Performance: The End Of An Era?

When I first became a dedicated cyclist, as a teenager, I discovered the mail-order catalogues.  They had all sorts of exotic bikes and parts, most of which I couldn't afford and weren't found in the local bike shops.  I pored over those catalogues the way other kids devoured comic books or teen magazines--or the way some young person in a remote village might indulge him or her self in magazines filled with images of the latest fashions from New York or Paris.

Before the '70's Bike Boom, there was Gene Porteusi's Cyclopedia, that printed cornucopia of, seemingly, all things bike-related.  He was one of the old-timers who kept the flame flickering during the Dark Ages of cycling in the US.  

Somehow I don't think much of anything changed in his catalogues during their history.  For most of his career, he was dealing with a small audience--few American adults were cycling during the quarter-century or so after World War II--and a limited selection of goods.  Actually, in the later years of Cyclopedia's run, he limited his selection:  He didn't offer any Japanese parts, not even a SunTour derailleur, even after people started to choose them for custom-built frames.

For making those wonderful V-series and Cyclone derailleurs, and other great stuff from the Land of the Rising Sun, widely available, much of the credit goes to the mail-order companies that launched in the wake of the Bike Boom.  I am thinking now of Bike Warehouse, which later became Bike Nashbar; Bikecology, renamed Supergo; and, possibly the 800-pound gorilla among them:  Performance Bike.

Well, it looks like Nashbar is the last catalogue standing.  Well, not exactly:  Nashbar still exists, but I reckon that hardly anybody shops from its catalogue anymore. For all I know, they might not even have a printed catalogue these days:  I'd guess that, save for their outlet store, all of their sales are on the web.

And the web, ironically, is one of the things that destroyed the other two.  Actually, Performance took over Supergo.  But now it looks like Performance is nigh:  Its parent company filed for bankruptcy protection last fall, and all of its retail stores will close next month.  In addition, over 100 staff members have been laid off at Performance's Chapel Hill, North Carolina headquarters.

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Although you could buy stuff from Performance's website, it never seemed to generate business in the same way that other retailers' websites did for them.  Plus, the web made it easier to order from overseas retailers when they offered better prices or the exchange rate was favorable. As an example, during the past few years, it's often been cheaper to buy Shimano components--Performance's bread-and-butter, if you will--from UK retailers like Ribble or Chain Reaction because, in addition to the favorable exchange rates, US customers benefited from not having to pay the value-added tax (VAT) levied on purchases made by native or European Union customers.

The coup de grace for Performance, though, might have been tariffs the Trump administration imposed last year on bikes, e-bikes and products related to them.  An already-reeling Performance was hit with higher overhead costs and, from what I've read, had no choice but to raise prices.  That, of course, would drive away an already-dwindling customer base that was attracted mainly by the company's low prices.

So, for better or worse, we may be witnessing the end of an era: the one of the mail-order catalogue, in the bicycle industry as well as in other businesses.   

ASE Is Not an Ace After All

By now, you've probably heard that Advanced Sports Enterprises--the company that owns Performance Bicycle, Bike Nashbar and several well-known bicycle brands--has filed for bankruptcy.

According to ASE, it means that some of Performance's brick-and-mortar stores will close, employees will be laid off and Performance's and Nashbar's operations will be scaled bike.  The company did not, however, give any indication that any of the bike brands it owns--which include Fuji, Kestrel, Breezer and Tuesday Bicycles--will be discontinued.  According to Patrick Cunnane, ASE's CEO, sales of those bikes have been "steady" but overall sales and profits didn't grow enough to sustain their retail operations.

Translation:  The company over-expanded.

Company insiders, not surprisingly, laid at least part of the blame for the company's woes at the doorstep of Amazon.  It's difficult to discount such an analysis:  Most bikes that aren't custom or specialty machines, and most bike-related stuff, can be found on the online omnivendor, usually at a lower price than Performance or Nashbar offered, and almost always with free shipping.

There is, of course, a certain irony in all of this.  When Performance, Nashbar and other retailers--which sold through mail-order catalogues and took orders by telephone as well as via the post office--were growing in popularity, mom-and-pop bike shop owners lamented, "They're killing us!"  And there can be little doubt that Performance, Nashbar and the like were responsible for the demise of many smaller shops, which simply couldn't compete price-wise because they never could order the same quantities of merchandise as the mail-order megaliths.

I wonder whether any of ASE's or Performance executives heard the cries of  brick-and-mortar bike shop owners.  If they had, it's hard to imagine why Performance opened any physical shops.  Perhaps those execs thought that people had enough "brand loyalty" to Performance that they'd go to one of those shops.

The folks in charge at ASE probably had no idea of how expensive it is to operate a bike shop, which needs more space than most other kinds of retail establishments.  From what I read and heard, Performance used to buy whole boatloads of Shimano equipment and store it in huge warehouses which they owned.  So, until they opened brick-and-mortar shops, they didn't need a showroom or an area for bike repairs.  Also, since they had a worldwide customer base, their merchandise didn't sit for as long as it often does in a smaller bike shop.

They also probably had no idea that, essentially, Amazon could beat them at their own game, which could be spelled in five letters--  p-r-i-c-e--in part because its overhead was even lower than that of Performance or Nashbar.

I'm not a business person. But I know this much:  Whatever game you play can be played by someone else.  And if that competitor finds a new method, tactic or technology, watch out!

This Price Is Right

$88 billion isn't chump change, even for Warren Buffett.

It's greater than the GDPs of about 50 countries, including Moldova, Kosovo and Rwanda.  Moreover, it's the value of a not-insignificant industry.

Now, when I say that something is "not insignificant" on this blog, you know it has something to do with cycling.  In this case, that $88 billion is the "economic impact" bicycles have on the United States.  

The fellow who pointed that out ought to know:  His state is one that benefits more than most from all of those bikes, parts, helmets and related items cyclists buy--and from related services.

He is David Price, who represents North Carolina's Fourth District in the US Congress.  That district includes much of "The Triangle," home to several leading universities and research laboratories--where one finds, not surprisingly, lots of cyclists.  

Also, right in the heart of that district is the headquarters of Performance Bicycle, one of the world's largest cycling retailers.  Their "command center" employs 200 people, while another 2000 work in its online store or retail shops.

It also just happens that some 35 bicycle equipment manufacturers are located in the Tar Heel State, as well as 229 brick-and-mortar retailers and 44,103 PeopleForBikes members.

I don't know how many people are employed by those manufacturers or retailers, but I'm sure that it's more than a few.  And that's just in North Carolina:  There are surely thousands, if not millions, more in the rest of the country.

So why is Congressman Price pointing out the economic impact of the bicycle in the US? 

David Price

He is part of the PeopleForBikes Summer Campaign, which includes a tour of bicycle industry companies and retailers.  The campaign, says Price, "highlights the impact that Federal infrastructure investment programs have in providing alternative modes of transportation that can enhance the quality of life in a community."  

He knows what he's talking about:  he is the highest-ranking Democrat on the Congressional subcommittee responsible for federal infrastructure investment.   Moreover, he is a member of the Congressional Bike Caucus who vows to "continue fighting for programs that enhance the cycling experience."

Of course:  If you "enhance the cycling experience", you just might entice people to leave their cars home for errands, shopping trips or even their daily commutes--and for day and weekend trips, or even vacations.  That will keep more than a few people working, I'm sure!