For cycling brands and retailers, 2023 has been about one thing: Overstock.

How did we get here?

I am not going to dive too deeply in this as I have already discussed the causes of the overstock at length. TLDR: Irrational ordering during frothy COVID times led to overstocks starting in mid 2022 as demand cooled that have persisted throughout 2023.

Who has been hit the hardest?

COVID ushered in many new cyclists to the sport, therefore the hardest hit bike categories have been entry level bikes and kids’ bikes in terms of overstocks. This doesn’t mean that premium bikes weren’t affected. The lack of cash flow at the dealer level impacted all categories.

In addition to bikes, clothing and accessories were also impacted by the slowdown. The clothing and accessory slowdown can be felt most by online resellers like Wiggle.

500-pound Gorilla feeling the pain

The online giant Wiggle/Chain Reaction has enjoyed strong growth over the last years as the industry ‘disruptor’ offering an unmatched assortment of cycling, running, and swimming products online.

In a recent article on Bicycle Retailer Signa Sports, the holding company that owns WiggleCRC reported declines in net revenue and customer in the first half of 2023. Due to the lack of cash flow, the company has had to raise 150 million euros from investors to continue operating.

Effects of the Overstocks

As I wrote in this article earlier this year, cycling clothing brands have been in full panic mode since late 2022 with essentially promotions nonstop. Clothing brands were able to ramp up production faster than other categories, and because of the seasonal nature of clothing, they are particularly sensitive to overstocks. That coupled with their reliance on online retailers (who are out of cash) they are feeling the pain more than other categories.

More brands are relying on their own Ecommerce stores as online retailers and bike shops have pulled back purchasing. This is why we are seeing more aggressive promotions from brands that normally would not discount their own web site. Some examples are Castelli, Sportful, and Assos. Even Specialized and Trek are discounting on their online stores?!

How are the big players faring?

According to FORBES, revenue in the first half of the year for Japan’s Shimano, the world’s largest manufacturer of cycle transmission systems, decreased by about 13% year-on-year, with projections of an annual decrease of 28%.

SRAM, the world’s second-largest shifting system manufacturer, reported on August 9 that its Taichung, Taiwan, factory would lay off workers, a shock to the globalized industry.

Guimeng, the world’s largest supplier of cycle chains, has seen its revenue in the first half of the year decrease by 34%.

Global Taiwanese bike brands Giant and Merida are faring better than components suppliers but have reported half-year revenue decreases of 5.44% and 6.72% respectively.

When will inventories be back to normal?

It’s anyone’s guess when things will get back to normal. Because of the rampant discounting happening, demand could be potentially suppressed due to the flood of new product into the market. The most representative indicator will the balance sheets of the retailers. This can’t be easily measured.