The Collateral Damage of NYC’s Bike Share Program: Bike Shops

By James Tarmy Jun 5, 2014 5:31 PM CT

Source: Bloomberg

Citi Bike Stations

Citi Bike Stations

Charlie McCorkell supported New York’s Citi Bike program from the beginning, as one of the bicycle-sharing network’s founding members. But he’s also the owner of several local bike shops. This presents a problem.

While he still supports Citi Bike “philosophically,” on a more practical level, he says, the year-old program is hurting his business.

McCorkell owns two Bicycle Habitat stores in prime locations: one in SoHo, a block from a Citi Bike station; the other in Brooklyn’s Park Slope, more than a mile from the nearest kiosk. Before the program started, he says, the two stores were both on the same growth trajectory.

“After Citi Bike began, over a period of two weeks you could see the change” as the SoHo location adjacent to rows of rent-a-bikes took a hit, McCorkell says. When the year ended, the Brooklyn store’s revenue was up 8 percent, while the SoHo store was “250 to 350 bike sales short.”

This isn’t how it was supposed to happen. Casual riders and tourists embracing the program were to push bike lanes into every corner of the five boroughs. Your neighborhood bike store — staffed with sinewy 20-somethings bickering over component specs — was to flourish as the city became more bike-friendly. At least that’s the lift-all-boats scenario many shop owners had hoped for.

If you go by the numbers, Citi Bike’s 324 bright blue bike stations across Manhattan and Brooklyn have been a success. At the start of May, 105,367 had signed up for the $95 annual membership, equivalent to roughly a fifth of the total population of New York City riders. Bike lanes have multiplied, and cycling has doubled since 2005. New Yorkers have finally begun to embrace bicycles as means to get around town.

But the perverse byproduct of Citi Bike’s popularity is its impact on bike stores like McCorkell’s. The very institutions that should be riding the success of a newly bike-friendly city are getting doored by it instead. For the neighborhood bike shop, declining sales are an unintended consequence of a program that most people seem to love.

A Convenient Alternative

Citi Bike has proved to be a convenient alternative to the mass-market bicycles favored by commuters. There’s no need to lug it up and down stairs to your apartment, pay for repairs, or worry about getting it home after a night out. Bike stores aren’t making up for the lost business with new sales of $4,000 racing bikes, which have little connection to Citi Bike’s chunky, slow-moving cruisers. It’s like hoping Maserati sales pick up after people test-drive Toyota Camrys.

The maps at Citi Bike stations show the locations of bike shops and long-term rentals, Nicole Garcia, a spokeswoman for the Department of Transportation, said in an email. She said that Citi Bike is meant for short trips and that its service area covers only part of the city.

The rent-a-bike program works like this: You can buy a 24-hour pass for $9.95 or seven-day access for $25. Bikers get 30 free minutes of ride time before they’re required to check in to another kiosk to avoid additional charges. For year-round passes, the first 45 minutes of every ride are free. The program was introduced by the administration of former New York City mayor Michael Bloomberg, the founder and majority owner of Bloomberg L.P.

Citi Bike even cut into sales in Williamsburg, Brooklyn — the global spiritual home of the bike-riding, PBR-slugging creative class. Revenue at Chung Pai’s two Landmark Bicycles stores — one in the East Village, one in Williamsburg — was down 20 percent last year. The Williamsburg location is a few blocks from four separate Citi Bike kiosks.

“We had to cut staff by three people,” Pai says. Helmet and accessory sales increased, he says, but the profit on a helmet sale is $30, compared to $200 for a bike.

Sales Down $400K

Sales tumbled 40 percent in the West Village Hub Cycles, which makes European-style urban bikes with fenders and baskets, “They put five stations within five blocks of our store,” says owner George Bliss. “We had been growing year over year for five years before that.”

In 2012, Hub Cycles grossed about $1 million, Bliss says. In 2013: $600,000. It wasn’t just a drop in bike sales that ate into his profit; he says Citi Bike put a dent in his lucrative repairs business, too.

“Now, people who don’t want to maintain their bike have another option,” he says. “A wheel costs $100. Or they can just join Citi Bike for $100.”

At Echelon Cycles in the West Village, co-owner Daniel DeNigris says that bike rentals and sales of hybrid and commuter bikes are both down 50 percent. The store still made a profit though, thanks to high-end racing bikes.

Some store owners believe that New Yorkers will eventually trade the lumbering Citi Bikes for something sleeker. They cite reports from Washington, DC, which saw an uptick in bike sales after its bike share program was implemented. But New York’s bike system is so extensive that others worry riders will never want to make the switch.

“I want to have a viable business, believe me, I don’t want to go down in flames,” Bliss says. “How would you feel if you had a bakery and someone started giving away free bread all around you?”

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