Masi-Guy wrote an awesome post of where the cycling industry is currently going and how it is getting there. The US economy is in a fritz with taxes, gas and the housing market. Recession is the talk on most news channels and being a small fish in the cycling community can be pretty frightening.

Bicycle sales, especially in the US market, have been doing very well over the past 10 years. In many markets, that can be traced back directly to that Lance Armstrong guy and all those French bike racesone brand really made out well on that deal, but at the same time many of the rest of us got a boost from their good fortune. Road bike sales climbed to an all-time high during the peak of the boom. Other categories faired pretty well too, in the end, with overall interest in cycling reaching higher levels than ever before. All in all, the past several years have been good to the bike industry.

The very competitive nature of the industry has lead to incredible values for consumers. Many years ago, a $1,000 bike was a pretty good bike. Maybe even a great bike. But now, the amount of product and technology present on a $1,000 bike is amazing. It is still possible to buy a bike that is not worth the money you pay for it- at all ends of the pricing spectrum- but it is pretty hard to. Technology and manufacturing have created a time where consumers typically get a very good product for the money they spend- this is especially true of bikes sold in the IBD/ specialty retail channel (ie- not Wal-Mart, Toys-R-Us, etc).

The down side of all of this pricing competition has meant that many manufacturers (and retailers) have had to operate with incredibly small profit margins- selling at lower than reasonable prices to gain market share. In essence, buying floor space (at the wholesale level) or buying loyalty (at the retail level). Thing is, it’s hard to keep a business afloat like that and it is the major reason brands or stores come and go from the bike industry. Worst of all, when you operate on such narrow margins, any kind of increase in costs of goods means an increase in ultimate sell price…

… which brings us to my point…

Read his point here. Believe me it is worth the click if you are interested in the cycling lifestyle, industry or plan on buying a bicycle soon.