The bicycle market in Germany is currently sending out very contradictory signals. The long, dry and wonderfully summery summer should actually have boosted business in the specialised bicycle trade, because good weather is good for bike sales. Consequently, the shops should now be empty in the cloudy days of autumn and the bike dealers should be satisfied. But if you enter a bike shop at the moment, you will see the same picture in many places. Bicycles and e-bikes are packed tightly together in the shops and waiting for buyers; you would think that the 2024 spring season was just around the corner and that the dealers had stocked up on fresh goods to cope with the expected rush. However, the opposite is the case at many bike dealers: the shop is still full of old goods, and it is not uncommon to find bikes from the current year as well as those from model year 2022. If you click through the websites of online dealers, specialist store chains or retailers, the strike prices reign supreme and the discounts - 30, 50, 70 per cent on bikes of all kinds - are eye-catching. And if you ask around in the bicycle industry, you will realise: Euphoria sounds different.
Consumer climate in Germany is weak
In fact, the 2023 bike season was characterised by a number of bad news - or measures taken by industry players that at least made people sit up and take notice. After the boom years of the coronavirus pandemic, which seemed like a boom for the bike industry, the market is currently anything but stable: although the supply chains that were broken during the pandemic are largely intact again, the bikes and parts that were ordered in a panic by many retailers and have since been produced and delivered by the manufacturers are clogging up the warehouses. Selling is necessary: the mail-order company Rose already announced at the end of 2022 that it would reduce prices by an average of 15 per cent. According to the Bocholt-based company, price-driving effects have calmed down. This may be one aspect of the current price and market development, but the consumer climate is also suffering, and not just in Germany. The monthly GfK consumer climate study, in which the Nuremberg Institute for Market Decisions (NIM) has also been involved for some time, came to the following conclusion for November: "With the third decline in a row, we have to give up hope of a recovery in consumer sentiment before the end of the year," says Rolf Bürkl from NIM.
Bicycle market collapsed after Corona
This affects the bike dealer around the corner as well as the big players in the industry: the US bike brand Specialized announced back in the spring that it would be cutting eight per cent of its jobs worldwide. In the USA alone, 120 employees were to be made redundant. Scott Maguire, CEO of Specialized, explained somewhat vaguely that it was "necessary to adapt to the current environment". The fact that the bicycle market is under pressure is also demonstrated by a letter from the world's largest bicycle manufacturer from Taiwan to its suppliers. In a confidential document, Giant asked business partners for a longer payment period for outstanding invoices. The reason given for this was a sharp drop in demand for bicycles - particularly in the lower price range. As a result, full warehouses would increasingly cause chaos in the supply chain.
Parts are often missing to assemble wheels completely
The traditional German company Prophete, which has been manufacturing bicycles for 115 years in Reda-Wiedenbrück, including Kreidler, Rabeneick and VSF Fahrradmanufaktur, also had to file for insolvency; one reason for the payment problems was a large stock of bicycles that could not be fully assembled because individual parts were missing. "Our warehouse is full of individual parts, where the last screw is always missing to build a complete bike," Prophete Managing Director Felix Schwabedal told WDR. After an investor from Singapore came on board, Prophete was initially able to continue its business.
Müsing, a brand that made a name for itself with high-quality aluminium racing bike frames in the 1990s, also had to file for insolvency. According to a press release: "Despite a stable order situation in Q1 2023 and a good start to the following quarter, there was a decline in demand in the core months of May and June. As the further market development in a tense industry and the continuing consumer restraint, especially on the German market, led to a slump in sales, the founders and managing directors of the GmbH have decided to file for insolvency under self-administration."
Even the big players in the bicycle industry are affected by insolvencies
Finally, the latest bad news comes from from Internetstores GmbH. The company, which has experienced rapid growth since the early 2000s, operates several online platforms in the bicycle and outdoor segment, took over the Brügelmann brand in 2010 and operates its own Votec brand, among others. Internetstores is part of the Signa Sports United group of companies owned by Austrian investor René Benko. However, its financial problems probably stem more from the Benko Group's involvement in the department stores' (Galeria Karstadt Kaufhof) and property business. At the time of our research, it was not yet possible to predict what would happen to the Internet stores and the bicycle business.
Last but not least: component manufacturer Shimano, a kind of seismograph for the industry due to its global activities, reports high stock levels and stable sales in Germany and Benelux in its latest company figures, but sluggish sales in North, Central and South America as well as in Asia and Oceania. In the first nine months, Shimano's turnover fell by 24.8 per cent to 1.8 billion euros compared to the same period last year, while operating profit fell by 48.8 per cent to 350 million euros.
Supply chains are intact again, but new problems arise
How should these indications be assessed? Is the bicycle industry slipping into a recession? Or is it stagnation at a high level, accompanied by a perhaps even salutary market shakeout? The German Bicycle Industry Association (ZIV), which represents the interests of the German bicycle industry, is still exercising caution when interpreting the data it has collected for the bicycle market in Germany. For the first five months of 2023, the ZIV is expecting sales of 850,000 e-bikes, a decline of 12 per cent compared to the previous year, while the figure for bicycles is 830,000 units, a drop of 20 per cent compared to the first five months of the previous year.
"In view of the ongoing war in Europe, with inflation and a general reluctance to buy and very bad weather on top of that, we expected the market to slow down in the first few months," said Burkhard Stork, Managing Director of the ZIV, in June. Current figures for the second half of 2023 are not yet available.
Tegtmeier makes forecast for the bicycle industry
So if the supply chains of the global bike business are largely intact again, why is it that the bike industry seems to have lost the smooth ride of the coronavirus years in view of the high social value of bikes as a problem solver in the climate crisis? At the beginning of the year, TOUR asked around in the industry, and Sebastian Tegtmeier, Director of Customer Experience at online retailer BIKE Components, predicted at the time: "There is already far too much stock on the bike market and on the part of OEM suppliers (Original equipment manufacturer, editor's note) the number of cancellations increases. Ultimately, this will lead to price wars that may be attractive to consumers in the short term, but will inevitably mean that not all brands, manufacturers and retailers will survive this crisis in the medium term."
Asked for a preliminary assessment of the 2023 season, Tegtmeier adds: "Unfortunately, the forecast was correct, but things have changed again: The industry is now faced with a number of insolvencies that were not foreseeable to this extent. It is clear that it is primarily aggressively priced providers that have run into difficulties. In general, the industry is now largely at the level of sales that would have been forecast for 2023 before coronavirus. Market growth is therefore definitely on the cards, but the low prices are eating into margins and therefore reserves."
The outlook for the bicycle market in 2024 is mixed
It is still difficult to predict whether the industry's prospects for the bicycle market will brighten up again in 2024. However, it is becoming apparent that more manufacturers than in the past are drawing the conclusion from the coronavirus years and the crisis-like consequences that they will at least slow down the cycle of model changes. This would be a positive development for both retailers and bike buyers. For bike dealers, the pressure is reduced in two ways. They do not have to lower the price of a supposedly "old" model after just a few months and do not have to pre-finance new bikes or put them in their shop, which would increase the price pressure on their bikes that have not yet been sold. Cyclists are also happy when their newly purchased bike is not labelled as "old" after just a few months due to a successor model.
However, it is also important that the bicycle industry as a whole succeeds in communicating to the public that price should not be the only or even the most important criterion when buying a bike. Sebastian Tegtmeier also emphasises: "Retailers and manufacturers have the mammoth task of communicating to customers how a fair price is arrived at. Only if retailers and manufacturers can incorporate their services, such as extensive warranties, a high level of goodwill and expert advice, into pricing and realisation will customers be able to choose from a wide range of products and services in the future. This cannot be realised at the current price level and will only result in losers in the medium term."
Thomas Musch
Publisher
