March 19, 2023
Lately it seems like cycling clothing is always on sale.
Here are some of the subject lines from emails I have received in the last 45 days from various clothing brands:
All in the last 45 days! When did discounting become so common?
Due to a series of events in recent years, we are now seeing brands engage in a type of promotional arms race. But at what cost?
10 years ago, things were very different.
Clothing brands were once widely available in bike shops.
There were three neatly distinct tiers of the distribution network (producer, distributor, dealer).
Hardly any brands sold directly on the internet. Selling on the internet meant that brands would be biting the proverbial hand that feeds them.
Dealers and distributors were the lifeblood of brands, and sidestepping this network to sell directly was unheard of.
Enter Wiggle
The online retail giant Wiggle was founded in 1999 and specialized in cycling, swimming, and running selling exclusively on the internet.
Wiggle became hugely successful because turns out, people like to shop online. It’s convenient and often cheaper (we’ll get into that more later).
Then came Rapha
The ubiquitous cycling clothing brand Rapha was founded in 2004.
They initially sold to stores and dealers but pivoted to sell exclusively online around 2010.
I wrote an article here about Rapha’s wide impact on how cycling brands communicate visually.
Since Rapha didn’t have a traditional distribution network, they were free to discount as they pleased.
They often followed the end of season sale strategies like most clothing retailers.
From sources in the industry, apparently a large share of their overall revenue comes during their Sale events.
Dealer Exodus from Clothing
Due to constant discounting of clothing brands on specialty online stores like Wiggle, Chain Reaction, and Amazon, bike shops began to move away from clothing, starting in the mid 2010s.
Retailers opted for more profitable items like bikes and wheels that have less competition from online retailers.
Clothing Brands Move Online
The success of brands like Rapha, La Passione, MAAP, and Le Col showed the potential for brands to sell online.
As retailers moved away from stocking clothing throughout the 2010s, even established brands like Castelli, Santini, and ASSOS began selling direct to consumer more aggressively.
COVID
When COVID struck in 2020, it was a perfect storm for cycling and ecommerce. Consumers were home and they were looking for ways to pass the time outdoors due to social distancing restrictions.
Cycling was booming. Clothing brands had record sales, and with their typically short supply chains, they could meet the demand.
Anyone and everyone that sold cycling clothing, was selling it online. Even the most traditional clothing brands now had an online store.
Party’s Over
In hindsight it seems obvious, the COVID party couldn’t last forever. As social distancing restrictions lifted in late 2021, the demand for cycling clothing cooled.
This coupled with Russia’s invasion of Ukraine in early 2022 which impacted energy prices, and high inflation, we are now seeing much softer demand for bikes, clothing, and equipment.
SALE! SALE! SALE!
This brings us to Fall of 2022 in which brands were way overstocked due to overly optimistic forecasts.
Sales were seen early and often. Black Friday became Black November for most brands in which deep discounts lasted the entire month. These sales were seen through the end of the year and into January and February. Which brings us to my initial question.
What is the real cost of all the discounting?
Deep discounting typically squeezes the margin out of the distribution network. Distributors and dealers lose in the end.
As many of the brands I mentioned are digitally native, there is no dealer or distributor involved.
But if customers are conditioned to expect discounts, it’s difficult to go back to selling at full MSRP.
I am afraid that we may have moved into a new normal, especially for the digitally native brands. I expect we will continue to see SALE! SALE! SALE! all year round.
