Specialized Layoffs

[scott43]

Found this interesting considering the COVID boom, and perhaps this is the hangover/bust coming back around...

Specialized laying off 8 percent of its workforce

This week, Specialized is letting go about 120 workers across the U.S., public records show.

www.velonews.com

 

[coskigirl]

Interesting given they also just bought the former Pearl Izumi headquarters in Louisville Colorado.

Specialized buys former Pearl Izumi building

LOUISVILLE, Colo. (BRAIN) — Specialized Bicycle Components bought the award-winning office building here previously owned by Pearl Izumi, for $14.9 million.The company said Thursday that it would use the space for an innovation center.

www.bicycleretailer.com

 

[Jersey Skier]

Found this interesting considering the COVID boom, and perhaps this is the hangover/bust coming back around...

Specialized laying off 8 percent of its workforce

This week, Specialized is letting go about 120 workers across the U.S., public records show.

www.velonews.com

Saw this coming.

Last month we got an email about employee purchases. Normally bike shop employees are allowed to purchase one MTB and one Road bike at a discount, for personal use. Last month we got an email that said "in the spirit of the season, blah, blah, blah....we can now buy 5 adult bikes each and an unlimited quantity of children's bikes." Ya think they're sitting on inventory? Right around the same time there was an article about how Giant Bikes couldn't pay their debt on time.

 

[scott43]

Saw this coming.

Last month we got an email about employee purchases. Normally bike shop employees are allowed to purchase one MTB and one Road bike at a discount, for personal use. Last month we got an email that said "in the spirit of the season, blah, blah, blah....we can now buy 5 adult bikes each and an unlimited quantity of children's bikes." Ya think they're sitting on inventory? Right around the same time there was an article about how Giant Bikes couldn't pay their debt on time.

Very interesting. Thanks!

 

[fatbob]

Ya think they're sitting on inventory? Right around the same time there was an article about how Giant Bikes couldn't pay their debt on time.

Ah the good old world of consumer products and their always upward demand forecasting!

 

[crosscountry]

Saw this coming.

Last month we got an email about employee purchases. Normally bike shop employees are allowed to purchase one MTB and one Road bike at a discount, for personal use. Last month we got an email that said "in the spirit of the season, blah, blah, blah....we can now buy 5 adult bikes each and an unlimited quantity of children's bikes." Ya think they're sitting on inventory? Right around the same time there was an article about how Giant Bikes couldn't pay their debt on time.

In the meantime, the MSRP price of bikes had gone up something like 20%

 

[cantunamunch]

In the meantime, the MSRP price of bikes had gone up something like 20%

There's a serious danger of developing another missing-middle, just like with housing.

Basically all the 105/Ultegra level bikes disappear off the planet, and consumers get squished into racer/boutique, e-bikes, or budget hybridish stuff.

The prelude to that (let's-say-notional, but is it really?) phenomenon would look exactly like what you and @Jersey Skier are both saying.

 

[scott43]

There's a serious danger of developing another missing-middle, just like with housing.

Basically all the 105/Ultegra level bikes disappear off the planet, and consumers get squished into racer/boutique, e-bikes, or budget hybridish stuff.

The prelude to that (let's-say-notional, but is it really?) phenomenon would look exactly like what you and @Jersey Skier are both saying.

Looking at the line ups, one or two bikes in the Tiagra, 105 range around $2k... Whole lotta > than $4k...

 

[cantunamunch]

Interesting given they also just bought the former Pearl Izumi headquarters in Louisville Colorado.

Specialized buys former Pearl Izumi building

LOUISVILLE, Colo. (BRAIN) — Specialized Bicycle Components bought the award-winning office building here previously owned by Pearl Izumi, for $14.9 million.The company said Thursday that it would use the space for an innovation center.

www.bicycleretailer.com

I can't....even...try ...to read that without thinking "But where's the connectors?"

Looking at the line ups, one or two bikes in the Tiagra, 105 range around $2k... Whole lotta > than $4k...

The same economics are at work as with housing...this shouldn't surprise anyone.

 

[fatbob]

I must admit I don't really understand the bike market. There are the weight weenies and the quiver builders who are always looking for excuses to upgrade and the bottom end of those who just want a functional about town/commuter. But surely the bulk is in the aspirant middle who want to get into it (whether they do or don't actually end up riding a lot). And that segment is precisely the one that bought in during Covid and may not need or have the time to trade up now.

 

[Jersey Skier]

In the meantime, the MSRP price of bikes had gone up something like 20%

Not anymore, at least not on all models. Specialized has dropped retail prices on certain models to well below my cost. Totally killed the value of my inventory. I will have negative margin for the first time ever if I sell at MSRP. Specialized just recommends buying more so I can dollar cost average.

 

[cantunamunch]

Not anymore, at least not on all models. Specialized has dropped retail prices on certain models to well below my cost. Totally killed the value of my inventory. I will have negative margin for the first time ever if I sell at MSRP. Specialized just recommends buying more so I can dollar cost average.

Does that include e-bikes? 'Coz HTF do you dollar cost average that?

Little wonder they only have 2 dealers left in this entire Metro area.

 

[Jersey Skier]

Does that include e-bikes?

They say it will only be a temporary sale, but I'm doubtful based on everything else going on with them.

 

[cantunamunch]

But surely the bulk is in the aspirant middle who want to get into it (whether they do or don't actually end up riding a lot).

Eh, I don't see it that way, quite.

The "Want to get into it" are easily nudged into the low-end/townie/hybrid direction.
The moneyed "Want to get into it" are supposed to be steerable into e-bikes. Whether they are or not is a different story.

The question is "What do you do with the true aspirants? Those who already have low-end bikes, hybrids, or old used gear, have signed onto Strava, maybe even have a Zwift scrip? But who balk at dropping 4-6-8K because they are not convinced of return on money spent?"

These people are committed to the sport and want to improve. They've put 4-5-10K on their low-end gear purchased during the pandemic. They've discovered the gear's limits or they've found they want to do something a little different.

But they're not really the ones being catered to. They're not really committed enough for the boutique/racer shops. And they're maybe 10% of the walk-ins at hybrid/townie/repair oriented shops who probably don't have any stock to sell them. Because pricing and supply games.

 

[crosscountry]

I must admit I don't really understand the bike market. There are the weight weenies and the quiver builders who are always looking for excuses to upgrade and the bottom end of those who just want a functional about town/commuter. But surely the bulk is in the aspirant middle who want to get into it (whether they do or don't actually end up riding a lot). And that segment is precisely the one that bought in during Covid and may not need or have the time to trade up now.

Bikes are so much more different than skis. Or maybe not. If you lump cross country skis and snow shoes into the "ski markets", you get the "bike market"!

So the bike equivalent of "quiver builders" are exactly the "aspirant middle"!

Many of the "Covid purchase" had found they need a different type of bikes. And they're in the market for a function, nothing fancy, your quintessential "mid-level" bike to replace their first purchase. Whether that's a front suspension mountain bike, or a road bike that can take 40mm tires.

But god forbid it'll cost 4-6k!

 

[fatbob]

I think you are both saying the same thing I was trying to articulate . That the industry ignores the "my first real bike" or the "I've got my taste now I want something a bit more focused but at a reasonable price" crowd at its peril. Particularly in a recession when disposable income may fall. I got a reasonably specced hardtail MTB immediately pre Covid for around $770 equivalent here which suited my need for more modern geometry without busting the bank (admittedly Wiggle/CRC keeps competition fairly keen here) but I sensed that was a empty tier of the market in the US.

 

[crosscountry]

I think you are both saying the same thing I was trying to articulate .

I read your earlier post as you believe that "aspirant middle" no longer needs a bike as they already bought one during the lockdown. So I was arguing they do need a "second" bike which is in effect their first bike that actually meet their real need.

But it seems we're in agreement?

 

[scott43]

I just feel like having the best selection of models in the greater than $4k range doesn't make sense to me. Do we all need carbon? Do we all WANT carbon? Maybe.. Maybe I'm the outlier..

 

[wooglin]

I just feel like having the best selection of models in the greater than $4k range doesn't make sense to me. Do we all need carbon? Do we all WANT carbon? Maybe.. Maybe I'm the outlier..

I don't think you're an outlier any more than I am. I think the industry _wants_ us to be outliers. Which isn't really a great business move in the long term.

 

[cantunamunch]

I just feel like having the best selection of models in the greater than $4k range doesn't make sense to me.

I feel the proper move is coming from parts companies that also do frames. *cruises the Salsa page*