Already a Bloomberg.com user?
Sign in with the same account.
Slide Show >>
This summer, cyclists in skintight shorts raced through the French countryside in the annual Tour de France. The winner, Alberto Contador, rode to victory on a Trek Madone 6.9 Pro that would cost consumers $8,249.99. Alice Wilkes also bought a Trek bike this summer, but she had a very different experience. Wilkes bought a Trek Lime, which shifts automatically so riders don't have to fuss with gears, stops when cyclists pedal backwards (like in the old days), and has a big, comfy seat. It retails for $589.99.
With her new bike, the first one she has owned in 40 years, Wilkes hits the trails near her Lynchburg (Va.) home. For Wilkes, it's not about speed and performance. "Tight cycling clothes—that's not my world," says the 55-year-old grandmother. "I like to feel free, with the wind flying up my sleeves."
The new "Coasting" bikes are a daring attempt by the bike industry to get some of the 161 million Americans who don't ride back in the saddle. Bike sales in the U.S. have been flat for nearly a decade, hovering between $5.5 billion and $5.9 billion since 1999, according to the National Sporting Goods Assn. Worse, the number of people riding bikes is falling. According to the sporting goods group, 35.6 million Americans over 7 rode a bike at least six times last year, down from 43.1 million in 2005 and 53.3 million in 1996. "We lost a lot more cyclists than we thought," says David Lawrence, senior manager for product development and marketing at Shimano America Corp., the Japanese bike component manufacturer behind the Coasting gambit. "It wasn't sustainable."
The bike industry was blinded by a blip in sales of high-margin, top-end road bikes after Lance Armstrong's remarkable string of seven Tour de France victories. Sales of those expensive, high-tech marvels of modern engineering stabilized revenues, even as unit sales slid.
And that was Shimano's motivation to come up with the Coasting concept and sell the idea to bikemakers such as Trek and Giant. For Shimano, Coasting is not just another new product. The company is the Microsoft (MSFT
) of the bike industry. Manufacturers install Shimano's components—gears, derailleurs, crank arms, and the like—on the vast majority of bikes produced. As the bike business goes, so goes Shimano.
To refine the new biking concept, Shimano turned to Palo Alto-based innovation/design consultancy IDEO, which co-hosted a one-day workshop with BusinessWeek this past summer. David Webster, who runs IDEO's San Francisco office, understood that for people such as Wilkes, building a better bike wasn't enough. Shimano needed to build a better biking experience. "We're interested in sitting, not [just] the chair," Webster says. So rather than starting with computer models of great-looking bikes, IDEO sent researchers into the homes of people who don't ride. They met with boomers in Atlanta, Chicago, Phoenix, and San Francisco to talk about leisure activities.
In the process, Shimano learned why people stopped riding. It wasn't so much that they were out of shape, or too busy or lazy. It was because cycling had become intimidating, something for hard-core athletes who love all the technical minutiae. "Everything had changed in bicycling," says Shimano's Lawrence. "It had gone from fun to being a sport, and no one had noticed."
For boomers, bikes changed from the 10-speed rides on steel frame bikes to 30-speed carbon fiber and titanium machines. Costs rose from a few hundred dollars to thousands. Handlebars, pedals, tires, even seats came in so many varieties that consumers got overwhelmed. And bike shops, filled with workers who fawned over gear, had little time for customers interested in just plain bikes. Yet there was hope for Shimano. "Everyone we talked to, as soon as we talked about bikes, a smile came to their face," Webster says. And that nostalgia gave Shimano an opening.
With IDEO, Shimano developed a concept for a new bike that had a familiar look and was easy and fun to ride. In fact, riders of Coasting bikes never have to shift gears. To keep things simple, the bike uses Shimano's automatic shifting technology. There's a tiny computer on the seat post or tucked under the bottom bracket that triggers a gear change when riders hit 7 mph, and again at 11 mph. The processor is powered by the rotation of the front wheel. In addition to the back-pedaling Coasting brakes, some bikes come with puncture-resistant tires and a chain guard to keep the grease off cyclists' pants.
Research also showed that people worried about safety riding their bikes, especially about getting sideswiped by a car. This led Shimano to move into an advocacy role to increase the number of bike paths around the country. It built a Web site, coasting.com, where riders could find safe routes in their communities.
And Shimano also moved to improve the shopping experience. Shimano put bike industry executives who have direct contact with bike-shop staff through empathy training. To understand how uncomfortable many customers feel in bikes stores, the male managers were sent to buy cosmetics at Sephora. In addition, every Coasting bike dealer was sent a DVD explaining how customers for Coasting bikes are folks who "just want to ride."
Not everything worked as planned. Research showed that the ideal price for the target market was $300 to $400. "It turns out that was too aggressive," Webster says. The cost of the auto-shifting mechanism pushed the price for even the lowest-cost bikes to $450.
It's unusual for a parts supplier to push its corporate customers to expand their brands into a totally new market. Initially, Shimano didn't wow bikemakers with its Coasting pitch. The first prototype Shimano showed was unlike anything on the market, with rounded chrome hubs on the wheels, a swoopy curved frame, and handlebars with loops in them big enough to set a coffee cup inside. The cushy seat flipped up to reveal a mini-trunk to store a cell phone. "It was kind of like Audi meets Dr. Seuss," says Kyle Casteel, product manager at Raleigh America Inc. in Kent, Wash. "Shimano thought this was the next big thing, and we were like, Is it?'" Casteel recalls.
Executives at Trek, the world's largest bikemaker and builder of Armstrong's rides, were also nonplussed. "To be honest, it was anticlimactic," says Chad Price, Trek's pavement bike product manager. But Price was looking to introduce nonriders to Trek's bikes, and he saw how the Coasting concept could help.
Trek, Raleigh, and Giant did, finally, embrace the Coasting concept, if not all the features of the prototype. Since the spring, when Shimano rolled out a 15-city marketing campaign, the three manufacturers sold out of the roughly 30,000 Coasting bikes produced. They're making more as Shimano moves into other markets in the fall. It plans a media bash in New York's Central Park in mid-September.
In the end, bike riding is always about the experience. Lance Armstrong has his. Now Alice Wilkes has hers. By Jay Greene