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Bicycle Industry

Bicycle Industry & Shop Trends & Observations

By Scott Chapin

Insurance and risk management services for the bicycle industryWhile looking ahead to what 2016 has in store, I found myself reflecting on the things I saw and learned last year about this great industry. Below is my list of standouts that I saw among bicycle industry start-ups as well as retail bike shops.

  1. Mobile Bike Repair Businesses: I continue seeing a lot of new mobile bike repair businesses. The common business model is a franchise system that seeks entrepreneurial bike mechanics currently employed at a retail shop who want to advance their career as owner/operators. Obviously, this is a threat to existing bicycle retailers as the service department is a key profit center, and losing a key employee is problematic due to the fact it is difficult to replace experienced mechanics. Plus, many mechanics bring in new revenue for the retailer. These mechanics (unlike employees in other businesses) do not typically have a non-compete clause in their employment contract and so are able to poach customers.
  2. Existing Bicycle Retailers Creating a “Mobile Repair” Department: Several of my existing bicycle retail shop clients are purchasing their own van/truck and providing a mobile bike repair service. One of them said, “If you can’t beat-them, join them.”   
  3. Satellite Bike Rental: A few of my clients have opened satellite rental centers near or on a bike path since, clearly, location is EVERYTHING in the bike rental business. People would prefer to be able to ride in a nice, safe area, and most retail bike shops are in less-than-ideal locations from which to start a ride. Several of my clients created separate legal entities to help mitigate the risk associated with bicycle rental, and for insurance purposes, which makes a ton of sense for many shop owners. 
  4. Private-Labeling Products: Whether their own branded bicycle, wheels or other bike accessory, retail bike shops continue pursuing the “manufacturing” side of the business. This is becoming simpler to do, with more manufacturers available to work with small operations. Unfortunately, however, many of these products are not being insured correctly, and leave the shop owner exposed to substantial financial risk. 
  5. Coaching/Training Services & Workout Centers: More and more shops either employ or work with a certified coaching professional who they make available to their customers. This is primarily a way of differentiating themselves from their competition. Other bike shops are actually building a mini gym or workout center with bike trainers available. This is becoming more prevalent, particularly in northern states, where cold and snow keep many riders inside for the winter. 
  6. Events: Many bicycle shops are putting on special events, ranging from charity rides to winter bike festivals. These events have been HUGE drivers of new customers, and some of these have become quite large. Winter Bike Expo, put on by Freewheel Bike in Minneapolis, is a perfect example in Minneapolis. Unfortunately, these events can pose substantial liability risks to the store and its owner if proper special event insurance isn’t purchased. 

This document is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. Marsh & McLennan Agency LLC shall have no obligation to update this publication and shall have no liability to you or any other party arising out of this publication or any matter contained herein. Any statements concerning actuarial, tax, accounting or legal matters are based solely on our experience as consultants and are not to be relied upon as actuarial, accounting, tax or legal advice, for which you should consult your own professional advisors. Any modeling analytics or projections are subject to inherent uncertainty and the analysis could be materially affective if any underlying assumptions, conditions, information or factors are inaccurate or incomplete or should change.