Make Room for the Big Green Square!

MEC and the Cycling Industry, Part 1

Earlier this week, we broke news that MEC has partnered with Ridley bikes for the upcoming season. While we don't know all of the details of their deal yet, it is safe to say that the ripples of this will be felt by shops across the country.

When MEC entered the cycling market in the fall of 2009, we felt that it could be beneficial to the industry as a whole. Their target market seemed to be entry level and casual riders, so their bikes could be viewed as 'gateway' products to a larger world of cycling. If the number of cyclist grew, it would be beneficial to everyone in the industry. Also, some of those new cyclists will want to move upmarket eventually, and would visit their LBS (local bike shop) for their new bike.

Much of that narrative changed when MEC partnered with Ghost in 2012. MEC was moving up-market, at least in the world of mountain bikes. Now, with Ridley in the fold, what does this mean for the other players in the Canadian cycling market? Click past the jump to read more.

The partnership between MEC and Ghost made great business sense for both parties: MEC has a nation wide distribution network, many locations, and a robust online store; while Ghost provided them with proven designs, and an established brand. Ghost Bikes is a large German bike company that has decent following in Europe, but no North American presence.

As an aside, our understanding is that Ghost did not come to North America sooner because of a patent dispute with the All Mighty Big S. While the patent claim did not apply to Canada, the Canadian market was deemed too small for a push through the normal distribution channels. When MEC started looking for a bike partner, their vast resources appeared to be a perfect match.

The deal with Ghost was exactly what the early critics of MEC feared: competitive bikes at less than competitive prices, at least as far as the LBS was concerned. According to those critics, MEC pricing is the result of their large resources, and unfair business practises that result from the co-op model. With Ghost, MEC now was equipped with a full range of mid-to-high end bikes, 26ers and 29ers, hardtail and full-suspension, aluminium and carbon.

For example of pricing, here is a selection of 2014 full suspension, carbon framed, 29er XC bikes with Shimano XT drivetrains:

Cannondale Scalpel Carbon 29 2, MSRP $5600

Ghost AMR Lector 2977, MSRP $3600

 Trek Superfly FS 9.8 SL, MSRP $6300

Obviously, there are more nuances involved on the quality of a bike than just frame material, wheel size, and drivetrain, so I know that this isn't a perfect apples to apples comparison, but the price differences are striking.

The saving grace for most LBS is the relative obscurity of the Ghost brand. Most people want what their friends are riding, or the pros, or at least a brand that they have heard of. Many in the market were sceptical of the 'new' brand. That will only last so long, however. Ghost is in its 3rd year in the Canadian market, and sales have been growing every year, sales which have to be cutting into LBS bottom lines, especially in the important mid-level, higher volume bikes.

I don't think that Ghost will ever be a recognised 'premium' or 'high desire' brand to compete with the likes of Yeti or Pivot, but their large range of models can make them competitors to other large bike companies, like Trek or Specialized, who are often the bread and butter for shops.

So, while Ghost gave MEC a mountain bike brand they could lean on, their road and cyclocross line-up was lacking. While MEC has some carbon and aluminium road and 'cross bikes for sale, both Ghost and MEC branded, none of them are serious competition in their respective markets.

If Ghost is obscure in the mountain bike market, they are unknown in the road market. In addition, road cyclist historically have been much more conservative than mountain bikers (some people call it pretentious, grin). Roadies typically take longer to adopt new trends or accept new brands.(While I have a soft spot for smaller, less known brands, I can't deny the appeal of the historic Euro brands).

With that in mind, enter Ridley at MEC. To quote the company line from the website:

Flanders, the Flemish region of Belgium is infamous for delivering the harshest cycling conditions. Riding in the rain, on cobbled non-category climbs, on snow and on ice are the norm for Belgium’s 6,000 cycling clubs. This place, the pounding heart of a passionate cycling nation where the most revered Spring Classics unfold, is the cold steel anvil where flesh and bones are forged into the greatest racers of all time. This is Belgium, home to Ridley Bikes, this is where our products are engineered, hammered into raw form by the roads themselves, and where we refine them in competition.

This is Ridley. We are Belgium!

If that doesn't get you on a bike, I don't know what will (grin).

In addition to their inspiring narritive, they are sponsors of the Lotto Belisol World Tour race team, and pro riders have logged many victories on Ridley bikes. Their cyclocross trophy case is even more impressive: 7 World titles, multiple national titles, and wins in every major race series. In the world of cyclocross, Ridley has few rivals.

The point is: Ridley is a legitimate

RACE

bike company, and they are now being sold at MEC.

So what does this mean? Lots of things. Check back next week for part 2 of our series on MEC and the Cycling Industry, where we will try to cover the many of the issues facing the MEC and the LBS in the Canadian bike market.