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The State of the Cycling Industry

Cody Sovis | Published on 11/11/2023

The pandemic triggered a widespread cycling boom in the US, with millions of households investing in outdoor activities and experiences. As COVID-19 concerns eased, travel and service-based spending normalized, and demand for bikes and accessories has fallen precipitously. The cycling industry has faced one of its most challenging years in decades, but there is hope that 2024 will improve. 

Cycling Industry Faces Double-digit Declines

Mid-year revenue shows substantial year-on-year declines from several of the industry’s biggest manufacturers and suppliers. Shimano’s revenue slipped 13% in the first half of 2023, with the brand adjusting forecasts to a 28% annual decline. SRAM didn’t release financials but was forced to implement sweeping layoffs in Taiwan. Another critical parts supplier, Guimeng, saw revenue from chain sales slip 34% in the first half of 2023. 

The decline is most pronounced in the US. Giant, which produces its own bikes and those of brands like Scott and Colnago, reported a 44% decline in US sales, compared to a 12% dip in Europe. It’s worth noting that Giant is increasingly buoyed by eBike sales, which contributed 25% of the manufacturer’s revenue in the first half of 2023. 

Excess Inventory Pinches Bike Shops

The current industry challenges result from backlogged inventory finally making it to market. Supply chain shortages plagued the industry for much of 2020 and 2021, when factory closures in Taiwan and China, plus shipping bottlenecks around the world, pinched inventory levels just as demand surged. 

Inevitably, manufacturers overcompensated, and many bike shops overextended themselves, bringing in massive orders just as demand shrank. Once healthy profit margins shrank, distributors and retailers were forced to discount new model-year bikes to generate cash flow. And there’s still a lot of unsold inventory; Accell, which distributes brands like Lapierre and Raleigh, reported inventory levels up 70% compared to 2022, more than three times in 2019. 

Brands and retailers are also facing a credit crunch. Servicing debt is more expensive due to rising interest rates and tightening lending standards

The Road Ahead

In aggregate, there are more cyclists - and more people - today than in 2020. In the long run, the industry will recover as inventory levels stabilize. For cyclists, it’s a great time to support your local shop and likely enjoy steep discounts on bikes and accessories - and you’ll be doing them a favor.