The impact on cycling of a deflationary retail economy

Although utilities prices are rising, consumer goods prices are coming down. And that includes bike gear. You would think perhaps it was time for all of us to run out and hoard rain gear, but the irony of deflation, is we tend to spend less. The moment we figure prices will continue to fall—that last year’s $4000 carbon wheel set on sale now for $2000 will be $1000 in a few months—we are on the cusp of a great revelation. We are about to see that everything under lights in the shops is just resin and steel from the same factory in China from which we might buy direct for a few bucks, if we just looked on eBay or alibaba. I’m waiting for the day when online bike stores outnumber pirate movie and porn sites and have to give away all their stock as free samples, just so people come to their sites and click on dating site ads in the margins.

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In the race toward a post-retail future, Germany is the nation to watch. They have gotten so tight, the Yanks have just had to reprimand them. From the commentary I’ve heard on this issue, I gather American capitalists fear a Malthusian cloud falling from the firmament, engulfing the world in economic depression and pinko politics, if German attitudes toward spending spread throughout Europe.

From where I stand though, those days have already come. Smart people in my elite sphere have passed over spending as something very last year. If they spend at all, they will do so on gumtree. But they’re not spending money in shops.

So who do shop keepers speak to? Folks without PhDs, I suppose. I ever they do have occasion to speak to someone clued up, it could only be over the phone. They will be calling from interstate, having just searched the internet and identified some piece of inventory gathering dust at the back of the shopkeeper’s storeroom. I was that customer two weeks ago, buying a frame from some interstate shop I will never visit. With the help of a few friends with tools, knowhow and old parts, I have since turned this frame I picked up below cost, into a bike.

Though it’s been made with more leftovers than my mother’s fried rice, it rides like a dream and photographs as well as anything I might have had custom made for me in Portland. But that would have been back in the days when spending was hip. To think, that was just one year ago.

About Steven

I'm on a mission to put cycling on the agendas of architects, urban designers and fellow academics, who see the potential for bicycles to change cities and buildings. My PhD is in architectural history and my interdisciplinary research spans art theory, philosophy and cultural studies. I teach architectural history and theory and design studio at The University of Tasmania, Australia, and formerly worked as an architect designing large public housing projects in Singapore.
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8 Responses to The impact on cycling of a deflationary retail economy

  1. Luke says:

    From the man who only needs 9 bikes….

  2. Rob(erto) says:

    Looks like a bought one …

    Certainly one would not want to be involved in retail these days.

    While the downward spiral of prices for some goods is definitely a factor is it also consumer fatigue???

    How much can you buy/have???

    • Steven says:

      Hey Roberto, yes, a bit of fatigue on my part. Perhaps that’s just an age thing. But aren’t you the master of skimping?
      I think these are good times to be a skilled bike mechanic with a full set of tools and access to rare parts.
      Bike shops will do better when they start pushing transport bikes and advocating against bike helmets laws.

  3. Jared says:

    I work for a parts distributor in the US. I’m a grad student in planning, a racer, rider, and advocate. I’m all about a good deal. I’ll ride 9 speed because the price is right. So is advocating for a good deal a good idea? You make designs so that folks can bike to work, the store or wherever…. Why shouldn’t the local bike shop(LBS) be one of those stores. LBS’s are where most commuters I know go to get their bikes repaired because they aren’t racers with mechanical know how. They are just folks who have found an alternative to driving.

    Also, what about fair wages, copy right laws, and safe working conditions often not found in the country of origin that make cheap carbon wheels or similar type product.

    “The bitterness of poor quality remains long after the sweetness of low price is forgotten.”

    • Steven says:

      Hi Jared, nice points. In my view, bike mechanics aught to charge more for their time, premises, and tools collections. They don’t charge what they’re worth, because their business model (and rivals’ business models) builds in profits from components sales. It makes sense they stock certain components: spacers, chains, cables etc.. But most components are better off stored by huge warehouses attached to buy-direct internet stores. I like bike mechanics who are happy for me to waltz in with components I’ve bought cheap from warehouses, and who charge me more for their labour. I had to call into a small bike shop in Rotterdam last year. He had next to no stock, just a work stand and tools. In my utopia, there’ll be a guy like that on every block, making a good solid wage. What do you think?

  4. Jared says:

    Hey Steven. I think LBS’s under charge on repairs not because of component margin which is generally 30% or less. Rather they under value their product. As a former LBS manager it drove me mad. Many of my shops in Iowa and perhaps thoughout the US undercharge for service. I think it stems from mechanic labor being underappreciated either by themselves or society. This is were I think the margin is most often lost. All too often I walk into a shop and hear someone gripe that it is $20 for a tube and tire installation. I think people complain about this because most bike riders don’t ride enough to recognize the economic value of cycling. Two cheap tires on a car would cost $200.

    I agree with you when you say that components are best stored in a warehouse. In an effort to keep inventory low. The days of having a C-Record or Dura-Ace group in the case are long gone. I disagree in the buy-direct model. As a distributor sales rep, I have a vested interest. It gives the mechanic another chance mark up cost and more importantly provided customer service by flexing his mechanical know how and ordering the proper part. Most folks don’t the know difference between a 9spd and 10 spd chain.
    However, if you are willing to pay more for labor when you don’t buy from an LBS, we agree!

    Who can argue with your Utopia? I want to be that mechanic who rides an old raleigh 3sped to work. Wrenching in my tiny shop adorned with poster of cycling legends from yester year, wearing a campy cap, and listening to classic music.

    Thanks for replying! You should come to Iowa.

  5. Most enjoyable reading your comments and insights gents.

    If I may wade in, with a ‘sublime to ridiculous’ LBS experience…

    I’m quite handy with a few things but hardly what you’d call a ‘bike mechanic’. Conversely, I am lucky enough to have mates who either own bike shops or who are just bloody talented bicycle mechanics (especially when it comes to building specialised items like custom wheelsets, for example.)

    It’s struck me as odd when I’ve entered some LBS with a few internet-direct purchases, (and with my wallet wide open with regard to paying for the specialised services and labour they provide, mind) only to be told “Not if you didn’t buy it from us, mate. The internet’s gonna be the death of us!”

    That is: regardless of where I’ve visited (3 higher-end and 2 other mid-range LBS at last count) a total of zero were interested in assembling those components for me, irrespective of what I offered to pay for their time & services.

    So I’m wondering: when your livelihood depends on charging customers a true price for a good or service, let alone customers like me who are more than happy to pay for the quality service and expertise most (but admittedly, not all) LBS can provide, how busted is the current ‘must buy it from us ’cause I had to buy it from a sole distributor’ business model, when they’re effectively rejecting money for jam?

    Fortunately I have at least two friends I can call on who are more than happy to do the special stuff (seriously, the knowledge they have is worth its weight in uncut Colombian Blackrock) and, shock horror, they’re are even willing to let me look over their shoulders and teach me a few tricks and tips along the way.

    It seems to me that for whatever reason, this is the kind of niche service most LBS have either forgotten about or are no longer interested in, but from which there is so much to be gained in the way of happy, repeat customers and a profitable, word-of-mouth recommended business.

    • Steven says:

      “We gladly fit parts purchased elsewhere”. I wouldn’t be surprised if bike shops started putting signs like that over their doors. Businesses that are customer focused, and where the customer is always right, usually win in the long run. My own LBS gladly fits parts I purchase elsewhere, but doesn’t advertise the fact — yet.

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