Pandemic Demand Has Made Bikes Scarce. How Can You Run A Bike Shop Without Inventory?

Bikes are safer than public transportation and less expensive than cars. Which is why they are now so hard to find.

In addition, most are made in China, which is in the midst of a trade war with the US and has supply chain issues of its own. Making the plight of consumers who want them and bike store owners who'd be happy to sell them even harder. JL

John Stoll reports in the Wall Street Journal:

New bicycles are almost impossible to find. Shops are jammed these days with beat-up Schwinns, Treks and Bianchis that need repairs. (But) it can take a mechanic a day’s work on the bench to earn as much profit as a single high-end bicycle sale. High-end bikes won’t be available in big quantities until well into 2021 due to production delays in China and supply-chain kinks. “I’m running out of stuff to sell.”

Bike shop owner Jon Hughes laughs when someone like me says, “Hey, at least you’re staying busy.” That comment shows how oblivious I was to the cruel joke the pandemic plays on an entrepreneur who has spent 10 years molding a business plan only to see it turned inside out overnight.

His shops are jammed these days with beat-up Schwinns, Treks and Bianchis that need repairs. A line of people stand outside in the hot sun waiting for same-day remedies on bikes that are often older than the 37-year-old Mr. Hughes. Fix-it jobs are bountiful, helping his enterprise survive at a time when people stuck at home are hungry to pedal.

But new bicycles—the key to his business’s success—are almost impossible to find.

“Right now, sure, there’s a boom in this industry, but it’s almost like a fake boom, and I can’t plan on that continuing,” said Mr. Hughes, owner of the Downtown Ferndale Bike Shop and Downtown Detroit Bike Shop. That’s a common sentiment. A nine-week study by the Census Bureau found that 44% of owners felt in late June that their small businesses will need more than six months to return to normal, up 12.5 percentage points from two months earlier.

“The uncertainty is brutal when you’re trying to figure out how to spend the little money you have,” said Eric Groves, chief executive of Alignable Inc., a business network that helped inform the bureau’s work. “Do you bet on red, hoping red comes back around again, or do you just stand pat?”

To really understand the angst, I went to Mr. Hughes, the guy who sells bikes to my family. He let me hang around on Monday and Tuesday as a handful of mechanics worked through a weekslong backlog of repairs.

It soon became clear that the repair jobs are a Band-Aid for a broken business model.

It can take a mechanic a day’s work on the bench to earn as much profit as a single high-end bicycle sale, for example. Those high-end bikes likely won’t be available in big quantities until well into 2021 due to production delays in China and supply-chain kinks.

Mr. Hughes, the son and grandson of bicycle shop owners, knows the hardships of this industry. It’s fair to wonder if the people buying his goods and services do as well.

“People think of small-business owners getting to make all the money, and setting your own hours,” he said. Hardly. Mr. Hughes has never had a summer vacation. He doesn’t drive a Benz.

“Every year there comes a time when you’re like, ‘Is this going to be the year to get out of the business?’” He’s not giving up anytime soon, but during coronavirus, that question is omnipresent.

Take Tuesday.

Mr. Hughes was awakened by a pre-dawn call about an alarm going off at his shop. It turned out to be false.

By lunchtime, he realized the store had run out of 26-inch tire tubes, a popular size that has never been out of stock since he opened this shop in 2010. He’s not sure when he’ll get more.

Later that afternoon, he chugged a beet juice and wolfed down a carryout container of fried rice—fuel he needed for the 75-mile endurance ride he was participating in that evening with kids he coaches.

Sandwiched in between, Mr. Hughes figured out how much to charge for esoteric repairs, asked one of his staff to quickly put together a shipment of beach cruisers that unexpectedly showed up on his doorstep, taught that staffer how to efficiently break down a cardboard box, dialed and scrolled hunting for inventory and patiently listened to customers complain about the scarcity of parts.

“All that s---? It lands on me,” he said.

Before the pandemic, the U.S. bicycle market was suffering under tariff-inspired price increases and waning interest in casual riding.

But Mr. Hughes’ Ferndale shop and its sibling 12 miles south in a tough Detroit neighborhood were enjoying a strong spring before Michigan Gov. Gretchen Whitmer ordered bicycle shops closed in mid-March. It surprised Mr. Hughes because he thought stores that help meet people’s transportation needs should have been deemed essential.

When Mr. Hughes reopened in early May, most of the available new inventory was spoken for (most of it is made in China, which had shut down in early 2020), and many of his customers fled to rival shops that had stayed open despite the governor’s order.

Mr. Hughes, proudly self-made, received a $20,000 loan from the federal Paycheck Protection Program. “If the money’s green, I’m not going to turn it down.”

The aid was a drop in a bucket for a business used to selling hundreds of thousands of dollars in goods annually, especially one that was expanding its workforce from five to nine to handle increased repair demand and paying top-dollar to secure parts and bikes from all corners of the globe. Shipping rates have gone up, margins on new products have gone down, and you can’t get good mechanics to work for you if you pay them like a McDonald’s cashier.

One of the endearing things about Mr. Hughes’ operation is that it’s both a boutique and a commuter store. He gladly makes a fistful of money from geeks like me who lust after carbon-fiber road bikes costing between $2,000 and $6,000 dollars, but he never turns a repair down for the rider who uses a bicycle like a car.

“I’m running out of stuff to sell,” Mr. Hughes said. That means that the buyers like me won’t be spending nearly as much, and the lower-spending riders become more important. With snow and ice only a few months away, this equation is a recipe for trouble.

“How am I going to pay the bills in the winter?” he asks.