Peek No : 3
July 16, 2003

Fortnight Focus | Wish I were | BrandFact | This Fortnight that Age | Make us Work 4 you | Insight

Hello!

We could observe our research team's intensity of freewheeling gaining added momentum as Marketspeek gains more patronage from subscribers. The research team took the wheeling a bit further. The result: A Marketspeek on the Bicycle sector.

Besides the habitual peek into our economy's latest performance, get to know the rank enjoyed by cycling as a recreational habit, the size of our bicyle industry, the changing trends in selling bicycles and much more in this issue!

To start with, a closer account on our economy's health.

Export and Import Prices

The U.S. Import Price Index rose by 0.8% in June. The prime driver behind this rise is the increase in petroleum prices. This jump comes after the steep decline reported in May. On year-over-year comparison, import prices rose by 2.0% in June while export prices declined by 0.2%.

Producer Prices Index (PPI)

The finished goods PPI for June increased by 0.5%. This is due to a 3.4% rise in energy prices. Energy prices, at raw material level, rose by 10.7%. This is the largest gain since the 31.3% jump seen in March. There have been mixed sentiments in food and non-food sectors. While raw material food prices declined by 0.5%, the non-food, non-energy crude PPI rose by 0.6% in June

Chain Store Sales

Chain store sales rose 2.4% in June, marginally beating market expectations. However, the rise in sales was due to intense promotional support. The month also witnessed several retailers issuing profit warnings.

Weekly Natural Gas Storage Report

Underground storage of natural gas surged by 111 billion cubic feet (Bcf) during the week ending July 4. Net injections beat expectations calling for a build in storage of around 100 Bcf. It is estimated that this strong build will have a marginal downward pressure on the natural gas market.

Happy Peeking!

Editorial Team
Marketspeek
Executive Editor - Dr. Sharon Livingston
Editor - Vijay

Fortnight Focus

Bicycle industry - America

• The size of the bicycle industry of US has been estimated at $6.0 billions.
• Around 42 million Americans (aged seven and older) ride bicycles. A ranking of the most popular recreational activity in the US :
  

Rank	Recreational activity
1	Exercise walking
2	Swimming
3	Camping
4	Fishing
5	Exercising with equipment
6	Bowling
7	Cycling

• Almost 98% of the bicycles sold in the US are imported predominantly from China & Taiwan.
• There are also domestic manufacturing facilities of US based companies. These companies have around 100 brands among themselves.
• The average price of a mass market bicycle has been falling continuously. The reasons are :
  a. The growth rate for bicycles in US has almost leveled off.
  b. Imports from China have been increasing. Due to this, there is an unprecedented spurt in the availability of bicycles.

Vital Statistics

• 25% of the bicycle-selling stores in U.S. also sell indoor exercise equipment.
• The non-bicycle items sold by bicycle stores are Inline skates, Snowboards and Skiwear.
• The bicycle category has been fast emerging with the inclusion of specialty bikes, electric-assisted bicycles and foldable cycles.

• First quarter sales (in fiscal 2003) of the bicycle industry are substantially low compared with the first quarter of 2002.
• The cold winter and early spring have slowed bicycle sales drastically. Though reports of April indicate that sales are picking up, they are expected to be below sales of last year's April.

Analysis - Bicycle Industry

• The federal government has earmarked significant transportation monies for the construction of facilities. These facilities will include bike paths and bicycle-friendly roads. Development of such facilities could trigger demand for bicycles in the coming years.
• Specialty bicycle retailers stack lifestyle items like exercise bikes, weight machines, etc. This works in favor for the bicycle industry to position itself as a fitness equipment. The industry should capitalize on this trend to acquire a strong lifestyle related positioning.
• More stores in the US have identified bicycle accessories as a part of their offerings. Recent studies on the sales mix of retailers have shown that approximately 50% of the average bicycle store’s sales are derived from accessories and parts. This is a strong indication of the growing emphasis on service and specific repair services.

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Wish I were

A Pleasant Tale

She created a market that the experts swore did not exist, with a midlife foray at the age of 45. She unlocked the buying power of an explosive new category of pre-teens - the `tweens'. With 82 million books and seven million dolls, her American Girl line grew to become second only to Barbie as America's most popular doll. Sales topped $350 million in 2001. And when Pleasant Rowland finally sold her business to Mattel for $700,000,000, she became the country's highest paid woman.

A remarkable record for a remarkable woman. It will certainly be of interest to discover what inspired her, powering her transformation into a unique phenomenon in the world of business. Especially as she made her entry with absolutely no fanfare, no big investors, no formal business plan, no experience in the toy industry and no money for advertising.

All she had was a singular, compelling vision of her product. A vision that enabled her to successfully take on the biggest toy manufacturers in the world. Her investment was her own life savings. She worked out of home, relying solely on direct mail, networking and catalogs to market her custom-made dolls. And made up for her lack of resources by establishing vibrant relationships with her customers, vendors and lenders.

Today, her legacy is a pre-teen market that encompasses not just books and dolls but the entire music and entertainment industry. A market of over $100 billion - just in the US.

For further reading:

http://www.fortune.com/fortune/fsb/specials/innovators/rowland.html

http://www.giftsanddec.com/esec/Article_229769.htm

http://www.erasofelegance.com/americangirls.html

http://www.medusaonline.com/hbbc/insight_0009.htm

http://www.shareholder.com/mattel/news/19980615-54274.cfm

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BrandFact

Developed in 1950 by the then-called Zenith Radio Corporation, the first TV remote control was christened "Lazy Bones." Lazy Bones used a cable that ran from the TV set to the viewer.

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This Fortnight that Age

June 25th 1867 - The first barbed wire was patented by Lucien B. Smith of Ohio.

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Make us Work 4 you

Our research team will be glad to work on a research assignment for you. Download the proposal requisition form and commission our cost-effective secondary research services.

Click here for proposal requisition form.

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Insight

The difference between a successful person and others is not a lack of strength, not a lack of knowledge, but rather a lack of will.

-- Vince Lombardi 

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Disclaimer
The information presented in this Newsletter is not based on any primary research undertaken exclusively for this purpose; it is based on secondary sources of information, as current as the researchers were able to collect from the sources. However, should any specific client need up-to-date information on this (or any other) segment, they may commission Executive Solutions to do such research.