Tariffs

Vosper: The NBDA has a new vision for dealers, whether they like it or not

Published June 9, 2025

by Rick Vosper

This piece you are currently reading began in April of this year, the day after Income Tax Day, in fact, with the regular Wednesday NBDA letter to its members (including me, although Im just a lowly Individual Member) from Heather Mason, the groups president and sometime fellow BRAIN contributor.

Ive always enjoyed Masons writing, which tends to present new and sometimes controversial ideas in spare, thoughtful, and tightly reasoned sentences, three things I (and probably you) wish my own sentences had more of. See previous paragraph.

Her April 16th Wednesday Words issue was no exception.

In it, along with the usual opening chitchat, was a section provocatively entitled The New Era: Conservationism vs. Consumerism in the Bicycle World, and a nice subhead: How repair, reuse, and shared mobility could reshape the ride ahead.

Looking forward, Mason wrote, both traditional bicycles and e-bikes are poised to play a defining role in the conversation between two opposing forces: consumerism, which pushes constant upgrades and disposability, and conservationism, rooted in longevity, stewardship, and shared value.

She then went on to develop her thesis with a six-point exposition:

External Forces: How Tariffs Could Spark Innovation
From Ownership to Stewardship
Shared Mobility and the Rise of Access
Designing for Circularity
A Cultural Reboot Centered on Meaning
Conclusion: Moving Forward with Purpose

Clocking in at just under 600 words, its an absolute humdinger of a piece, and I strongly encourage you to read the whole thing. So much so that Ive posted the section in its entirety on my personal website (astonishingly, the NBDA does not archive its newsletters; what the heck, guys?), which you can read here. And I highly recommend you do so.

You may or may not agree with all (or even any) of Masons piece. And thats fine. The important thing, I think, is the conversation it can stimulate, which is one the industry desperately needs to have as we collectively try to figure out how we move forward out of the bleak post-COVID morass weve created for ourselves.

I was so impressed with Masons editorial that I immediately emailed her and asked if we could do a phone interview together. I may have actually used the word visionary.

Initially she declined, but ongoing suasion (well, maybe more like whining) on my part led her to finally give in.

Nearly a month later, the result was an hour-plus, freeform, intense and rapid-fire conversation which left my hands cramped from trying to type fast enough to get it all down. More importantly, in it, Mason sketched out her vision for how traditional retail bike shops and with them, retailer/supplier relations might survive and even prosper together in the coming years, regardless of the vagaries of our current economic reality and the increasingly fraught mechanics of the relatively-new-but-already-battered Bike 4.0 industry model.

(Warning: unfortunately, the following conversation strayed far from Masons original NBDA piece. Which is just one more reason to take a break here and read the whole thing your ownself.)

Its going to change, and it has to. We need a more value-driven, long-term approach.

Overall margins have to increase, and this can only happen if suppliers really want to be partners with their retailers. We have to help each other.
NBDA President Heather Mason

Q: As bike shops pivot to some of the changes you envision, what do you see happening to the traditional IBD business model?

A: I talked to Jay Townley the other day, and asked him in a podcast recording if we had ever gone through times like this in the past. He told me, This is a time literally unlike any other.

Its going to change, and it has to. We need a more value-driven, long-term approach. I think (the IBD business model) still plays an important part, maybe a more important part because of the services the SBR (Specialty Bicycle Retailer, her preferred term) brings to the picture.

Every brand that has gone D2C has had to move back to the SBR to get their products serviced.

Q: What will this do to existing suppliers?

A: Im seeing a huge desire for suppliers to deepen their partnership with dealers. I think suppliers will get a little savvier about what consumers are asking for, and as suppliers get more creative they need to get closer to their retailers. Potentially, we will see some reduction in SKUs. We should see more suppliers offering rental and leasing programs for retailers.

I was at the BLC and connected with Linda Crivello from Lease A Bike, which has connected with Pon and is starting state-by-state leasing programs. (Of course Pon is already familiar with the power of leasing programs from its many decades of experience in the automobile business, both in Europe and now the USA RV).

Q: Are you suggesting that as they transition from consumerism to conservationism, bike shops scale down or eliminate inventory from traditional bike brands?

A: Yes. The exact information Im giving to retailers is that they should have a stocking plan just like large consumer retail brands do, and make sure they have a great relationship with those suppliers, including keystone-plus margins on equipment. Wed love to see bike margins that will cover OpEx, which we know needs to be 38-42% on bikes. Thats a win-win for all. E-bikes are currently in the mid-20s, and thats a joke; our P2 dealers are currently averaging only about 35% on bikes and hard goods (PAR) combined.

We also have look at freight and assembly fees. And brands are starting to show those fees on their website, including battery recycling fees, which is a big step forward. Were the only industry where the retailer is charged a fee for the battery (although Giant helps with this). We need to look at every tiny expense, but the bottom line is that retailers are really challenged with the current margin structure.

Q: You mention that suppliers are starting to reach out to retailers, wanting to partner more closely. Can you give examples? What about The Quadrumvirate, for instance?

A: A number of industry leaders joined us at our Summit in Bentonville: Nick Hague, GM for North America Japan at Cannondale, Angelo Mascelli, GM for business at Giant, and executive VP Bob Margevicius from Specialized. Pon CEO Marco Kind as well. (Note Pon is not a member of The Quadrumvirate, but theyre certainly an industry leader RV) And Trek does such a great job of educating retailers. I think they all want to form great relationships with retailers.

Q: What specific changes do you see happening right now?

A: Its finally happening. Dealers are starting to offer annual service package plans, which are focused on creating retained service revenue, allow extra margin and keeps the customer committed to the shop.

Dealers are starting to take on new brands, like Aventon, Rad, Velotrek, at lower margins just for their marketing power, their ability to pull new customers into the shop. But overall margins have to increase, and this can only happen if suppliers really want to be partners with their retailers. We have to help each other.

Of course we want brands to survive too. But there are still some big obstacles. Brands who say you have to stock every single SKU or every product category, for instance. Brands need to become more strategic in their stocking plans.

Then brands go on discount and that eats into dealer margins too. We need pricing protection in addition to enforcing MSRP and MAP online. Every day I get emails from dealers asking for help. And I also get emails from suppliers asking how they can help.

We cant keep going the way we are in this industry. We have to get more strategic and more aligned, and that way everyone can do better together. We need to think long term, too, looking at things like rentals and community building.

The goal here is not inventorying less product, but more turns. Our turn rates for equipment and bikes are showing 1.2 turns per year. If we can get to four or five, its not less annually, its more reorders. That means the communication has to improve and there has to be better planning. And I think thats good for both retailers and suppliers.

Q: What does this mean for the traditional bike shops physical workplace? Will it get smaller, reducing rent and OpEx?

A: A couple years ago, I was really telling retailers they have to look at their footprints, their floorspace, and if they have multiple locations, close the ones where the revenues are not coming in to pay for that floorspace.

Retailers will need to see that income potential in their footprint and ensure that stocking items are carefully selected to meet customer needs, while meeting the back-of-house stocking plan financial needs. SKU reduction on floor may lead to smaller showrooms with space given to expanded service areas and designated space for e-bike repair areas with lifts.

Outside spaces may expand with some retailers choosing to create spaces outside for pick up/drop off after hours in locked access cabinets, or bike rental leasing centers accessible from the outside. Outside gathering areas, test ride tracks and community spaces may expand.

Bottom line is that the old way of showing hundreds of SKUs in large stores with tons of slatwall will move to a more simplified stock plan, larger service areas and all overhead expenses refined to allow for maximum profit potential, and outdoor spaces capitalized on.

The birds-eye lowdown on the dealer margins caper

Suppliers are still still! choking on industry-record levels of inventory, five years after behaving like a bunch of drunken adolescents at an all-night kegger.

Mason, of course, speaks for herself and, presumably, the NBDA, in delivering an exceptionally thorough and articulate interview. But theres one point I feel the need to respond to.

Dealer margins are emphatically not going to go up much if at all, and certainly not to the keystone-on-PAR/low-forties-on-bikes averages Mason says are the NBDAs goal.

Sorry, kids, it aint gonna happen. And thats just the way it is.

For the record, those would be my preferred goals, too. But as I say, I just dont think thats likely to happen. Certainly not in the next few years, and barring some sort of seismic change in the way our supply chain works, not to mention consumer markets overall almost certainly not anytime in the next couple of decades.

There are two very big reasons for this, because there are only two ways the kind of margins Mason is talking about can possibly come about:

First, suppliers can significantly raise retail prices. Of course, suppliers can set retail prices anywhere they want, but such a move would ultimately prove disastrous. Heres why:

Competition among brands wont permit it. Price competition among both bike and equipment suppliers at every incremental price point is so intense that higher prices by one brand can only come at the expense of its market-wide sales volume. No brand can afford that now and ultimately, both the brand and its dealers would suffer.
More specifically, higher MSRPs would further widen the delta between brands and their exclusively D2C competitors, further eroding their and their retailers market share.
Consumers wont pay it. Weve been training consumers for literally the past quarter-century to expect huge in-season discounts on bikes and equipment and it would (or will) take many years for them to unlearn that lesson.
And by the way, the same thing goes in the short term for passing on the costs of whatever tariffs we may end up with, whether youre Team Surcharge or Team Price Increase. To paraphrase the sitting U.S. President, EAT THE TARIFFS! (caps in original, exclamation mine).

How any of us in this industry are supposed to remain in business under this scenario is way above my pay grade.

Second, brands can simply allocate a significantly larger share of their own margin to retailer partners.

I mean, sure, why the heck not? Many retailers Ive talked with over the years, as well as industry people in general, are under the assumption that bike and equipment suppliers are the industry fat cats. And to be sure, most suppliers are financially larger than most retailers. But remember, Ive been a senior executive at a number of large and midsized industry brands, and consulted with many more. In some of those cases, Ive literally seen the books. And Im here to tell you that even reasonably successful industry suppliers are operating on about the same realized margins as reasonably successful retailers, and most are struggling to get by on far less.

Except that right now, supplier margins all across the industry have been in the toilet for the past half-decade, due to record discounts in an attempt to move record amounts of inventory.

Wait a minute. Did I really say struggling to get by a couple paragraphs ago? Pardon the living dog biscuits out of me. I should have said struggling to keep their noses above water.

In the past five years, suppliers have literally put themselves into the worst financial position in the history of the bike business, certainly since the Bike Boom went bust in the late 60s, and in all probability, since the original invention of the very bicycle itself. To service their mountains of excess inventory, many of them have taken on mountains of debt. Someday soon, that particular piper is going to have to be paid. And the results wont be pretty, either for those suppliers, or for the global bicycle industry all the way up and down the supply chain.

I put this proposition to industry boffin and longtime personal mentor Jay Townley, and he responded this way: My gut, based on the numbers I recall seeing, he told me in an email, tells me that the bike brands were left with more unit inventory post-Bike Boom and much more constant-dollar value in inventory post-COVID.

Now its halfway through 2025 and suppliers are still still! choking on industry-record levels of inventory, five years after behaving like a bunch of drunken adolescents at an all-night kegger.

Its hard to overemphasize this next point, but Ill do my best.

Based on a single data point representing less than a years worth consumer demand hearsay from retailers (I wont even say data, because there literally wasnt any) during a once-in-a-lifetime pandemic, they looked around, saw that all the other kids were doing it, and promptly placed tens of billions of dollars in aggregate factory orders more than enough, in fact, to alter not just the course, but ultimately, perhaps, the fate of an entire industry.

If youve ever been the parent of teenagers or ever been a teenager yourself, for that matter no doubt youve seen this type of behavior before. But witnessing brands representing something on the order of a hundred billion dollars in retail sales over the 20002025 time period doing it like theyre at the controls of a slo-mo trainwreck well, as we say here in the South, that takes a special kind of stupid.