Reported in the American based Bicycle Retailer website, Shimano have announced price drops in the US market of up to 40% on components above SLX level.
Speculation abounds as to the reasons which is a pretty sure indication that they are complex, but one US retailer directly blamed the whole pricing problems faced by US dealers on the UK market, hinting that heavy price discounting here could be part of the reason that Shimano are ‘levelling the playing field’ for the US market.
“Even at the new lower cost, many items are still available cheaper overseas than here,” said US dealer Mike Jacoubowsky, “They haven’t really addressed the problem.
“The problem is the U.K. What other industry is there where customers can buy products for the same or less than we can? We’ve ordered pedals from Chain Reaction and Wiggle because they were cheaper than from Shimano,” he added.
Wiggle set to buy Chain Reaction Cycles
We spoke to one UK dealer who confirmed that he had heard nothing from UK Shimano distributor Madison about any changes in UK pricing, suggesting that the price adjustment may be a US deal only.
With the weakening dollar against other global currencies the differences between markets are becoming more acute. For periods in retail history, being a UK customer and buying products from the US has been a risky way of getting a bargain, but with the current rate of exchange around $1.45 to the £ that’s not been a viable option for quite some time. If this price adjustment is not a global strategy by the Big S then it’s possible this could still be good news for UK based bargain hunters willing to take a gamble with import duty and VAT charges, which can often leave you paying out more for the item than the RRP in the UK despite the low $ price.
Price Changes Ahead?
Many UK dealers are reporting that prices throughout the industry are changing with some predicting that 2016 will be the year of the consumer as prices throughout the industry are possibly set to fall, blamed by some on low demand and high stock levels throughout 2015. But the risk to dealers is that with smaller margins and shelves already full of stock bought in at the old prices this could, in an ironic twist, land a lot of businesses in financial strife as bigger players and even some distributors look to clear out the overstock direct to market online, an option that many smaller dealers can’t afford to do.
When price changes from manufacturers include reductions in RRP (Recommended Retail Price, which is ‘set’ by the manufacturer) it can lead to retailers being instantly left with stock on their shelves that they paid more than the new selling price for. Since the market will demand that RRP’s are reduced instantly regardless of how much the items were bought for by the retailer, this can lead to retailers having to sell current year stock at a loss.
We will, as ever, be keeping a close watch on developments from the industry and as more information dribbles in we’ll keep you updated, but since it’s ultimately the buying public at the pointy end of price changes we look forward to your take on all this in the comments and the forum.
Read the full Bicycle Retailer report here
Comments (5)
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Amusing that the US blames folk in the US buying from the UK, when many folk in the UK buy from Germany as its cheaper than the UK (at trade in many cases, particularly for SRAM). Its just the way of the modern connected world I guess.
What are they whinging about? Try buying a frame priced $1500 dollars there, we pay the same in pounds which is a cool £400 pound mugging depending on prevailing exchange rates! .
It is the retailers that have an issue, not the end user. Just like in the UK consumers buy there parts online from the cheapest place.
In the USA there is no import duty on bike parts, no 20% VAT to be paid and, in many cases, free postage over $100. Buying from CRC is cheaper in the USA than it is in Ireland and much cheaper than any local retailer can match, even the big, online guys.
I can only assume that they are unable to reproduce the business practices for legal reasons. Though as a rout US retailers must have more clout than European retailers.
Dealers in the UK make bugger all from selling Shimano. That’s why most IBD’s hold no Shimano stock anymore.
EG XT 1×11 Groupset from Madison (on special trade offer) £270 Same kit from Chain Reaction £300.
I need to make 25% margin on everything in my shop just to pay the bills.
And SRAM have just launched their new budget 1×11 groupset NX today.
What a time to be alive!