Business is booming for a lot of bicycle companies as Los Angeles increasingly becomes a bike-friendly culture – but others are not finding it such an easy ride.
Congested cities in Los Angeles County, such as Santa Monica, Los Angeles, West Hollywood, Long Beach and Beverly Hills, are either paving new bike lanes, forming bike-share programs or pushing commuter biking as ways to cut car use and promote themselves as environmentally friendly.
This new approach would seem to form a perfect climate for those who make and sell bikes, design bike-riding attire and form bike-share programs. However, increased competition and an increase in renting rather than buying bikes has thrown a wrench in the wheel for some.
The new climate, including 12 months of bikeable weather, attracted Brilliant Bicycle Co. to Santa Monica after starting up last year in New York, said Adam Kalamchi, co-founder and chief executive.
Kalamchi believes there’s a growing market for the simple midprice bikes it designs, makes and sells for the casual rider – not the hardcore cyclist.
The company’s investors think so, too. Brilliant launched with about $1.5 million in venture capital funding from several firms, including New York’s Brand Foundry Ventures.
That firm’s founder, Andrew Mitchell, said the move to Los Angeles is a smart idea, and feels Brilliant’s market potential is $17 million to $18 million within six to 10 years because its direct-to-consumer business model will enable it to scale up production while keeping gross margins high. Additionally, Los Angeles is an emerging market for startups – particularly consumer brands, he added.
“These guys just launched and we’ve got six-figure monthly revenue,” Mitchell said. “The market is at an inflection point – there are new bike lanes, bike-sharing and bike plans. The timing is perfect, and the customer exists, and they’re looking for the right brand.”
Standing tall in the saddle isn’t easy for all bike businesses, however. Established bicycle shops face increasing competition from new vendors and online bike companies – such as Brilliant – and bike-share programs that rent bikes and could discourage riders from buying them.
“If people share bikes, they don’t have to take them in for tuneups,” said Greg Autry, assistant professor of clinical entrepreneurship with USC. “That’s a negative for bike shops.”
Shifting up
The competitive atmosphere amid bike urbanization hasn’t slowed business for Giant Bicycle Inc. in Newbury Park, the U.S. distribution headquarters for Taiwan-based bike maker Giant Manufacturing Co. Ltd.
Instead, the distributor doubled its warehouse space last month when it moved from Cerritos to a 200,000-square-foot structure in La Mirada because of sales growth at its franchise bike shops. It also opened a bike shop this summer in Santa Monica, with a section showcasing its line for women.
The company scaled up to stock more of the fast-selling bicycles and related items, said Patrick VanHorn, corporate communications manager. Bike and gear volumes are up 12 percent over 2014, he added.
“While our La Mirada warehouse serves Giant retailers throughout the western United States, it is a fact that Los Angeles and Southern California Giant retailers are experiencing growth because, in part, the region is considerably more bike friendly than it has been in the past,” VanHorn said.
Bike business owners say the riding market is still dominated by hardcore cyclists, so many newer businesses are targeting those pedaling to run errands, go shopping, visit the beach or ride to work.
That’s Brilliant’s target market with its four models – two for adults and two for children – starting at $299 and $149, respectively, for everyday riding or weekend cruising.
“The idea came from personal experience when I, as a 30-year-old male, went to buy a bike,” Kalamchi said. “It was confusing and frustrating. I thought if I felt that way, everybody must be having similar problems getting a bike.”
To sell high-quality bikes at midlevel prices, Kalamchi cut out the bike shop and sells directly to the consumer from its website. The bikes come unassembled.
Brilliant’s first year has been really strong, he said.
“There is a connection between the creation of bike lanes and bike-share programs and how much people ride,” he said. “We all have a belief cities are changing in that way.”
Brilliant might get help in boosting its target market from former Nike Inc. employees Claire Ortiz and Heather Park, who co-founded downtown L.A. apparel company Ortiz Industry Inc. in 2013.
The pair design and make women’s and men’s suits, dresses and separates in performance fabrics that stretch with people as they bike to work and other activities while managing moisture, protecting from ultraviolet rays, eliminating odor and resisting stains such as sweat, Claire Ortiz said. Tops range from $75 to $250 while jackets and pants run $120 to $425 per item.
Ortiz and Park raised $800,000 from investors to help develop the line that now sells at New York retail stores of Italian motorcycle maker Ducati Motor Holding and Italian scooter maker Piaggio & C., Ortiz said, as well as through online retailers. They’ve had the most success selling men’s clothing and they plan to target bike shops. She declined to give sales figures.
“Biking is going to grow, but it will grow exponentially if there’s an additional audience,” Ortiz said. “This opens up an entirely new customer.”
If the bike did most of the work, that might also attract new and more riders – and that’s why electric bikes are also gaining traction.
Three electric-bike shops have opened in Santa Monica recently, including Bike Attack Electric+ on Main Street. The shop sold 50 bikes before the store officially opened at the start of this year, said Manager Markis Andrada.
“It took only one or two people to ride them alongside a car in traffic,” he said, for demand to pick up.
But after a robust start, sales are starting to slow, Andrada said. Customers are buying elsewhere rather than waiting for orders to arrive.
Downshift
In L.A.’s rising bike culture, Santa Monica is iconic, with its more than 100 miles of bike pathways; the county’s first bike-share program, which launched last month; and myriad policies and requirements that encourage biking.
The city has 20 bike-related businesses overall, six which have opened since 2011, many of them bike shops, and many crowd Main in the downtown area.
With its 79-year history, Helen’s Cycles has six bike shops throughout the county, including Santa Monica and an I. Martin Bicycles shop in Beverly Grove.
Owner Jay Wolff said sales across all his stores this year are flat to slightly down compared with the same time last year. Apparel is down 10 percent to 15 percent from a year ago.
He cites competition from online stores and an increasing number of brick-and-mortar shops. Wolff is also leery of potential impact from the city’s new bike-share hubs, three of which are right near his shop.
“We don’t see sales from it; that’s the bottom line,” Wolff said. “For us in Santa Monica, it’s become a very crowded place. Obviously, Santa Monica wanted to be the friendliest bike place in the world but it’s at the expense of the bike stores.”
