Retail Bicycle Shop Business Plan

The predominant market segment for University Cycle Works is the university student population. We also cater to the university staff, local business employees, and, along with every other bicycle shop in town, the greater Metroburg population.

In part the local market is driven by the lack of parking. Bicycle transportation is more economical, as well as time and space efficient in the university neighborhood. Part of the market is price constrained and another part is hooked on the latest fad, be it frame style, number of gears, or portrayed image. As long as new students arrive each year at the State University at Metroburg, our market segment growth is assured.

4.1 Market Segmentation

The university students are our main target market.

1. They are mostly undergraduates, so there is a 25% annual turnover.
2. The lack of parking in the university area and the general ease of bike mobility throughout Metroburg motivates them to use bicycles as inexpensive transport. Athletic pursuits draw them, and the nearby areas for use of mountain and trail bikes provides a great place to ride.
3. There is a new enthusiasm for retro Cruiser bikes, and higher tech cruiser-style bikes with multiple gears, good brakes, etc. among the college age population.
4. Also, main market for racks, locks, throughout, pannier/bags, fenders, rainwear, etc.
5. They want convenience for sales and service.

University employees are another prime market segment.

1. Small growth and turnover, but on the whole, the group is pretty stable.
2. Are willing to commute by bicycle to work.
3. They want a stable, comfortable bike and a full range of accessories.
4. When their bikes need service and maintenance, local drop off/pickup convenience is important.
5. They have families who ride bicycles also, and will patronize a shop that gives personal service.

Greater Metroburg population.

This segment has a choice of going to any bike shop in Metroburg, and will probably choose a shop located closer to their home. They are not the main target market segment of University Cycle Works, and we market to them casually, only as a collateral effect to our university-oriented efforts.

4.2 Target Market Segment Strategy

We’ve chosen our target market segments, the greater university population because:

• They are contained in one area with a high daily population density. 
• Are easily reached with advertising, such as outdoor displays on main street next to campus.
• Have discretionary income.
• They have a regular turnover of population/influx of new potential customers.
• Are, in general, athletically/physically active, and often performance oriented.
• In need of quick, efficient, maneuverable, alternative transportation.
• Like toys, especially expensive toys.
• Are image and brand conscious. 
• Respond to convenience, especially highly visible, easy access convenience, with impulsive purchases.

4.2.1 Market Trends

Trends in the bicycle industry usually last for a time. Some of them have been:

• 1960s – Big rush on 10 speeds.
• 1970s – Touring bikes became popular.
• 1980s and 1990s – Huge growth of mountain bikes
• 1990s – The rumored but exaggerated death of “road bikes” and the unfulfilled prophesy of a boom in the tandem market.
• 2000s – Popularity of retro ‘cruisers.’

4.2.2 Market Growth

The bulk of University Cycle Works’ market growth is the regular matriculation of students from the State University in Metroburg. While the overall market numbers change in small increments, usually less than 10%, the market has a turnover of 22-26% yearly. In a longer time frame the number of students and the number of university employees grows and shrinks with economic changes, and with population demographics.

For the next three years we foresee a slow but steady growth in the overall university population as well as continued growth of Metroburg as a desirable place to live.

4.2.3 Market Needs

Our market niche has several needs which we strive to meet:

• Quality bikes at several price points.
• Various styles and sizes of bikes, leaning heavily toward the styles most popular with the student population.
• Range of accessories most practical in the local setting, such as locks, fenders, lights, tires, seats, rainwear, etc.
• Plenty of replacement components and service parts.
• Friendly personal relationships between cyclists and shop staff.
• Prompt and convenient service from on-the-spot flat tire fix, to drop in repairs, to scheduled major maintenance, where the rider can drop their bike off, head to class or work, and be assured that their bike will be ready for the ride home.

4.3 Service Business Analysis

The bicycle industry is a world wide concern. The Pacific Rim is a huge producer of framesets, components, tires, and accessories. European countries have a long and honored tradition of producing the finest in road touring and racing bikes and parts. The United States has probably the largest number of producers of high-tech, exotic metal, jewelry components, and handbuilt custom framesets.

Transportation of all these various pieces and fully assembled bikes across continents and oceans brings the industry its international flavor. It also adds a certain cost all products. Interestingly enough, some of the least expensive bicycles are imported from the People’s Republic of China, and some of the most outrageously expensive pieces are made in the U.S. and are handbuilt at a small shop that uses CNC machining to make titanium bolt, nut, and screw sets for the bike nob who wants to reduce the weight of his bike that last 143 grams. 

4.3.1 Main Competitors

Setting aside the discount department stores, University Cycle Works has the following direct competitors.

• 1 local multi-sport store at the local megamall
• 1 statewide chain of bicycle shops which started out as Schwinn-only shops, but has had to take on other brands and products.
• 1 used bike store that has made a fine business reputation for itself, dealing strictly in used bikes.
• 3 local, including the oldest shop in town.
• 1 local multi-location chain, that has specialized in opening shops in small local malls in areas of new housing development.
• Several garage mechanics offering service only.

None of these competitors is within two miles of the university, and so, for the present, we have first access to our chosen market segments. One of the local shops has chosen to target the burgeoning young road racer segment, another is focusing on recumbents and folding travel cycles.

The two strongest competitors are the Oldest Shop in Town which carries the cache of being the most stable, and most well known — a Metroburg institution. The Mountain Bike Specialist targets the same athletic, young, performance and image conscious rider that we target in the university student population. These cyclists are particular about their bike and will go where the name brand they want is sold, or will try every bike and then buy the one that fits best, regardless of store loyalty.

4.3.2 Business Participants

The bicycle industry has many players large and small all over the world. A few are listed below.

Big bicycle manufactures

• Giant – one of the largest manufacturers in China. Private label manufacturer that sells under its own name.
• Huffy – The largest manufacturer and seller of bikes in the U.S. under its own private labels.
• Cannondale – U.S. company that was in early on the “Made in USA” movement in the 1970s.
• Trek – Heavily marketed U.S. company that has expanded to offer bikes, clothes, accessories, road support for events, training for shops, and other services.

Big component manufacturers

• Shimano – largest manufacturer of cranksets, derailleurs, drive trains, brake sets, hubs. HQ in Japan with offices, distribution, and factories world wide.
• Campagnolo – Premier Italian producer of the finest component gruppos for almost 100 years.

Big accessory distributors

• Specialized
• Bell Sports
• Quality Bike Parts

Mail order/Online companies who began selling through the mail and now have extensive Web presence as well. They offer great prices, but no installation or services.

• Performance
• Bike Nashbar
• REI

Discount stores are the usual outlet for Huffy bikes in several guises. These are the $100 bikes which are assembled by minimally trained clerks, and frequently end up at specialty shops being reassembled and serviced for the owners. The price bargain usually isn’t by the time the bike rides well and safely.

• Wal-Mart
• K-Mart
• GI Joe’s

Specialty bike store such as University Cycle Works, where bicycles are our focus and passion. Trained and knowledgeable sales people, service techs, and avid riders in their own right.

Custom frame builders, smaller specialized manufacturers of folding bikes, tandems, trailers, racing bikes, and custom components.