their costs. Lael Brainard, former Fed vice chair and current director of the National Economic Council of the United States, has expressed worry that a price-price spiral could ultimately tank the economy by turning consumers off from spending. HPS Analysis: The first quarter of 2023 has come to an end, and corporations will begin to report their earnings. There are not a lot of public companies in the bicycle business, but the reports from those that are will provide key insights into the profit margins, and to some extent inventory. If MSRPs keep going down, it may be a sign that margins are being reduced as raw material and shipping costs fall-away, allowing slimmer profitability while lowering prices to move inventory. Economists tell us price-price spirals can’t last forever, particularly in recessions.

3/30/23 Why the China-US contest is entering a new and more dangerous phase. The Economist. You may have hoped that when China reopened, and face-to-face contact resumed between politicians, diplomats and businesspeople, Sino-American tensions would ease in a hurry at dinners, summits and small talk. But the atmosphere in Beijing reveals that the world’s most important relationship has become more embittered and hostile than ever. In the halls of government, Communist Party officials denounce what they see as America’s bullying. They say it is intent on beating China to death. Western diplomats describe an atmosphere laced with intimidation and paranoia. In the Diaoyutai State Guesthouse, multinational executives attending the China Development Forum worried what a deeper decoupling would mean for their businesses. The only thing both sides agree on is that the best case is decades of estrangement, and that the worst, a war, is growing ever more likely. HPS Analysis: The wishful thinking that China reopening would eventually see the working relationship between bicycle business buyers and the sellers in China return to pre-pandemic norms is just that — wishful thinking. What has happened since 2020 is a hardening of the Chinese Communist Party’s world view, including wealth redistribution among the people instead of to a wealthy class of mega rich. This does not bode well for Taiwanese-owned and controlled bicycle businesses manufacturing in the PRC, or their customers outside of China. It also places at risk the multinational bicycle brand businesses inside China. As we have said, decoupling will be very difficult, but risk assessments are pointing toward finding alternate sourcing outside of China sooner than later, as difficult as this may be.

Contact Jay Townley:


Electric bicycles have fundamentally changed the bicycle business in America. Europe has a mature e-bike business and country markets, compared to the embryonic business and market in the U.S.

Everything continues to change rapidly in America as the market matures, including e-bike design and micromobility electric propulsion systems, consumer preferences, regulations and standards, options for safe storage and use of micromobility lithium-ion batteries, techniques for sales staff and service technicians, as well as consumer education and awareness.

And fire departments are changing the way they fight micromobility lithium-ion battery fires, and their hazmat protocols for clean-up and disposal.

New York City has a unique critical mass of delivery gig workers on e-bikes and other micromobility devices powered by lithium-ion batteries. In 2022, the Fire Department of New York City (FDNY) reported 191 fires attributed to micromobility devices, including e-bikes, resulting in 140 injuries and, sadly, six deaths.

In the first two months of this year, lithium-ion batteries for micromobility devices, including e-bikes, were believed to be responsible for 22 fires, leading to 36 injuries and two deaths.

On February 27, Bicycle Retailer and Industry News (BRAIN) published an article about 25 FDNY fire protection inspectors, fire marshals and sheriff’s deputies inspecting bike shops, and finding “hundreds of battery charging, storage violations at shops.”

This was followed on March 1 by publication in BRAIN of an interview with Consumer Product Safety Commission Chair Alex Hoehn-Saric with the headline: CPSC: The industry’s 3-class e-bike framework is not part of our statutes.” HPS has offered the same opinion for months, but the industry has paid little attention until this interview.

The BRAIN article goes on to state: “When asked about regulating Class 3 e-bikes and e-MTBs, and “out-of-category” e-bikes, Hoehn-Saric said in a February e-mail exchange with BRAIN that, “I know there have been questions and confusion around jurisdiction of these products, so I want to take this opportunity to provide some clarity about where CPSC stands. First of all, the Class 1, Class 2, Class 3 framework is not part of CPSC’s statutes, so any assertion about our jurisdiction over an entire category is not accurate.Decisions about agency jurisdiction over e-bikes are made on a case-by-case analysis of the products.”

On March 2 BRAIN announced: “NY City Council passes lithium-ion battery safety package.” The subhead states that: “E-bikes now need to meet UL 2849 or similar certification: batteries UL 2271.”

The city lithium-ion battery regulation is part of a package of five bills, and goes into effect six months after being signed into law by the mayor. Included is a requirement to develop a public education campaign on fire risks of e-bikes and e-scooters, and specific educational materials for delivery workers to be distributed by third-party delivery apps.

March 4 BRAIN published an article titled: “What New York’s e-bike law will mean to retailers,” quoting an interview and letter sent by Heather Mason, president of the NBDA, to members about the NY city lithium-ion battery safety package.

This is an insightful article that, among many other things, quotes Chris Nolte, a NY City bike shop owner, who has sold UL certified e-bikes exclusively for the last two years as stating: “… the new regulations will have a huge impact on the sellers of thousands of low-cost e-bikes used by food delivery workers in the city.”

Charlie McCorkell, owner of three Bicycle Habitat bike shops in NY City, is quoted as saying (among other things), “…to improve fire safety in the city, the federal government will need to enforce safety regulations at the import level.”

What is generally agreed on is that New York City is a trend setter, and the FDNY and City Council will be followed by other fire departments and municipalities, closely watched by the federal government, while changing the game.

Contact Jay Townley:


It’s Wednesday, January 11, and I am walking down an aisle of the CABDA West Expo with my long-time friend, and editor of this newsletter, Fred Clements. It’s the second day of the West Expo, and attendance is actually good for the second day. I ask Fred, “…what do you think of this first trade show of 2023?”

Fred’s response, “It is a sign of life!” I ask what he means. He responds, “It is a sign of life for bike shops after the pandemic.”

As I am getting ready to travel to CABDA East at the Meadowlands, just outside of New York City, I thought about this, and reflected on what I considered to be a well-attended CABDA Midwest Expo in February. I found myself agreeing that the CABDA trade shows, held during the first quarter of this year, are a strong sign of life for the bike shop channel of trade in the U.S.

They are a clear statement that independent bike shops are open for business, and whatever 2023 has in store, bike shops will be there to sell the latest in bicycles, e-bikes, parts, accessories, kit, and to provide professional service.

I believe the big bike brands and major industry trade association are short-sighted in not exhibiting or otherwise supporting the CABDA Expos.

The Bike Shop Count chart shows that approximately 27 percent of the estimated total number of American bike shops are totally independent, or “pure” independent, and that approximately 67 percent are “authorized” dealers of one or more of the big bike brands. Many make the decision to attend a CABDA Expo in their region of the country, as they feel it is in the best interests of their business to do so.

You might well ask if I am going out of my way to promote the CABDA Expos? The answer is a whole-hearted yes. We as an industry need to socialize and share ideas, and more importantly interact as a community of common interest.

I know one of the primary purposes of a trade show is for retailers to buy from suppliers, but in these times of uncertainty and turmoil, there is also the need to seek knowledge and ideas to survive and grow.

The National Bicycle Dealers Association (NBDA) is collaborating with the CABDA Expos in providing educational content, and will continue to produce and present webinars and educational programs through the rest of the year for bike shops.

Joe Marcoux, in my opinion one of the best sales trainers and educators specializing in the bike shop channel of trade, does multiple presentations at the CABDA Expos. I encourage bike shops to each out to Joe as a resource for their employee training needs.

Joe often refers to Peter Drucker, who warned that the greatest danger in times of turbulence is not the turbulence. It is to act with yesterday’s logic.

This is another sign of life from the CABDA Expos, providing the information attendees are sharing about what’s new in consumer wants and needs, and how to provide the products and services to satisfy them.

Contact Jay Townley,


This is the slogan of the Pew Research Center that refers to itself as a nonpartisan fact tank: Good Decisions Demand Good Data.

In our corner of the world, the National Bicycle Dealers Association (NBDA) provides two examples of good data — one covering adult cycling consumer habits, and another about bicycle shop financial metrics.

The consumer research is an invaluable planning reference guide for suppliers, brands, associates, and bicycle retailers as they shape their strategic and business planning around understanding consumer bicycle and e-bike buying habits over the last two years.

The report contains detailed data, analysis, charts, and actionable information about the demographics of the American consumers that purchased which brands from what retail sources, at what retail prices, and with what accessories during the last two years.

With the report, readers will be able to study the clusters of adult purchasers, including the 33.4 percent of women who started cycling, and the 22 percent who returned in the last two years, including what style they purchased, from what retailer, for what kind of cycling. It also reveals what it is going to take to retain them, and what they plan to spend on cycling going forward.

Key study highlights:

  • What are the key cyclist segments in today’s market?
  • How do these segments buy? How do they interact with IBDs?
  • How have buying channels changed? What channels are the most important for each segment?
  • How have bicycle buying habits changed?
  • Will the changes be long term?
  • How can we take advantage of the changes?
  • Is the new cyclist segment significant? How big is it? What is the long-term potential?
  • What are the most important buying factors in each segment?
  • How does my brand perform in each segment?
  • What messages resonate with each segment? How do I reach them?

Associate members of the NBDA may purchase the report for $3,000. Retail and mobile members of the NBDA may purchase a special retailer version of the report for $199. Retailers who are not members of the NBDA can purchase the special retailer version of the report for $399.

The second research study is the latest version of the NBDA’s Cost of Doing Business study. Specialty bicycle retailers were surveyed in early 2022, with most answering based on the full 2021 calendar year.

This unique research effort represents the most up-to-date comparative financial performance information available anywhere. This study is designed to serve as an easy-to-understand tool for specialty bicycle retailers to evaluate their own company’s operating results, in order to pinpoint strengths and weaknesses, and improvement opportunities.

In early 2022, the National Bicycle Dealers Association mailed a strictly confidential survey questionnaire to all NBDA member firms, as well as a random sample of non-member firms.

The survey collected detailed financial and operating information from industry operators by sales revenue size, store type, geographic region, and number of locations.

The NBDA Cost of Doing Business Survey was compiled, tabulated, and prepared by Industry Insights, Inc., a professional research and consulting firm which specializes in industry operating surveys, compensation studies, educational programs, and customized research services. Completed surveys were returned in confidence through early 2022, to Industry Insights, Inc. All company identification was removed from each questionnaire, and only a confidential identification code remained. The data was then coded, keyed, and edited by Industry Insights’ financial analysts for validity. Computer processing was performed on all data to insure statistical validity, and to produce the financial and operating ratios contained in this study.

Using this information, bicycle retailers can compare their own figures with other firms in their revenue category, with other single or multi-store operators, with stores of similar size, with stores of a particular geographic region, and with the high-profit firms (i.e., those in the upper 25% based on before-tax return on assets). Spotting significant differences between your own store’s performance and the industry composites can be the first step toward improving performance. However, deviations from industry norms do not automatically call for some action.

To use this report, determine which of the above data groups pertain to your operation so that you can compare your own store’s results to retailers that are comparable to your own. Be concerned only with those sections of the report that are relevant to your business.

Price: $399. NBDA member price: $349. All reports delivered as a PDF file only.

For information on both reports, visit


54 years ago, the American bicycle industry faced the specter of the federal government regulating bicycles as products sold to consumers. The reaction of the industry, through its trade association the Bicycle Manufacturers Association (BMA), was to resist and fight the government by advancing the manufacturing standard it had developed in the face of growing imports.

Schwinn, the company I worked for, had left the BMA in the late 1960s in a dispute over promoting chain store bikes. Sears was the largest retailer of bicycles at the time, and held sway over Murray-Ohio and Huffy, the domestic sources of its bicycles, making it the largest financial contributor to the industry association.

Our marketing department continued to cooperate with the industry association, and coordinated our full-time bicycling advocate activities and financial support for the League of American Wheelmen and Bicycle Institute of America (BIA), the umbrella bicycle industry association under which the BMA operated.

When it became obvious that Congress was going to pass, and the President was going to sign, the Consumer Product Safety Act creating the Consumer Product Safety Commission (CPSC), and that the CPSC was going to develop a mandatory bicycle safety regulation as its very first standard-setting activity, the BMA collected funding to work in opposition, and to lobby both the Congress and the new federal agency.  

The BMA approached Schwinn for its help. Frank V. Schwinn, the third generation president of the company, discussed the request with his management team. He made the decision that his company was going to cooperate with CPSC and BMA to craft the best possible bicycle safety regulation for the whole of the American industry, including domestic producers and importers, and for the consumers who purchased bicycle products for themselves and their children.

Some of Mr. Schwinn’s management team felt the accident cases documented by CPSC and its predecessor agency, the Bureau of Product Safety, “wasn’t our problem” because Schwinn’s manufacturing and quality standards were far better than those of the rest of the bicycle manufacturers and brands.

Mr. Schwinn responded that it was indeed our problem, because the public judged all of us, all of the bicycle manufactures and brands, as the same when it comes to their safety, and the safety of their children.

I was one of the young managers who had been working with the Bureau of Product Safety, and was engaged on behalf of Schwinn with the newly formed CPSC. I reported to Ray Burch, vice president of marketing. He made sure I understood Mr. Schwinn’s meaning and intent. I acted accordingly, including cooperating with BMA when our aims and objectives were mutually compatible, and to opposing BMA when they were not. When in doubt, Ray advised, “do the right thing, and Mr. Schwinn will understand.”

As representatives of the Schwinn Bicycle Company and the Schwinn family, we didn’t impose or recommend Schwinn standards. We used those standards as examples of what could be done, how to do it, and how to measure it. In some cases, we learned from what CPSC developed, and from what BMA members and importers were doing.

The point is that we worked for at least half a decade on achieving the best possible federal mandatory bicycle safety standard that in turn provided safe bicycles to American consumers.

When the mandatory bicycle safety regulations became effective January 1, 1975, there was a two-year requirement for a label stating: “Meets U.S. Consumer Product Safety Commission Safety Regulations for Bicycles.” In Schwinn’s case, this was a yellow hang-tag that went on the handlebar with the owner’s manual. It served to inform and educate American consumers.

I realize this is history, and that many in today’s bicycle business are not interested in the history of either the business, or what is now an old and tired CPSC bicycle safety standard. I still feel there is a lesson to be learned about not denying responsibility by saying “it’s not our problem,” just as Frank V. Schwinn said 53 years ago.

There are those among the multi-national bicycle brands with headquarters in the U.S. that advocate for making international bicycle safety standards, and specifically ISO4210-10, the U.S. mandatory standard replacing the CPSC standard.

I for one think this is an excellent idea! ISO4210 was developed as the CPSC was developing the first mandatory bicycle safety standard, with the same participation through the American National Standards Institute (ANSI), CPSC, BMA and Schwinn.

Don McKay, an engineer who was with the Bureau of Product Safety and transferred to CPSC, was contacted by the International Organization for Standardization (ISO) and ANSI about the formation of a standards committee under ISO to create an international bicycle safety standard that would be as compatible as possible with the mandatory U.S. standard being developed by CPSC. The purpose was to ensure foreign-manufactured bicycles would be able to enter the U.S. market by meeting the mandatory federal standard.

When Don McKay asked Schwinn to participate, Frank V. Schwinn approved because he saw it as part of “our problem.” His company had been importing components from Europe and Asia since the end of World War II, and became a significant importer of complete bicycles during the 1971-1974 “bicycle boom.”

ISO4210 has its origin in the original CPSC bicycle safety standard. The significant difference now is that the CPSC standard has aged, basically frozen in time, while the ISO4210 international standard has been updated frequently as the products have evolved over the years.

Again, this is history that many in the industry today have no interest in. However, there should be an immediate interest in the public perception of an industry that is concerned about the safety of the consumers that purchase and use their products.

The consumer doesn’t know, or care, if the lithium-ion battery that powers the e-bike they own is from a “member” of a trade association or not. What they care about and expect is that the product they purchased, whether from an online seller or a bike shop, is safe to own and use.

They are also naïve, demanding and wanting both the lowest price and safe products. It is our problem, as an industry, to provide this in the best way possible for them. It is also an opportunity just waiting to be discovered.

As many of you already know, Human Powered Solutions (HPS) supports the National Bicycle Dealers Association (NBDA) in advocating for UL2849, a voluntary third-party testing and certification e-bike electrical power systems standard.

UL 2849 was developed under the auspices of Underwriters Laboratory (UL) pre-COVID, with the active participation of three members of the bicycle industry: Trek, Bosch and SRAM. The committee that developed UL2849 is still active, and has already amended this voluntary standard once since it was promulgated January, 2020. I can let you know who sits on the UL2849 development committee on request.

Brands can have their e-bike electrical propulsion systems third-party tested, certified, and listed with UL, which gives them the right to use the UL sticker on their products.

HPS has reviewed the cost associated with testing, compliance and listing to UL2849, and shared our findings with Bicycle Retailer and Industry News. The costs of compliance and listing, like insurance and shipping, are amortized over the cost of each complete product, or stock-keeping-unit, utilizing that complete electric drive system.

For some brands this will spread the cost over an appreciable quantity of units. Depending on annual unit volume, the compliance cost can have a wide range that with most brands will not have an appreciable effect on retail pricing.

With this said, HPS feels this is the time for an e-bike brand to promote its products’ compliance and listing to UL2849 with retailers and consumers, and is an opportunity to enhance and build brand integrity and share of mind with all.

Contact Jay Townley:


All the news and factual bits and pieces that float to the surface indicate the American bicycle business is in an uncertain place, as our primary supply chain shuts down from January 20 until about February 6 for Chinese New Year, and we wait to see how many workers are able to come back to factories, desks, CAD stations, trucks, warehouses and ocean ports.

So much of the global and U.S. bicycle business is privately-held, or in the hands of private equity and venture capital, that very little public information is available about layoffs, order cancellations, inventory, and the financial condition of the supply chain.

With that said, here are a baker’s dozen headlines from U.S. and European news sources, bicycle trade and consumer publications that shed some light on the currents and winds of the bicycle business during the month of January 2023.

1. Peloton agrees to pay a $19 million fine for delay in disclosing treadmill defects. This story is taken from National Public Radio and, goes on to report:

“Peloton had received more than 150 reports of incidents involving people, pets or objects being pulled under and entrapped at the rear of the treadmill, by the time the company informed regulators, the CPSC said.

“Those reported incidents included the death of a child and 13 injuries, including broken bones, lacerations, abrasions and friction burns, the agency said.

“After initial resistance from the fitness company, Peloton and the CPSC jointly announced the recall of the Tread+ treadmill in May 2021.”

HPS thinks this is significant because it shows that the greatly-weakened CPSC, often portrayed as “toothless” by the bicycle industry, does indeed have fangs that bite, and when it gets the support of Congress, can and will enforce section 15(b) of the Consumer Product Safety Act.  

The bicycle industry association, in HPS’s opinion, should pay careful attention to CPSC going forward.

2. Both Merida and Ideal Bike announce top management changes. The story appeared in Bike Europe, and reports:

“Merida CEO Michael Tseng will step down as president of Merida. His son, Vansen Tseng, will assume this position following an approval by Merida’s board of directors effective 1 February.

“Ideal Bike general manager Tim Lin already stepped down on 31 December 2022, but will remain with the company as special assistant to the chairman. At the turn of the year the vice president of Ideal China, Frank Chen, was appointed as Lin’s successor at Ideal Bike.”

Merida is the number two bicycle and e-bike Original Equipment Manufacturer (OEM) in Taiwan, with manufacturing facilities in mainland China and Europe. The U.S. brand most associated with Merida is Specialized. Merida also owns a percentage of Specialized.

Ideal is the number three bicycle and e-bike OEM in Taiwan, with manufacturing facilities in mainland China, and is the source for a variety of U.S. and European brands.

Merida is a public company traded on the Taipei stock exchange, and we believe Ideal is as well. HPS finds the timing a bit odd given the uncertainty of 2023 and what we believe is the mounting financial pressure on all the top-tier Taiwanese bicycle industry OEMs that also own and control manufacturing facilities in China.

3. The US bike manufacturer Specialized announced last week that it was laying off 8% of its employees, or some 125 people. This headline comes from the January 17 issue of The Outer Line, a cycling enthusiast newsletter. It goes on to report: “This comes just a few weeks after discontinuation of its ambassador program. While severe economic challenges have impacted companies both across the bike industry (Outside, Zwift, Wahoo, Strava, Pearl Izumi, The Pro’s Closet, etc.), and the wider economy in recent months, Specialized’s pullback signals a significant retrenchment from their early COVID-era aggressive expansion plans, which included purchasing and opening their own retail network and even starting a consumer-direct sales pipeline.

“Outside of the simple fact that the era of cheap capital is over, this retreat confirms that the COVID bike boom was an aberration that pulled future years of consumption forward. The initial misread of the trend by the industry’s major brands, and ensuing production bottlenecks and product shortages, triggered a whiplash effect where there are now too few customers and too little money chasing too much product. Ironically, the industry has come full cycle: the next few years will likely look a lot like the landscape before COVID hit in early 2020.”

This enthusiast cyclist newsletter offers the opinion to affluent consumers that: “…the COVID bike boom was an aberration that pulled future years of consumption forward.” HPS finds this a plausible theory as relates to the market for high-end acoustic bicycles, and worth considering from a consumer research standpoint.

4. Specialized re-organization also impacts European operations. This headline is taken from a January 19 Bike Europe article that reports: “Citing a changing global economy and faster than anticipated changes within cycling, Specialized announced the job losses on January 11. The press release stated that an organisational adjustment will allow the brand to be adaptive and continue to invest in innovation. Giant is another manufacturer taking extreme measures to future-proof itself. In December the company wrote to its suppliers asking for payment postponement.

The article shows a picture of the new Specialized European headquarters located in Arnhem, the Netherlands, and also says: “A representative of the European operations, confirmed to Bike Europe that employees in Europe are also affected by the layoffs, but no further details were given than what was in the press release coming out of Morgan Hill. It leaves the question, who will be the next big brand to announce strategic repositioning this winter? Watch this space.”

HPS agrees with Bike Europe, and is also watching for who will be the next big brand to announce strategic repositioning this winter.

5. 2023 may be a rollercoaster for e-bike prices. For those of you who follow electrek, you know Micah Toll writes an article almost every day. This one ran in the January online consumer newsletter, and offered the opinion that:

“Prices in the electric bike industry spent years with relative stability until the pandemic’s many ripple effects wreaked havoc on the industry. Over the last few years we’ve watched prices rocket up and then plunge back down again in a matter of months, only to repeat. Many riders had hoped to see 2023 bring with it a return to normalcy in the industry. Based on the several recent price changes across many companies, that doesn’t appear to be the case.”

The article ends: “With only a week into 2023 and no stability in sight, don’t expect to count on this being the year that prices drop back to normal for good.”

From what HPS has seen since this article posted, 2023 will be a rollercoaster for e-bike prices, primarily DTC, but spilling over into specialty retail.

6. “Global e-bike brands gather in Las Vegas for back to normal CES.” This is taken from a January 17 Bike Europe article. HPS attended the Consumer Electronics Show in Las Vegas, but came away thinking this headline is slightly overstated.

The stringer who wrote the Bike Europe article states: “Held from 5-8 January, the event attracted more than 115,000 visitors and 3,000 exhibitors. For the 2023 edition, organiser Consumer Technology Association still focused on electric mobility with a growing number of car manufacturers, but also a multitude of e-bikes brands. A hot topic this year was vehicle-to-everything (V2X) technology, which continues to catch the attention of more companies.”

HPS agrees that V2X technology will be a hot topic in the bicycle market going forward, as was shown and demonstrated at the PeopleForBikes SHIFT-22 Conference. However, a “multitude of e-bikes brands” is an overstatement. The brands identified in the rest of the article are Komda, Invanti, LUL, Vinfast, Cake, and RCA.

HPS’s Mike Fritz advises anyone wishing to attend CES in the future to study the hall layouts and attendees and make a plan for efficiently navigating and visiting exhibiters. Otherwise, the size of the show is overwhelming.

7. VanMoof asks investors for additional funding to continue operations. A January 24 Bike Europe article announced: “The trendy Amsterdam-based brand VanMoof has seen its turn-over hike since 2017. A strong global branding made it an attractive investment for private equity. But VanMoof has also experienced the back side of the current supply chain problems, just like many others in the industry.

“Without a capital injection, the company warned its future was in danger within two months,” reported the Dutch financial newspaper FD yesterday. The preliminary annual report for 2021, which was filed just after the turn of the year, stated that the e-bike manufacturer was discussing with investors and suppliers to pay between €10 and €40 million. It now appears that only existing investors participated in the latest capital injection. These include London-based investment firms Balderton and China’s Hillhouse.”

HPS notes that this situation may be attributable to the company’s original business plan, and not reaching the revenue required to cover expenses in the face of declining sales.

8. Amprio confirms take-over by SRAM. On January 5 Bike Europe reported: “This week Amprio confirmed the take-over of the e-bike components business of Rheinmetall by SRAM. Bike Europe learned from industry insiders that SRAM is now taking serious action to join the e-bike boom.

“SRAM is late coming to the e-bike electric propulsion system party, and any acquisition in Europe now has a higher risk attached to it because of the economic conditions brought on by the Ukrainian war. With this said, SRAM has a good solid reputation as a drive train and system source, and a European supply base will be beneficial against established competitors in the EU.”

9. McKinsey-WFSGI study reports industry braces for headwinds. On January 26 Bike Europe announced the WFSGI and McKinsey annual report “Sporting Goods 2023 – The need for resilience in a world in disarray.”

“ZURICH, Switzerland – Rising costs, the looming threat of larger recession, low consumer confidence and continuing operational challenges are set to create headwinds, according to sports and bicycle the industry executives. This is one of the key findings from the WFSGI (World Federation of the Sporting Goods Industry) and McKinsey latest annual report.

“In 2022 consumer sentiment was improving month-on-month, reflecting looser COVID-19 restrictions in most markets, companies were placing large orders, both in anticipation of demand and to avoid the supply chain challenges of 2021, and performance in the first half of the year was widely positive. However, inflation was picking up due to the impacts of the war in Ukraine, with higher raw material and energy costs prompting some companies to raise prices. In the meantime, consumer sentiment showed signs of deterioration with -40% consumer’s net intent to purchase sporting goods items, and discretionary spending declined. Supply chains gradually became more reliable, but the sudden increase in available product in destination countries paired with declines in spending led to widespread overstocking.

“According to the WFSGI and McKinsey, 2023 is expected to be a challenging economic environment with continuing subdued consumer sentiment. This will require a holistic approach from sporting goods companies to focus both on preserving demand and building resilience. WFSGI and McKinsey write that in 2023, four key themes will shape the industry:

“Brand relevance: Sporting goods companies are among the most effective brand builders in the world. As consumer expectations rise and brand relevance deepens, brand building is expected to become more important.

“Sustainability: Accelerating decarbonization and scaling circular business models will be key for sporting goods companies to meet their aspirational sustainability targets.

“Nearshoring: In an era of supply chain disruption, more companies are likely to turn to nearshoring as an element of de-risking and speeding up their supply chain strategies.

“Industry is profitable growth for private investments: The success of sporting goods brands has attracted a wave of private investment. This is especially true for complementary brands, brands with an elevated digital interaction with consumers, and analytics at scale.

HPS will study and analyze this report in detail, and advise clients of its findings. Clients and interested companies and individuals should obtain the report and conduct their own review, keeping in mind that the U.S. bicycle business stands apart from the European bicycle business, and both are subsets of the sporting goods markets in Europe and the U.S.

10. Council member’s bill would ban e-bikes, e-scooters in NYC. This is from a January 26 Bicycle Retailer and Industry News (BRAIN) online article that reports: “A New York City council member introduced legislation a week ago to ban e-bikes and e-scooters until they can be made safer and called for them to be treated like motor vehicles.

“The bill, put forth by Robert Holden on Jan. 19, would repeal the 2020 law that made e-bikes and e-scooters legal in the city and calls for a $500 fine. It would not include electric wheelchairs or other mobility devices designed for those with disabilities.”

This is serious and immediate. The Micromobility Reporter (TMR) lead story this month, “It Is Our Problem!” focuses on the importance of the American bicycle industry trade association recognizing that all e-bikes sold in the U.S., and all lithium-ion batteries used to power e-bike propulsion systems, are within their purview and responsibility.

The National Bicycle Dealers Association (NBDA) has actively engaged with the New York City Council and the Fire Department of New York City, along with UL and CPSC, to find solutions to the New York City e-bike lithium-ion battery fire problem, and do so in a manner that will not result in the banning of e-bikes.

11. Rad Power CEO: “We recognize that we have made mistakes.” Several trade publications, consumer publications, and new media reported this, and the latest is a January 27 article published online in BRAIN.

“Rad Power Bikes CEO Phil Molyneux said in an e-mail to customers this week that the company has made mistakes and will learn from them. In the past year, the direct-to-consumer brand had three lawsuits filed against it, including one for a wrongful death of a girl riding as a passenger on one of its bikes.

“As a young company, we recognize that we have made mistakes. Now we are dedicated to learning from them,” said Molyneux, who succeeded founder Mike Radenbaugh in November. “The culmination of these efforts represents the ‘New Rad,’ one that combines the forward-thinking innovation of our early years with the knowledge and resources to make us more customer-focused than ever before.

“In October 2021, Rad Power announced that its latest $154 million financing round brought in a total of $329 million in investments since its inception in 2006. The company claimed then it was the world’s best-funded e-bike brand, at least in the direct-to-consumer market.”

Micah Toll of electrek is fond of referring to Rad Power Bikes as the largest e-bike brand in North America, and he bases this in large measure on the $329 million in investment since 2006. True, the Rad DTC sales figures are impressive, but as the title of this article states: Confronting Shrinking Sales After a Pandemic Driven Boom.

HPS would not have advised the president of Rad Power Bikes to make the statement about a “New Rad,” but we were not asked either. Watch Rad carefully from this point forward as the market and financial pressure rises.

12. Giant Group buys minority share in Stages Cycling in $20 million deal. This article was also in several trade publications, and this is from a BRAIN January 27 online article:

”Giant Group has made a $20 million investment in Stages Cycling, acquiring 32.5% of the company’s common stock according to a filing with the Taiwan stock exchange.

“Stages, based in Portland, Oregon, makes stationary smart bikes for the commercial gym and home markets, crankarm-based power meters, and GPS bike computers. Giant has manufactured some of Stages smart and commercial indoor bikes for several years, and Giant also distributes some Giant-branded Stages GPS computers to its dealers globally.

“According to the announcement in Taiwan, on Jan. 20 Giant’s board approved the purchase of 32.5% of Stages Cycling Inc. common stock for $6.5 million and Stages Cycling’s convertible corporate bonds for $13.5 million. Giant made the investment through its subsidiary Gaiwin US I Investment Inc. 

“Giant said its strategy is to expand Giant Group’s presence within the indoor cycling market and to build Giant’s ‘cycling ecosystem.’”

Even in good times, this would have been an unusual acquisition. Giant just bought about one-third interest in a large customer for not a lot of money, depending on what the financials of Stages Cycling Inc. look like.

The convertible corporate bonds will convert to stock, in which the value of the 32.5% common stock convert to over another 64%. We may be wrong, but HPS analysis is that Giant just pulled a relatively large OEM customer of its fitness plant out of a financial crisis for now.

13. What tracking one Walmart store’s prices for years taught us about the economy. This last article is from a January 26 NPR article that shops a Walmart store in Georgia, in Liberty County, just south of Savannah that was shopped in 2019, before the pandemic and inflation. This normally wouldn’t make our newsletter, but out of the hundreds of items NPR put in its shopping cart for comparison, one was a bicycle!

Note that the last item above is a “Girls bicycle with training wheels.” The brand is Kent, and the Package Price in August, 2019, was $68.00. The Package Price December 2022 is $98.00, an increase of 44%.

We don’t know any more about the bicycle itself, or whether it was imported or assembled at the Kent-owned Bicycle Corporation of America plant in South Carolina. What we do know is the retail price leader, Walmart, had an inflationary price increase of 44% from the summer of 2019 to the winter of 2022 in the retail price.

While HPS is not aware of any similar retail price tracking in the industry, this one example may explain, at least in part, why the American bicycle business is confronting shrinking sales after a pandemic driven “boom.”

Contact Jay Townley:


The following is taken from The Outer Line, December 14, 2022. While the audience is primarily adult enthusiast cyclists, HPS found the author’s observations compelling as related to the overall American bicycle and e-bike business. We edited the original article for easier reading.

A few weeks ago, we commented on the turmoil and downsizing occurring in the cycling and other niche sports media platforms. As economic headwinds and uncertainties continue, this trend continues to intensify – in both the overall media business as well as the broader bicycle industry. With declining ad revenue and more hesitant subscribers, media platforms across the board are tightening their belts.

Substantial cuts have more recently been made at mainstream media firms like CNN, the Washington Post and USA Today. As former CNN host Brian Stelter put it in an essay for The Atlantic, “Media Winter is here once more, and it is getting ugly.” 

It seems that a “prerequisite for working in media in the 21st century is a tolerance for turmoil and constant change, continuing consolidation and ownership change; politicians and CEOs like Elon Musk fighting about coverage, AI threatening to replace writers, and not to mention that the pay is often terrible.” And it may be tougher in smaller niche media markets like individual sports verticals.

Another observer summarized it more concisely, saying, “Media is one of the worst businesses known to man.”  And it’s not just in the media. Layoffs have spread far beyond the editorial side in the cycling world, just two years after the historic “COVID boom.”

This retrenchment was best illustrated by COVID-darling Wahoo reportedly laying off at least 15 percent of its staff – likely largely due to over-extending itself after incorrectly assuming pandemic consumer habits would remain even after things returned to normal.

In addition, its partner turned competitor, Zwift, released a smart trainer significantly undercutting Wahoo’s indoor riding products. Strava has also reportedly laid off about 15 percent of its staff, as did The Pro’s Closet. And Specialized just discontinued its special ambassador program.

Beyond being a reflection of the current economic and financial headwinds, all of these recent developments also suggest that rather than COVID causing a boom in consumer spending, it may have just brought forward several years of spending. Hence, because of this over-optimistic forecasting, we will likely see the industry enter a prolonged lean time.

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