The Chainlink

You'd think bike shops would hate Divvy. You'd be wrong

By Hailey Lee June 18, 2014

Crain's Chicago Business

The spread of Divvy rental stations is not stealing customers and bike sales from local shops — on the contrary, Divvy's expansion this past year has been a blessing for local bike shops.

Paul Kozy, a third-generation owner of Kozy's Cyclery in Chicago, says it's because Divvy is helping to urbanize biking.

“More than ever, city people are getting on bikes, not just for fun but to commute to work,” Mr. Kozy said.

Divvy rider data for the first year show that morning and afternoon rush hours are the busiest times of the day for Divvy rentals. So far, there are 3,000 bikes and 300 stations, concentrated in the city's most congested areas.

Before Divvy, bike shops depended on families and bike enthusiasts for their bread and butter. But this season, profits are rolling in from a whole new class of riders: city professionals.

Andrew Giniat, general manager of On the Route Bicycles in the South Loop, says the shift started this year as soon as the warm weather hit. He adds that Chicago's growing identity as a biking city is also thanks to Mayor Rahm Emanuel's commitment to create 645 miles of bike lanes in the city by 2020.

“This past year, bike commuting has become more accessible and safer in the city. That helps riders and our business,” Mr. Giniat said.

This new crop of urban bikers is frequenting local bike shops to gear up. According to Mr. Giniat, safety is not the only reason riders are buying accessories such as helmets; aesthetics matter.

George Chase, store manager of the Kozy's shop in Avondale, agreed. He said demand for stylish helmets is so high that Kozy's has doubled its stock this season.

“We are seeing a complete reversal of the type of products that are being sold,” Mr. Chase said.

Mr. Giniat at On the Route is noticing a similar change. Urban-style helmets have grown 25 percent in sales since last year, while traditional, sporty helmets have lost sales in equal proportion.   “People want to bike to the bar or to the grocery store — and they want to look good,” Mr. Giniat said. “We're seeing high demand for products with a 'smart' look, not traditional, dorky styles of the past.”

ALL-PURPOSE COMMUTER BIKES ARE ALL THE RAGE

The shift in demand is happening in bikes too.

At Kozy's, comfortable, all-purpose commuter bikes are flying out the door, with a 30 to 40 percent jump in sales since the start of Divvy. Sales of all other bike types have remained stagnant. Mr. Chase says half of his customers who use Divvy eventually return to the store to purchase a bike.

“Riders use Divvy rentals like training wheels before committing to a permanent bike,” Mr. Chase said.

Ex-Divvy riders will also shell out extra for a more expensive bike and for extra gear such as racks and pannier bags.

“Once they're sold on Divvy and the biking lifestyle, people realize they want a bike but of higher quality,” Mr. Kozy said.

On the Route also had a 50 percent increase in sales of similar utility-oriented commuter bikes, with a simultaneous, equal drop in the sale of fitness-oriented bikes.

“City riders are looking for something versatile to ride all year round, to carry all their work stuff and change of wardrobe,” Mr. Giniat said.

To continue attracting more Divvy customers, Chicago bike shops are teaming with Divvy to offer discounts to Divvy's annual members — flash a Divvy member key and receive 20 percent off a helmet and 10 percent off accessories. All Kozy's and On the Route shops, among others, offer the promotion.

Washington's Capital bike-share program is growing a similar enthusiasm for biking and fueling business.

Not so In New York, where the Citi bike-share program has reportedly hurt cycle shops. One shop in the West Village reported losing 40 percent of sales when rental stations popped up in its neighborhood.

 

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wow - cool article. thanks Gene !

OK, so why does a municipal bike share program result in increased revenue for bike shops in Chicago but decreased revenue for shops in NYC?

My guess would be that New Yorkers would rather rent a bike than purchase one that will likely be stolen soon after purchase.

Off the top of my head I guessed (assuming the veracity of the bike sales claims) that New Yorkers may have less living space in which to store a bike (which is obviously not unrelated to the theft question.)

If we're comparing Manhattan to Lakeview here, it's not hard to figure out where the market for garage candy is stronger.
 
Gene Tenner said:

My guess would be that New Yorkers would rather rent a bike than purchase one that will likely be stolen soon after purchase.

I'm wondering if NYC just has more tourists using the bikes...
Assuming NYC has more tourism than Chicago in general...



h' 1.0 said:

OK, so why does a municipal bike share program result in increased revenue for bike shops in Chicago but decreased revenue for shops in NYC?

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