Saturday, November 8, 2008

Tri Business in Troubled Times

The daily business news is grim. Yesterday, I heard a chilling stat. Automobile sales, that had peaked last year at 17 million units sold in the U.S., have dropped abruptly this year and they are expecting only about 10 million new units sold this year. That's a 7 million unit drop in a year! No wonder the automobile manufacturers, in particular the big three US Auto makers are hurting.

What about the triathlon world and business? So far, from what I can tell it's for the most part business as usual. Most of our customers had good to great years this year - not just with Nineteen wetsuit sales, but overall. Despite all the daily bad news, triathletes where still buying, bikes, wetsuits, shoes, clothes and all those other tri gadgets and nick-nacks, mostly at a record pace. The recent Interbike Trade show (Picture of the Nineteen booth above) was very up-beat. Most vendors that I talked to, had good years this year and pre-season orders for 2009 were at or ahead of record levels. The mood amongst many of our retail customers was very good. Some were a bit wary about the dark economic storm clouds that have been gathering all year, but they still were optimistic for 2009.

It's not a surprise really. The triathlon demographic is very good. You need to have a certain level of income - well north of what would be considered "average" to afford all the equipment needed to do the sport. You need sports gear for, three different sports! I think that is one of the key things that keeps it going. This may also be the dark down-side to this as the barrier costs to getting into the sport have been going steadily up, as have race entry fees. I have heard others say that if we see anything over the next year, it will be a slowing down of new people that have been coming into the sport - for that reason. The barrier costs of all the equipment needed and race entry fees getting too high. However, that is a slowdown from an astounding growth rate over the last five years. Record numbers of new people have come into the sport of triathlon and embraced the training and the lifestyle with gusto - and this is where the opportunity may lie. Many of these new people, bought entry level equipment to start out, in the last few years, just to get going - particularly when it comes to bikes and wetsuits. When they come back into the store now, they are not going to want to replace what they have with something similar. They are going to want to take a step up. My sense is even in troubled economic times, we are still going to be seeing people trading up to better equipment. That's why, many bike manufacturers, such as Cervelo, debuted over-the-top new bikes at the top-end of their lines - they know, that in addition to building awareness and the brand, these bikes will sell, because people do want to step up!

Be ready for the step up!


KonaKing said...

Nice piece I agree with most of it bu t IMHO I think many of the high income will be feeling the pinch as the stock market corrects itself. Also I think triathletes will continue to want the latest gear despite the down turn.

Bob Mitera said...

This is the book Marketing to the Affluent - real life. Nice work.