[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.

Selling at the cost you paid is a loss as you had to assemble it stock it sell it and support it.

My current lbs will ask what online price you can get and make you an offer. If he can't compete he tells you. Ie no margin on Garmin etc. Missus was looking at sram gear. He can get close enough and fit to make it worth doing. Her sister bought a seat he had in stock online as it was a fiver cheaper. She then asked me about road cassettes. I sent her to the lbs as she has no way ogre fitting the part when it arrives.

This place also has a large number of demo bikes as have my previous 2 lbs.

Some great people out there and once you get beyond the ticket price and look at the value it all makes sense to shop local. I can do all the mechanical stuff it need but the offer of fitting a new mech when I snapped mine in the shop there and the while I do something else makes sense. I don't always have the time to do stuff. If I charged it at my charge out rate it would double the price.

My lbs is selling a storck custom build roadie they've had for a couple of years (original 'buyer' fked them over) rrp is £7200, they are selling for £4000, a 'significant' loss. But like has been said before, bills need to be paid.

there is much said for LBS. I bought a full xt groupset from mine with discount and although it was still about £100 more than online prices they stripped the bike and built up with the new groupset for free. Then 4 months later when the brake calliper failed they replaced it as soon as they could and took up the warranty issue with distributor at their risk as it wasn't 100% obvious it was warranty failure and didn't charge me a penny for the labour either.

so currently after a road bike and although I could get a better spec brand online I want to buy a bike from my local guys as I know if I have a problem on a sat afternoon I can just drop it in with them and leave it with them and normally parts dependent they will have it sorted by the Wednesday at no cost if it's a warranty problem. if its something I have done wrong I am more than happy to pay and never quabble.

so as always its swings and roundabouts

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.

That's a shame as group buying seems to have worked for the local electrical shops (Euronics)?

The lack of demo bikes is extremely annoying. I'm in the market for a new full suss and the one area that bricks and mortar stores can compete is that I should be able to touch, car park test and for a fee take for a proper demo. On visiting not just a local LBS in the North Wales area but a 'megastore' in Chester I was told they don't do demos and even a car park test was problematic. I have up to £4000 to spend. Why is this so hard?! (Transition dealers in particular - Email in profile!).

Problem you get is when crc did the reverb cheap the other week that was cheaper than most lbs even national shops get them for on trade and if they have a price match like we do we end up out of pocket on that because its lower than trade and to think we have the overheads of our shop with rent, wages and bills still having to be paid. I'm not saying people shouldn't buy of crc or others like that because money is tight and it's an expensive hobby but it could finish off some lbs.

That's a shame as group buying seems to have worked for the local electrical shops (Euronics)?

That's a different kettle of fish really, as it's a totally different marketplace: pretty much everyone buys electric goods, while relatively few people buy bikes.
People buying high-end bikes are generally very specific about the brand they want, whereas the majority of people buying electric goods aren't so fussed. So, if you've got 5 bike shops in one town, they all want to stock different brands to appeal to different customers, while electric retailers can comfortably all stock the same brands as it's the price that's important.
If all bike shops stocked the same brands it would make the industry a bit boring, wouldn't it?

The lack of demo bikes is extremely annoying

Massive costs involved,
They always get the demo bike you don't want - wrong model/size

Demo days from suppliers are the way most most brands seem to be going. It does means less chance to try the bike but means LBS stores don't have the overheads in a demo fleet.

Would you buy the transition frame for the full RRP if it had been built up to the shops spec for you to ride around the carpark then split down again for you?

I have demo bikes - but that's because you really need to try recumbents. I can afford it because most recumbents only come in one size, they don't change models every year, and they don't depreciate like they've fallen off a cliff.

So I can have one demo bike per model, keep it for a few years until it gets scruffy, then sell it for at least cost price. Can't do that with MTBs I guess.

But can't shops have demo bikes shipped to them when requested by a customer? I'm sure they would if they could, but this seems like a shift from a few years ago when both Lapierre and Orange (for examples I have experience of) were supplying shops with demo bikes on request. I can understand a shop not being able to carry the cost but if brands that use stores want to sell bikes, they should give us an incentive not to use online retailers (Canyon/YT).

The building up of a bike sounds like a pain in the proverbial for the shop, but any sense that I can get that a bike might be right for me would be useful. To add an edit for the point about full RRP the answer is yes, assuming that online prices and store prices are not worlds apart. My fettlng skills are less than impressive so a good relationship is needed!

But can't shops have demo bikes shipped to them when requested by a customer?

The building up of a bike sounds like a pain in the proverbial for the shop, but any sense that I can get that a bike might be right for me would be useful.

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

Just brilliant.

I won't type it again myself:

then your either naive or stupid.

saxabar - Member
The lack of demo bikes is extremely annoying. I'm in the market for a new full suss and the one area that bricks and mortar stores can compete is that I should be able to touch, car park test and for a fee take for a proper demo

Trouble is there are people out there who get sized up , test ride the bikes and then buy on line which is pretty demoralising for the shop .

I don't believe CRC for a minute.
They claimed the rrp for the Garmin Fenix in Australia is $549, & they have it for $471.
I bought one at my LBS for $449.

The market's changed for me as a LBS in the last 9 years since I started. At my first shop which was very tiny and back street I used to regard XT mechs and cassettes as essential stock. Nowadays I'm in a more central location with a larger shop but anything over Deore is just a liability.

Not all brands will pick up the £15 or so each way postage for a demonstrator. I'm happy to let anyone have a roll around outside the shop on any stock bike but £30 on a maybe struggles to compete with using the time to make progress on the pile of Claud Butlers and Apollos awaiting repairs.

How about a scheme where you pay a fee - say £50 - to try out something which is then refunded if you buy?

Or there's a scheme I've been thinking of for the bikes I don't have demonstrators of - a guaranteed buy back scheme. Buy the bike, decide you don't like it, I'll buy it back at some decent price (exact figures to be worked out).

Think a lot of shops do charge a fee for demo and then refund it off a purchase
It works ok for the place I'm in apart from one being stolen while on test and my boss taking a large hit

But much like many lbs high end shiny bits are just a waste of money
Changing tubes for people and fitting tyres is far higher margin

The interwebz is changing retail. Not just the bike industry, but everything.

Anyone can compare prices for just about anything on their computer at home, in a store on their smartphone, and just about anywhere else that they can get online. In the US, Amazon is on a warehouse building spree. Their goal is same day delivery in larger metro areas. Order by lunch time, it will be delivered that evening.

The LBS almost certainly can't compete on price. Their ace in the hole is service. Amazon can't/won't fix your bike, the LBS can/will. That is their strength and they need to play to that.

Google shopping makes it real easy to compare prices. The problem is that a lot of vendors say that they have items in stock when they do not. I do think that google and pressure from customers will fix this over time, though. And I could see this working to the advantage of the LBS in certain instances. Need an XT rear derailleur now so that you can ride this weekend? Use google or whatever to find one in stock close by. Maybe even schedule the installation or repair. LBS may be able to charge more for same day service or something like that. As the consumer, you don't waste time calling or going to shop after shop. Win, win.

Or there's a scheme I've been thinking of for the bikes I don't have demonstrators of - a guaranteed buy back scheme. Buy the bike, decide you don't like it, I'll buy it back at some decent price (exact figures to be worked out).

That sounds like a huge can of worms. Trying to agree a buyback price on something hardly used then trying to sell on something a bit niche that has been used?

They claimed the rrp for the Garmin Fenix in Australia is $549

No, surely they claim the UK RRP when converted to AU$ is 549? I don't think they can be expected to cross reference RRPs in every country they ship to!

Is it just me or has the industry as a whole added 30% to the price of everything only to then discount it off with a big % discount taglines?

It isn't just the bike industry, it's the whole retail industry. The rise of online retailers and discounters has led to an entire culture of 'reference pricing', where the RRP is in no way related to the value that the item will EVER sell at.
Often this is achieved by an agreement between a supplier and a/several retailers (for instance, sondico prices its football accessories ridiculously high so that sports direct can slap a 90% discount on £7.99 football gloves that should in reality have an RRP of under a tenner. This makes them look favourable compared to the equivalent Adidas/ Umbro products, and sells more, and sports direct get the sondico products at a far, far lower cost than the equivalent Adidas/Umbro products.)
Otherwise this may just be that through bulk buying contracts online and large chain retailers have managed to batter down the costs of products to the extent that they can make significant profit by selling far under the RRP. Sometimes brands accept this, often they dislike it, but almost always they cannot escape it by not supplying the retailers with the highest buying volumes. Endura’s decision is a brave one that many suppliers would struggle to justify commercially (but I hope it works, as it’s an excellent ‘price defense’ strategy).
Sometimes the LBS’s can negotiate solid trade deals to compete. Often they will simply have to eat into their profits to stay selling.
Annualised production cycles will help with the discount as well. New season bikes will be priced to ‘skim’ the market for those that want the latest and greatest (STW’ers), and priced higher due to this. Retailers would expect to cut this artificially inflated price down when the model year changes, and will buy stock with some expected to sell at the reduced price.

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 just technology. 10 years ago you would struggle to get a 1GHz laptop for lower than £1000. Today you can get a dual core 3/4Ghz for £300.
Several factors are involved in this. The industry has gone much more mass market and standardized than in 1991, meaning cheaper tooling and manufacturing/distributing/retailing economies of scale. R&D costs have dropped as a result (R&D costs will be far lower per unit because many more units are being sold). As such, there is a far lower cost in getting a new bike to market. Annualised production cycles have helped this. Often they are just a facelift and a respec, with minimal R&D involved unless the market changes enough for a full redesign.

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

It depends who you’re talking about; big retail chains and CRC should know better than to have to flog stock off at a loss due to lack of space. They have enough data from their millions of transactions that they should be able to stock efficiently, and not be so overstocked by years end that they have to make a loss on unit costs. They can cut into their margins with big discounts, but still make a profit.
But with a smaller bike shop, it is often a game of luck to anticipate what people will buy, with no statistics on consumer or buying behavior to aggregate likelihood of purchasing. If it doesn’t go to plan, they end up with too much stock in a far smaller marketplace(the local vicinity) and far less warehousing space. Flogging the stock at whatever it will sell at is necessary.

Oh, and apologies to anyone who had to read that. I'm a pricing consultant by trade.

It's why noone ever invites me to dinner parties.

That sounds like a huge can of worms. Trying to agree a buyback price on something hardly used then trying to sell on something a bit niche that has been used?

Possibly. My logic is that very, very rarely do I ever sell something and the buyer decides they made a mistake. So it's more a safety net for the buyer that would almost never get used. Also, the esoterica I do doesn't depreciate like normal bikes, so would have no problem shifting it for at least cost price - or indeed keep as a demonstrator for a while then sell.

What I need to think over is things like the time limit - say a month or so - and the buy back price. Need to price it so people aren't just renting a bike for a month 😉

James - interesting, but most of the bike industry isn't that sophisticated, most pricing is still done on a "cost plus" basis - take the cost of manufacture, add on margins for manufacturer, distributor and retailer, and that's your retail price.

often said that if i ever decide to open my own shop ill be operating it like a car garage.

repairs and spares.

bike sales account for such a small portion of the profit in a bike shop ime. - thats not to say they are insignificant but you certainly waste alot of workshop time in the sales side.

Plenty retailers in the city i live in - all of them have perminant 4-6 weeks + wait lists for repairs.

cazum - Member

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....

I could live without the BMXs (but kids round here seem to like them), but they usually have a reasonable range (of reasonable MTBs), maybe they'd run out that day. Having said that i didn't get any discount on the TLD gloves i bought just before christmas (despite giving them some really useful tips on recovering a flite saddle), if they give me a cup of tea next time i'll let them off 🙂

interesting stuff, james. The big mail order houses often buy grey market/OE stuff, sidestepping importers and rrps, or in the case of CRC [i]become[/i] the importer. I think the notion of RRP has gone out the window and I was always suspicious there was deliberate pricing for discounting, like your gloves example. On One is good example of this, with own-brand stuff and stuff you've never seen for sale elsewhere listed as being on sale. Havent figured out what the smorgasbord tyre costs as theyve been various "offer" prices since their release. I bought some Carnac Notus shoes from them, selling for £45 with an rrp of £145. Never seen Notus for sale anywhere, but comparing the shoes to others in the market I was happy they were a bargain.

Dont think I've ever paid RRP for anything bike-related in 20 years.

It's a difficult one, I remember from my days of working in a bike shop that there was little money to be made in selling bikes, all of the mark up was on stuff like tubes (what we paid for Spesh tubes versus what we sold them for was crazy). We also used to get good deals from the distributors when they had stock to get shot for, which meant we could sell it for less ( I got a cracking deal in my Demo 9 s Spesh had one left that they needed to get shot of ).

However, we were useless at stocking stuff that would sell ( I.e. the management completely ignored the local riding scene ). A lot of people got frustrated because we went from being able to do ad hoc orders as needed to a stupid online system and weekly orders. This meant that it became quicker to get stuff from CRC et al.

I do think shops need to innovate and provide a good reason to get stuff through them. I'll admit that I buy mostly mail order, but that's because there isn't really a local shop I can get to easily. The demo ideas are good; I'd be reluctant to drop some serious cash on a new bike without a good test ride.

(what we paid for Spesh tubes versus what we sold them for was crazy)

The % mark up might be huge but you need to sell a lot of tubes to keep a business going!

LBS will never be able to compete successfully on price. They can, and often do, compete very successfully on value. People who don't understand the difference will keep buying from the internet.

edlong - I buy shoes from my lbs because I like to get the right fit. I would not try in the lbs and buy online as that's taking the piss imo. I see no added value however In buying chains, cassette etc from my lbs and will always buy such items online. As most shops cannot let you demo bikes I am also quite happy to buy my bikes online.

I've been biting my tongue regarding this thread for such a long time now but I do need to throw my 2 cents out there.

Firstly I think the way that people are shopping is changing, the attitude towards the high street is starting to come full circle as a lot of people, like edlong suggests, are staring to understand the distinction between price and value. The average lbs cannot compete on price and often, those that try, fail. As a prime example, we've a John Lewis round the corner from our shop; a high street retailer that thrives by offering a level of service and support that couldn't be offered by a warehouse on an industrial estate. I think that's the model that will help the high street retailer survive and it's certainly the model we are trying to follow, and we're thriving

Secondly, I think there is a real danger here that all bike shops are being tarred with the same brush, in a lot of cases unfairly. We, for instance, spend 10's of thousands of £s on demo bikes and can often arrange demos on models we don't possess within a matter of days. There's no excuse other than laziness.

a high street retailer that thrives by offering a level of service and support that couldn't be offered by a warehouse on an industrial estate. I think that's the model that will help the high street retailer survive and it's certainly the model we are trying to follow, and we're thriving

Completely agree. The list of companies that I know that have successfully defended against price competition by offering something new, or better, than their competitors is almost endless.

The list of companies that have survived such a price war by nostalgia, relying on customers paying a higher price simply due to loyalty despite commercial sense, is slim-to-nil.

If you look at the case of John Lewis, or Richer Sounds, both high street retailers who are doing relatively well, they pride themselves on impartial, informed service, in depth demonstrations, long warranties and no-hassle returns.
If you look at comet, HMV or most of the plethora of big name retailers that have gone under recently, they simply offered very little to differentiate their customer experience.

In this case, good old fashioned service, flexibility and the ability to touch, see, try on and test items is what will save the LBS, not trying in vain to slash prices and slashing service as a result.

I do love these threads where LBS owners start talking about how much they are suffering. 🙄

At the moment we are seeing a huge boom in cycling. For the last few years we've had the MAMIL thing, the 'cycling is the new golf', C2W and last year the biggest ever year in British cycling with Wiggo, Cav and the Olympians inspiring people to dig out their bikes.

In all the years I've been riding I've never seen so many people out on bikes - even at this time of the year.

I've even seen Welsh cyclists wearing Rapha! In the Valleys!

I bumped into a LBS owner a few weeks ago at a cross race and was chatting to him about how popular everything is at the mo - the cross season has had huge numbers entering compared to 10 years ago. He agreed and said that his business has quadrupled. Yes, quadrupled! (Note to pedants: he didn't tell me if this was turnover, pre-tax profits or what, just 'business'.)

And last summer, our local evening ride had newbies joining us every single week.

Seriously, if a bike shop is struggling in the present boom then maybe they just aren't meant to be in business.

Oh, I'm certainly not struggling - but it's equally amusing to see experts who are absolutely certain we must be making fortunes from the bike business and it's massive mark-ups 😉

I know a LBS shop very well.They do well between March and November.But dont do much now.As for big mark ups on bikes thats a pipe dream.Take out all the over heads wages/etc doesnt go far.How many bikes do you sell over 2k a week Hmmm.The owner does ok but will never be a rich man thats for sure.