[Closed] Bike shops and RRPs

LBSs have little choice but to offer big discounts, particularly at this time of year, otherwise there's just no competing with the big online retailers for the most part, unfortunately for most LBSs they're not going to sell stuff at any where near as high a frequency as the online shops and to be taking such a hit on profit is not going to help them out long term!

Unfortunately it would seem that everything is just getting more expensive, but it's further down the chain than the shops as they're having to pay more too...I think we just need to accept that it's not a cheap hobby!

Consumer marketing is now very much discount driven - attitudes have changed and getting a discount is a major influencer in a buying decision at retail stage.

Think DFS etc - the bike industry was just slow to catch on to an emerging trend.

spot on but at least give your lbs a go.

On a separate thread I chose a new brakeset, deore 80 quid both ends from crc. This morning I asked my lbs if they could match it, anyway,tomorrow they are fitting the new brake set for same crc price (& trimming cables down).

In future I'll always ask lbs before ordering online - it would be sad if they disappeared.

So, profit margins have remained similar after discount?
I just can't understand, considering how popular the whole thing has become, how bikes are the price they are compared to 10 years ago.

So, profit margins have remained similar after discount?

[Hollow laugh]

No. Shops are discounting stuff to try to compete with the online retailers, but without their buying power, grey-market sources and low overheads.

Traditionally I think a lot of businesses of all kinds operated on the same model: of the RRP, the shop kept about one third, the distributor kept about one third, and it cost the manufacturer one third. e.g. your £90 hub was sold to the distributor for £30, the bike shop bought it at £60 and sold it to you at £90.

Of course this means the distributor and shop make money - this pays for a distribution network and for a nice well-stocked shop with knowledgeable staff. It also potentially allows some room for discounts, at the expense of margin which would otherwise go to the shop or the distributor. That margin is what pays the shop's wages, rent, rates, etc. and allows them to keep lots of things in stock for just when you need them. Or it pays the distributor's wages, rent, warehousing costs, import duties and pays for the distribution and rep network.

As andyrm says, "attitudes have changed". A small number of very large, mainly internet-only, companies hold a lot of buying power so can negotiate good prices direct from the manufacturers and sell direct to the customer, meaning that with huge warehouses and a good courier network they only need to make a few pennies profit from each item to make a significant overall profit. Some customers expect bike shops to match those online prices, without considering that their small local bike shop does not have huge buying power but is expected to hold a lot of stock, and some seem to get indignant at the idea that people who work in bike shops or distributors need to be paid wages. The bike industry is generally not well-paid; a love of cycling in some form is usually the motivation to work in the industry.

[b]tl;dr - actual bike shops cost more money to run than Internet shops. Be nice to your LBS.[/b]

But at the same time..... 5 years ago if you told the average punter that a bike cost £1000 you'd have heard "you could buy a car for that". Looking in the shops today there's a lot of high end kit and more bike stock than I ever remember seeing before. I think that newbies are typically buying much higher end kit. £100 profit on a bike costing £1000 is the same at the end of the day as £100 profit on a bike costing £500, but the £1000 bike will have more room to discount.

I think that newbies are typically buying much higher end kit.

Not from our point of view.

[i]£100 profit on a bike costing £1000 is the same at the end of the day as £100 profit on a bike costing £500, but the £1000 bike will have more room to discount.[/i]

£100 profit on a bike costing £1000 is 10% profit.
£100 profit on a bike costing £500 is 20% profit.

The latter, 20% profit margin, allows for "more room to discount".

£100 profit on a bike costing £1000 is the same at the end of the day as £100 profit on a bike costing £500, but the £1000 bike will have more room to discount.

Not sure how the bike at £1000 offers more room to discount?

It's harder work to sell a product at £1000 than at £500, especially to people who see no difference, or don't have any need for any difference, in functionality.

£100 profit on a bike costing £1000 is the same at the end of the day as £100 profit on a bike costing £500, but the £1000 bike will have more room to discount.

£100 profit on a bike costing £1000 is 10% profit.
£100 profit on a bike costing £500 is 20% profit.

The latter, 20% profit margin, allows for "more room to discount".

I meant £100 profit after discount. I'm working on the assumption that there is the same % profit margin on both bikes initial. ie to end up with £100 quid in your pocket after the sale, the more expensive bike can show a bigger discount.

Not sure how the bike at £1000 offers more room to discount?

It's harder work to sell a product at £1000 than at £500, especially to people who see no difference, or don't have any need for any difference, in functionality.

See above. I think people are buying more expensive starter bikes than they were 5 years ago. Am I wrong?

If its anything like the industry I work it, the distributors are making nowhere near a 3rd of the RRP.

More like a tenner/20 quid.

Its the manufacturers who are making the money!

[quote=fourbanger ]
See above. I think people are buying more expensive starter bikes than they were 5 years ago. Am I wrong?
Forget the STW/Trail Centre market place. Most "starter" bikes cost a lot less than £1,000

That margin is what pays the shop's wages, rent, rates, etc. and allows them to keep lots of things in stock for just when you need them.

On a slightly ranty side note I have found this not to be the case at all. Numerous times I have attempted to get something from a LBS for them to not have stock. The worst case was when I broke a 10 speed SLX rear mech on a Thursday before a weekends planned riding. I called 5-6 shops in the Birmingham area asking for a SLX or XT and none of them had 10 speed in stock. It's hardly an exotic part. I get that there could be reasons beyond the control of the shops themselves but none the less I didn't get my rear mech when I needed it. I have experienced this with knee pads, chain rings and tyres to name but a few.

Forget the STW/Trail Centre market place. Most "starter" bikes cost a lot less than £1,000

Lets not get started on STW and being overbiked!

Lack of stock is the main reason I'll shop online. What's the point in the LBS ordering one in (often taking over a week or more due to minimum order requirements), then not getting around to phoning you when you can use an efficient online retailer, have the kit often in a couple of days for half the price.
I do shop with my LBS, often it's impulse buys. I'd love to buy more clothing from them but it's all endura, altura or royal. Same stuff they all sell.

In 1991 it cost £1000 for a Specailized Sun-tour pro with rigid forks and rubbish rim brakes.Look what you can get for a grand now suspension forks,disc brakes and alot more for your money.
Trek 2.3 in 2010 cost £1175 in 2013 the same model is £50 cheaper better spec and much lighter.

That's not comparing like for like.

[quote=dobiejessmo ]In 1991 it cost £1000 for a Specailized Sun-tour pro with rigid forks and rubbish rim brakes.Look what you can get for a grand now suspension forks,disc brakes and alot more for your money.
Trek 2.3 in 2010 cost £1175 in 2013 the same model is £50 cheaper better spec and much lighter.
That 1991 £1,000 was only worth £560 in 2012

I wasnt comparing like for like.Just saying you can get more for your money with some bikes now than a few years ago.The differance now is you can buy bikes up to £10,000 OUCH.My 2013 Trek 2.3 is way better than the 2010 one and cheaper thats good.

1.I've long wondered why LBS's don't all group together to use their combined purchasing power. All together they must sell at least (if not more) stuff than the online boys?

2.I still hate going into any of my (all very good I'm sure) LBS's just for a browse. I can look at online shops, and indulge my fantasies for hours. But going into a LBS, I feel I'm being looked at as a potential thief or they're all just thinking "well ARE you going to buy something?". Though I'm sure this is my problem, it still stops me going in.

I end up saving up my visits till I need something cheap (ie tube) that I don't mind paying for, whatever it costs, then spending an hour in there.

3.(and final rant) I don't see any LBS innovation, well very little. If you look at what STW is trying to do in the publishing world, they are not happy to live in the status quo, they are shaking it up a bit and trying new things. I don't see any of that in the LBS world. For example (really just off the top of my head), what about demo nights. Get lots of locals in, get a deposit off all of them up front then let them ride every bike in the shop. I've no interest in buying 99% of the bikes in most shops, so would never think of getting a test ride. But would love to have a blast, and who knows. I'd even be willing to pay a fee.

Just food for thought from a user.

For example (really just off the top of my head), what about demo nights. Get lots of locals in, get a deposit off all of them up front then let them ride every bike in the shop. I've no interest in buying 99% of the bikes in most shops, so would never think of getting a test ride. But would love to have a blast, and who knows. I'd even be willing to pay a fee.

What happens when all the bikes are then used. Who wants to buy a used bike? Shop knocks down price, and thus profit margin, gaining next to nothing out of the deal, except possibly some goodwill.

Local/regular riders are not likely ime to want to pay for a test ride; as a local, certain things are expected don't you know!

And as you admit you aren't interested in buying, doesn't it make the whole exercise a waste of time? You have a fun night out, the shop ends up with a used bike it has to then knock down to sell.

I would have thought that anyone who would turn up at an event like that, is potentially the sort of person to buy a bike. Maybe not today, but at some point. I might not be interested in a road bike, a style that doesn't appeal to me, but I may well test ride one. Then 6 months down that line I might have a change of heart/interest, the LBS that let me have a test ride previously would be my 1st port of call.

As I say, was just off the top of my head. I'd love to be more at one with my LBS, but just find them a bit out of reach.

they're all just thinking "well ARE you going to buy something?". Though I'm sure this is my problem, it still stops me going in.

I get the same feeling - you can't browse in LBS these days. Probably because they think that people are just looking to see what the product looks like before they buy it for half the price online. Which I usually am.

After 6mths in a LBS and then 8 years at Halfords I don't buy anything from either. There isn't a single job I cannot do myself in terms of maintenance, so have no need of the service side and neither can compete on price with online.

The one thing LBS could offer is a proper demo. I was think of going full sus until very recently. However, before I slap down £2k I want to ride the thing - I cannot afford to make a mistake that expensive. I couldn't find a single bike shop that could offer a demo. One offered a ride round the car park, but that won't tell me anything. The normal reason is they don't want the tyres to get dirty!

As above, I'd be quite happy to pay a fee to have a blast round a trail on something I wouldn't normally get the opportunity to ride. And again, who knows.

P.S. mark up on most accessories is about 2/3's. On the bikes it's much less. That's why a good salesman will often offer you a discount on accessories if bought with the bike, rather than just the bike 😉

Weedlikesbeer, I'll stick up for at least one of my LBS's here. You can actually get a proper test ride, you can borrow the bike for a weekend and take it out on the trail etc. I think they make a charge of £50, discounted against a bike if you buy. I think that is fair enough, but is only suitable in circumstances when your pretty set on buying one.

I'd guess that a significant proportion of people who take a bike for a test ride from an LBS are doing it so they can find out what they want to buy online. Ditto helmets, shoes, gloves, clothing, etc.

Worse are the ones who then come back into the shop and say "look, I bought this from Wiggle for £[i]x[/i] less than you charge!"

my LBS just seems to sell either BMX's or TOP of the line roadies and pivots ect..... i went in looking to spend about £1500 NOTHING the best they could do was a whyte 120 (2012) for £1899..... had a quick google and ended up getting a rocky mountain altitude 50 for £1500.....down from £2300.... if my LBS had better ranges of stuff for all budgets then there would not have been a problem 🙁 now everytime i go in i get comments about "you not get that on the clicky clicky shop" just making me not want to go there for anything....

OK, here's another, off the top of my head ideas...

I've just looked on wiggle for a £3.59 Cateye light to rack bracket. To get next day delivery would cost me £5.99 extra. There's very little chance any of my LBS's would carry stock, and I'm not going to spend half my Saturday checking out if they have or not. So why don't LBS offer to be a collection point for things from Wiggle etc? Amazon locker style.

The LBS could get a huge box of things delivered, so delivery cost would be minimal. I could pay a "collection" charge to the shop, say £1.50. They might not make much money of that, but chance's are I'd buy something else while I was in there.

UrbanHiker, the demo night is the future.

I was invited to one at my LBS, was an informal affair, drinks and nibbles etc, all the staff there, just talking (major levels of geekery, was ace!) about bikes. I went down as a dyed in the wool MTBer, and went down to look at some 140-160mm trail bikes and a dh bike they had brought in for the evening.

Got chatting to a group of people, got on to the subject of road bikes (there was some serious exotica that had been brought in to show off, think £12k De Rosas) and I was following my usual line of

'It's not for me all that leg shaving, lycra and skinny tyres lark, sounds dead boring'

'Have you tried it?'

'Uurr, no....'

'Go for a quick spin on this (mid spec carbon framed bike), see what you think.'

I went for a quick spin, I was converted. That shop will have had close to £3.5k out of me on road bikes/kit once I finish saving for my next purchase that will be bought around a year after that first night. Had I not been to the do, I'd never have even thought of riding a road bike, let alone buying one for winter and summer!

Admittedly not everyone is going to do what I've done but if a few do, its got to be worth the price of an evening and a few drinks and crisps.

I hasten to add that I haven't shaved my legs....

I won't buy consumables in an LBS, as they can be found online for much less oney. I rarely need their spannering expertise, except for wheelbuilding (yet to try it) and stuff that needs silly expensive tools (facing tools, bearing pullers/presses) at which point I am perfectly happy to pay.

Clothes though, very different matter. You need to know it fits. What's more, just as an example, popular stuff like Humvee shorts can't be found any cheaper online than in my LBS. I got a pair yesterday, with a bit of a discount, for less than I could get them online. The shop price tag was the same as eBay etc etc.

[quote=Scapegoat ]
Clothes though, very different matter. You need to know it fits. What's more, just as an example, popular stuff like Humvee shorts can't be found any cheaper online than in my LBS. I got a pair yesterday, with a bit of a discount, for less than I could get them online. The shop price tag was the same as eBay etc etc.
It's been noted that Endura aren't supplying CRC or Wiggle at the moment. That means LBSs are more likely to stock them as they'll not be getting undercut.

1.I've long wondered why LBS's don't all group together to use their combined purchasing power. All together they must sell at least (if not more) stuff than the online boys?

Organising bike shops is like herding cats. The Bike Station (a bike charity in Glasgow) had an open evening recently, with all Glasgow bike shops invited for free food and drink, to talk about how we can improve cycling in Glasgow.

I was the only person who turned up. The poor idealistic fools 🙂

There have been buying groups, they didn't last.

I only use LBS know them very well and get excellent service and a good discount.Cheltenham Cycles are having a sale brought some shimano XC mtb shoes in the sale £60 same shoes in CRC in there sale £84.If you dont go in them your never know what they have to offer.Everybody to there own.

I know someone who runs a very small bike shop, CRC/Merlin and the like sell shimano etc for less than he buys it in from Madison.

So he struggles. Been known to find the odd new boxed parst here and there on Ebay at better prices.

If LBS make so little on bikes, how come my LBS is selling bikes with 41% off? I'm sure they're not selling at a loss as they've been in business a while. So what are we looking at, 50% markup on bikes? An increase on the 1/3 talked about on here I think.

[quote=fourbanger ]If LBS make so little on bikes, how come my LBS is selling bikes with 41% off? I'm sure they're not selling at a loss
They are. There comes a time when you need to pay the bills - even if that means selling stuff off at a loss.

Often the maker will have deals this time of year
So the shop gets the bike at a discount.
There is not 50% mark up on bikes

Don't believe they're selling at less then they are buying for 1 second.

At the end of a model year, shops certainly will sell stuff off at less than cost price - better to be shot of it when it's 1 year out of date rather than being stuck with it...

Don't believe they're selling at less then they are buying for 1 second.

Sadly we sometimes have to 🙁

Example from the shop I work in from last year. 2010 Titus FTM alloy w carbon swingarm medium - rrp £1749.99. Titus go bust, picked up by On-One who start knocking them out, it is 2 years out of date, sell it for £500 and lose about £500 on the trade price. But better than having to dust it every week.

Don't believe they're selling at less then they are buying for 1 second.

then your either naive or stupid.

Every shop will sell stock at a loss if they need to. If a shop needs the cash to get new stock, having old models sitting around makes no sense. This isn't about bike shops, it is about all shops.

As for those who whinge when they can't get discounted models at the end of the model year, well no manufacturer wants to have any stock discounted, if they have left overs they screwed up the inventory control.