Jay Townley: Welcome to the exponential age and a new era of bike retailing!

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Welcome to the 4th Industrial Revolution…or the Exponential Age.  jay townley

Software and operating platforms will disrupt most traditional industries in the next 5-10 years, just as Kodak and the photo paper and processing industry were disrupted at the turn of the new century, including, as we said in the previous installment of the this article, the bicycle industry and business.

Uber is just a software tool. They don’t own any cars, but they are now the biggest taxi company in the world. They just introduced self-driving cars in Singapore and will shortly be introducing self-driving cars in Pittsburg, Pennsylvania.

Airbnb is the biggest hotel company in the world, although they don’t own any properties.

Amazon isn’t a retail company, it is a technology company!  While the retail industry wrings its hands over Amazon and predicts this online udelivpstart will soon learn how difficult fashion and clothing retail is…Jeff Bezos opens a stockholder meeting dressed in a space-suit and discusses and presents technology, data, being connected to consumers around the world and Blue Origin.

What this boils down to is – Bike Shops have to stop thinking like traditional specialty retailers just as all other traditional retailers have to stop thinking like…traditional retailers!

What should bike shops think like? Let’s toss a few ideas around:

We have come to the end of an era for bike shop retailing and we are about to begin a new era. It could be the best yet!      

In a 2015 blog post and YouTube video Doug Stephens, author of The Retail Revival: Reimagining Business for the New Age of Consumerism, said “We have come to the end of an era in retailing.”

Bike shop retailing, like the bigger retail world we are a part of has also arrived at the end of an era that coincides with the bigger world of retailing in America.

Let me make it clear that I am not talking about the END of bike shop retailing. I am talking about the end of the third era [1] of bike shop retailing that started in 1960. This saw the birth of the discount store, the rise of the Total Store bike retail concept, we went through the Bike Boom in the early 70’s, the introduction of the Sting-Ray, mass produced lightweight, derailleur equipped adult bicycles, the BMX craze, the Mountain Bike explosion and the migration from bicycling as an activity to bicycling as a sport. American bicycle brands became a significant factor in international racing and the growth of triathlon, biathlon, Xtrea and Cyclocross.

I am talking about the 50 years from 1960 to the great recession to 2010. Bike shop retailing, as we have known it, is at the end of its’ third great era (2), and is in transition to its’ fourth era, which could be the greatest era the bike shop channel has ever seen in America.

Everything is changing, and we are simply at the transition point between the end of the third great era of American bike shop retailing and a new age. The fourth era of bike shop retailing that will be greater, better and more profitable than anything we have seen previously as new-wave and outlier bike shop business models continues to emerge and thrive by embracing technology and using new product, merchandising and economic models.

Retail experts like Doug Stephens are predicting a new Golden Age of Retail, and a growing number of retail experts and futurists like Scott Galloway of L2 Consulting are adamant about physical retail stores not only surviving, but Galloway predicts the number of retail stores will grow in the future. It is important to note that Galloway also says it’s not retail stores that are dead, it’s the middle-class that’s dead and this is a reminder that demographics are important as we ride headlong into the future.

Automobiles 

We have already witnessed the introduction of self-driving cars by Uber and in 2018 the first self driving cars will be offered to the public (despite what Tesla owners think they are getting today). Around 2020, the whole of the automobile industry will start to be disrupted. The big players hanging around the bicycle industry and business have already figured out the disruption is eminent and no more than four-years away and they are working as fast as they can on becoming transportation / mobility suppliers and technology providers and connectors.

Going forward from 2020, consumers won’t want to own a car anymore. We will call a car on our smart phone; it will show up at our location and for a fee will drive us to our destination. We will not need to park it, and we only pay for the driven distance and we can be productive while driving, using smart phones, tablets, laptops, or reading.

Younger generation Y and generation X will, for the most part, never get a driver’s license and will never own a car. This will change the cities of America and the world, including the fact that we will need 90-95% fewer cars for our future needs. We can transform former parking spaces into walking and bicycle riding paths and lanes.

At present, 1.2 million people die each year in car accidents worldwide. We now have one accident every 62,000 miles. With autonomous driving, that will drop to one accident in 6.2 million miles. This will save a million lives each year – including the lives of bicyclists!

This will disrupt the world of American bicycle advocacy

When President Obama signed HR 22 or the FAST Act into law on December 4, 2015, it spelled out in detail the amount of federal funding that will be available for bicycle facilities and programs for the next five years – from 2016 through 2020!

This instantly changed the world of American bicycle advocacy from one that had been constantly lobbying for the next year’s funding extension or amount – to one of crafting and shaping the bicycling facilities and bicycle programs that the available federal funding will be spent on over the next five years – because the funding amount is a done deal!

How much funding are we talking about here?  The FAST Act, (now Public Law 114-94) provides a total of $4.2 billion in federal funding for bicycle facilities and programs over the next five years – from 2016 through 2020, an average of $844.0 million per year.

Keep in mind that the $4 billion, or the average of $795 million spent per year over the last five years – combined with the amounts spent going back to 2000 haven’t moved the needle and have resulted in the flat sales of new bicycles we have seen for the last sixteen years! However, the past expenditures of federal funding, and those to be made in the future have and will create the infrastructure foundation required to grow bicycling in America as the country goes forward from 2020.

The bicycle business needs to look to the future from 2016 forward. We must then recast and reshape how federal, state and local funding is used as the disruptions in the automotive, transportation and mobility sectors take hold and change for the better the safety of America’s streets and the rate of vehicle-bicycle related accidents, injuries and fatalities declines.

This disruption in the fabric of American bicycle advocacy presents a major opportunity to bike shops that create communities of interest and organize and conduct slow rides and embrace experiential products and services at all levels and for everyone in their neighborhoods and communities.

Electric cars will become main-stream

Futurists believe that electric cars will become mainstream around and after 2020. Cities will eventually be cleaner and much less noisy because all cars will run on electricity, which will become much cheaper.

I was recently in our county seat, Mauston, a town of about 3,000 people that is located about half-way between Chicago metro and St. Paul / Minneapolis metro, in central Wisconsin, about 200 miles either direction along the I-System that networks to the whole country.

I stopped to have lunch at a fast-food restaurant located just of the I-System and I noticed that there were half a dozen Tesla charging stations at the back of the parking lot – and when we came out there was a Tesla electric car charging up.  Tesla is obviously doing the research and making the investment in the infrastructure of charging stations to eliminate any concern about being able to drive cross country.

Futurists predict that most traditional car companies may become bankrupt by taking the evolutionary approach and just building better cars; while tech companies like Tesla, Apple and Google will take the revolutionary approach and build, as they have already demonstrated, a computer on wheels. We read that a lot of engineers and managers from Volkswagen,  BMW, Peugeot, Audi and other traditional car companies are terrified of Tesla.

What about ebikes? ebike

If the bicycle business – including the new-comers with e-bike brands from Europe and Asia – or the automotive companies that are lurking around the edges don’t change the way they are approaching the American market and really conduct good quality consumer research they, collectively and individually will not make any real headway in marketing and selling ebikes.

The difference between Europe and America is all about the consumer. In Europe most adults, and more specifically older people have grown up with bicycles and bicycling and the majority have no fear of riding a bike – and in fact do so regularly. Accordingly they quickly embrace the concept of being able to continue riding a bicycle, with an electric assist, as they grow older.

In America the majority of adults do not ride a bicycle and have not – either at all, or since they were children. The majority of adults also have a reluctance or fear of riding a bicycle in traffic and they can not relate to the concept of a bicycle with electric assistance that will allow them to continue riding as they grow older – because they have no context and bicycling just isn’t relevant and therefore isn’t commonly seen as a solution.

As we said, the solution starts with seriously conducting the consumer research to determine the demographic detail of the target market for e-bikes and what will convince the target market to consider and purchase e-bikes as a solution!

Health

Futurists tell us the Tricorder X price will be announced this year – a medical device (called the “Tricorder” from Star Trek) that works with smart phones, takes your retina scan, your blood sample and your breath. It then analyses 54 biomarkers that will identify nearly any diseases. It will be cheap, so in a few years, everyone on this planet will have access to world class, low cost, medical information and diagnostic guidance.

This is a window into what will make bicycles and e-bikes much more relevant as solutions that will help older Americans make the connection between their health and medical problems and being able to lead a better, improved quality of life as the age.

If the traditional mainstream bike and e-bike brands, as well as retailers don’t take advantage of this huge health and technological opportunity to present bicycles and bicycling as solutions, new-wave, outlier and non-traditional brands and retailers will quickly do so.

3D printing 3d

The price of the cheapest 3D printer came down from $18,000 to $400 within 10 years. In the same time, it became 100 times faster (remember Kodak and Moore’s Law). All major shoe companies started printing 3D shoes. Spare airplane parts are already 3D-printed in remote airports. The international space station now has a 3D printer that eliminates the need for the large amount of spare parts they used to need in the past. Titanium bicycle frame lugs and complete titanium bicycle frames are already being produced on 3D printers.

At the end of this year, new smart phones will have 3D scanning capability. We will be able to 3D scan our feet and print our perfect shoes at home. In China, they have already 3D-printed a complete six-storey office building.

Futurists predict that by 2027, 10% of everything that’s being produced will be 3D-printed.

With the growing popularity of locally made bicycles being fabricated and marketed by new-wave and outlier American bike shops, how long before bike shops begin to 3D print bicycle components, accessories and complete bicycle frames while their customers watch?

There will be other disruptions to the bike shop channel of trade, but the spread of 3D printing will disrupt the traditional supply chain and profoundly change the economics of the specialty
channel of trade in America.

Business opportunities in the American bicycle business phone

If you think of a niche in the bicycle business you want to enter, ask yourself: “In the future, do you think we will have that?”

If the answer is yes, then work on how you can make that happen sooner. If it doesn’t work via your smart phone, forget the idea. And any idea that was designed for success in the 20th century and the old third-era is probably doomed to fail in the 21st century and the new fourth-era of American bike shop retailing!

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[1] The first era of bike shop retailing in America was from the invention of the ordinary bicycle through the first Bike Boom, sometime referred to as the Golden Age Of the Bicycle, up to the first world war, and embraces the Wright Brothers bike shop that saw the birth of powered flight!

The second era was between the Great War and the Korean War and includes introduction of the great balloon tire kid’s bicycles exemplified by the Schwinn Phantom.

(2) The third era started in 1960, and is rooted in the emergence of the great homogeneous consumer that realized the American Dream!  In 1962 the Fair Trade Laws that prohibited discounting of consumer products were substantially repealed…and that same year Kmart, Walmart, Kohl’s and Target all opened their first discount stores!

At the same time George Garner opened his multi-location George Garner Cyclery stores in California, and in cooperation with the Schwinn Bicycle Company opened the first Total Concept store in Northbrook, IL in 1965.  The Genie was out of the bottle and the third era of the American bike shop business was off on a breakaway that has lasted for five decades!