I can see how that creates an ‘accounting’ loss for the said period, but over a longer period, sales will still be up. For a small business I can see how that creates a potential cash flow issue, but not for the likes of Specialized…
1 Like
Yeah, my shop and every other one I have talked with was in record territory (or well into it) by mid summer. This was called a bike boom for a reason, and it has been something we may not see again in our lifetime.
- I just can’t see that as accurate when looking at the entire calendar year. At least in the scope of what I have seen in my area and read about in many others. Most places I’ve seen could have shut down in September and still been ahead of their prior 2019 year sales (product volume and dollar sales).
7 Likes
True, but there are still supply issues. Just because they sold through 2020 stock and are taking orders for 2021 doesn’t mean they are going to deliver as many bikes as they would have sans-pandemic. What happens when Shimano/sram have production delays, or tire manufacturers, and it slows down bike sales as a whole. This is a unique time and to just dismiss it as corporate greed is being a bit shortsighted
2 Likes
My LBS is going to come up short for their projection. Yes they sold all their existing stock, but can’t get more stock due to supply limitations, and will still miss their year end goal. Maybe next year they will make up for it, maybe, depending on what happens out of their control
3 Likes
I don’t think I did say it was as simple as corporate greed, tbf, and I’m quite prepared to accept there are additional complexities this year.
My comments emerged from a general sense that there are companies looking to the Covid crisis for an excuse to do what they have wanted to do for some time.
The corollary to it being ok to raise prices to exploit short term conditions is the expectation that prices will fall when demand does. When is the last time a major bike company cut prices?
One LBS has just closed near me. The owners were planning to retire next year or the year after, but had such a good year this year they decided to shut up shop in September. Ok, predicted supply difficulties may have factored into that, but in their words ‘we did 10 months’ sales in 10 weeks’.
4 Likes
I wasn’t referring to you specifically but more-so the general comments in the thread. To be fair, when is the last time any big company producing anything cut prices? Materials are more expensive, labor is more expensive, year over year as a whole.
It’s hard to say whether it’s greed or just the need of the business, but I can tell you that companies are always looking to increase profits every year, so when they expect to sell/deliver less products as a result of pandemic or whatever else, prices have to rise to compensate for it, and that is just basic economics and not necessarily greed. These are businesses after all, and capitalism will punish them accordingly if the market doesn’t agree with price hikes and doesn’t buy their products
Ok, some fair points there. I suppose the dispute in general is over whether or not they really do expect to sell less product. I personally doubt it very much, but until I get a look at their accounts I can’t tell you 
I do think it’s not quite as simple as basic economics though. Consumers’ perceptions of businesses as providing value and caring about their customers (however phoney that is) play a big role in future success. There’s more than one business that’s gone under because of that perception; back in the 90s, a big jewellery chain in the UK went bust after their CEO was caught on tape saying they sold overpriced crap. Everyone in the industry knew they sold stuff that was just as good or bad as other players in the same price market, but the public thought otherwise…,
1 Like
If supply is going to be 3-6 months out like it is now, next year, then these companies are doing the right thing to raise prices to make up for it since they won’t deliver the same amount of product as they would in a normal environment. I also don’t know how far behind Shimano and sram and Continental etc are, but I recall someone getting a sram force bike with some sram red components because the manufacturer ran out of force stuff for that bike and had no choice but give this guy one force brake lever and one red
I don’t know if cycling companies really trade stock but Peloton does, and their stock has boomed as a result of higher profits during the pandemic. If peloton came up say 10% lower on revenue, shareholders dump stock, company loses money, and at that point it’s a spiral downwards. This is why companies rightfully keep shareholders as their #1 priority, without their money Peloton wouldn’t be what it is today.
/off topic rant
Taking a huge step back…
-
If we believe that branded bikes aren’t essential goods, and there are other choices beyond Spesh/Canyon/Giant that haven’t raised prices, can we even call it profiteering?
-
If still yes, do you still believe the same for up to a 12% price increase? (Example: Allez Sport £949 - £999 = 5.3%, or 50 quid.
-
If still yes, what about after considering logistical inefficiencies happening in the background, as induced by a pandemic?
To me, this all seems pretty natural. Moreover, it is not like these companies have a monopoly on bicycles and suffocating us on choices on something we absolutely positively need to live (a controversial thought on a bike forum)
So if this news is heartbreaking, maybe there is a feeling of betrayal for these brands from loyalists, or some yelling at clouds is going on.
3 Likes
Where do you draw that line, though?
Are you suggesting a 1000% price increase is “a more reasonable number”? Or perhaps 0.000012% increase?
Or maybe you meant completely the other way. Decrease all prices by -12%.
Or even better, Spesh should give their bikes out for free, because we’re in a pandemic and The.People.Want.Bikes.
My point is this gets so subjective based on each person’s individual circumstance, that there is no one solution that fits all.
1 Like
Maybe the people buying more high end bikes can provide enough of a revenue bump where they don’t have to increase as much or at all on the more affordable models. Car companies raise prices on specific models every year and not on others, are they wrong to do this too? Should a car cost the same today as a decade ago?
It’s a lot easier to act outraged like the companies owe you something
While I wholly take the point, just because the product under discussion isn’t essential doesn’t mean it’s not profiteering, at least not as I understand that term.
Fair point. But on a £1500 bike, that’s up to c.£170. Whether or not that’s material is up to you.
No, just a bit irritating. Forums have a habit of making real 1st world problems seem like the end of the world (and I very much include myself in that!)
I will very happily hold my hands up and say I’m wrong if there’s evidence that Spesh, Giant, Canyon etc are struggling, but I do note that other companies with largely Asian supply chains don’t seem to be having particular logistical difficulties…
3 Likes
It is profiteering but I see no problems with it. It’s capitalism. If I’m in the market for a bike, I am not excluding anyone. I’ll take the bikes and their prices along with everything else into consideration when purchasing.
1 Like
My own personal views on it aside, I still think this is potentially poor business practice. Because though not everyone feels the same – as this thread shows very clearly – there are enough instances of companies’ images being badly tarnished when instances of perceived unethical practices come to light. It doesn’t even matter if those practices make perfect business or economic sense; if they smell wrong, or exploitative, to enough people, then there is a long term sales loss.
I gave the example of Ratners above. In 2018, the CEO of Persimmon (big building firm in the UK) had to resign after it was revealed he earned £100m+ during a national housing shortage. What Ratners sold was no different to their competitors. Persimmon made a lot of money, quite legitimately, and the CEO didn’t exactly demand that salary from the board at gunpoint. But they both upset a lot of people and (in the first case irreparably) damaged the companies’ reputations. They doubtless made the same arguments made on here: the market, supply and demand, no one’s forcing the customer, etc etc. It made no difference.
And here’s advice from the webpage of a US PR firm: “If your brand is, or perceived to be, profiting directly from the global economic downturn, a winner among a world of sufferers, the consumer will see that you’re not playing the game fairly.” They end with the suggestion to think about “will you be seen as greedy and opportunistic … when all this is over?”
Do Spesh etc have the right to raise prices? Absolutely. Does it make (at least short term) economic sense? Again, clearly yes. Is it a good idea ? I’m far from convinced.
5 Likes
A well thought out response. I can see how it could be irritating.
In fact, the heart of this conversation is really about the individual expectations on what those on the top who aren’t hurting should be doing, isn’t it?
This question is literally one of the top themes of 2020. I see similar conversations weaved across various different contexts, beyond just bikes.
It’s so tricky. Even without any hard evidence, I would also agree with those who claim that the big branded bikes with their deep coffers aren’t hurting. I suppose the question (that will create infinite opinions), is what are the expectations placed on those who aren’t hurting?
If they sat and did nothing, they lose out on an opportunity to maintain their top position, or extend their lead further. Play it completely wrong, and they lose their top position to some other company below them.
In this hypothetical situation, we’d all still be having the exact same conversation and scrutiny on whoever is in charge. But just replacing the names Spesh/Canyon/Giant with the new sherifs. This topic never actually goes away since everyone’s got an opinion on what’s the best way to run the world.
At the end of the day, these companies are making plays to preserve their position. Just in a macroscopic way of how each of us make our own decisions every day for our own survival. Damned if they do, damned if they don’t.
The actionable thing each of us can do is vote with where we take our business.
1 Like
Well put and timely.
Same with one of the remaining 2 bike shops near me. He also had plans to retire soon, with the boom and then no more inventory he decided to accelerate his retirement and close the shop.
2 Likes
Specialized with ridiculous pricing? [shocked_Pikachu_face.jpg]
6 Likes
Fair enough for that example I suppose.
That is not the story the entire bike industry has been saying since COVID.
I think your main point is that it’s mostly about communication from the companies to their customer base. Canyon raising prices on only certain models does raise some questions. To me, as a potential consumer, I’m only concerned when I see an advertised MSRP not being maintained by a retailer (or direct in that case) after I had planned to spend a certain amount. When a company chooses to raise their pricing I have to believe a great deal of thought went into that. Consumers don’t generally react well to that. Our choice how and where to spend. I get your points though… although I’m still not convinced that this increase is solely about taking advantage of the current market; and even if it is, I mean, free market. I wonder how many Canyon or Specialized customers will be actually put off enough to NOT buy that next bike?