Much like Queen’s frontman Freddie Mercury, “I want to ride my bicycle, I want to ride it where I like.” But it has not been so simple. Since the first lockdown, a lot of newcomers have joined the peloton in search of cleaner air and a more sustainable means of transportation (as well as a little more exercise). When they’ve been able to get their hands on a bike, that is.
The Covid-19 crisis revealed more or less cruel shortages and, more generally, a fragmentation of the value chain. Even the Financial Times reported that global bicycle production was hit by supply chain delays due to the impossibility of bike parts giant Shimano (not world-leading bicycle brand Giant, one of its biggest customers) to meet the surge in demand.
As a result, repair shops (mobile or not) are opening everywhere; small bike businesses are scaling up. A bike enthusiast and entrepreneurship expert, ESCP Business School professor Martin Kupp can only welcome the fact that white-collar workers are choosing to lubricate chains (not of command), and take part in initiatives like the Flandrien Entrepreneurship programme.
A chain that needs lubrication, at the very least
ESCP faculty team leader Valérie Moatti knows first-hand about the underground bicycle economy: her bike was stolen in front of the school just before parking became available on campus grounds.
Strategy specialist Frédéric Fréry could talk at length about the uberization of the economy, which bike deliveries and bike-sharing services are a (bad) symptom of. And even though professor Régis Coeurderoy and PhD candidate Sofia Kriem explained in their “impact paper” as part of the ESCP’s “Managing a Post-Covid19 Era” series that delivery platform couriers’ gains in collective visibility could lead to a new social contract, who could forget that Uber sent truckloads of e-bikes to the scrap yard despite a nationwide bike shortage?
Shared bikes are nevertheless a necessary evil, with demand soaring since the beginning of the pandemic (despite a reduced number of rides during lockdowns) and new markets (countries, cities) emerging.
Wheeling your way through the global bike shortage?
Some manufacturers are set to acquire smaller ones and build new factories in Eastern Europe or Portugal, and some may even relocate, like stationary bike manufacturer Peloton decided to do. Especially since Chinese manufacturers are wary of another boom-bust after the share-bike debacle and the mountains of abandoned bikes.
Even before the Covid-19 crisis, professors Fabienne Fel and Valentina Carbone (whom I call Marco Pantani behind her back because I can never catch up with her electrically-assisted bike) wrote (in French, alas) with BCG Consultant and alumnae Jennifer Cayla that Industry 4.0 can help relocate production: Industry 4.0 technologies will enable greater flexibility, greater reactivity – by reducing both production and delivery times – better product quality and greater customisation, innovation facilitated by bringing design and production locations closer together, a better brand image (thanks to products labelled as locally made), while reducing labour-related costs.
Large-scale industrial reshoring will not take place
But others are not taking that route: even though “increasing the number of international cycle racing events in emerging countries such as China, India, etc. is expected to drive growth over the forecast period in the global bicycle component market” and the market is forecast to reach $9.4 billion by 2025, growing at a compound annual growth rate of 6.1% from 2020 to 2025, Le Monde reported Shimano was considering NOT building a new factory. Just in case the race for bikes turns out to be a passing fad…
Although he’s more of a running enthusiast, behavioural scientist Ben Voyer would certainly have something clever to say about cognitive wheels and humans’ short-term bias, like he did with the race for toilet paper – and this has nothing to do with the European Society of Coloproctology (ESCP).
More seriously… In the “impact paper” Valentina Carbone and Valérie Moatti wrote as part of ESCP’s “Better Business: Creating Sustainable Value” series, they show that large-scale industrial relocation will not take place. “In spite of the media coverage about reshoring and the growing political pressure to encourage it, there are persistent uncertainties about the viability of profoundly rethinking complex global value chains that have been established for decades…”
While the result of the race and the jury is still out on the future of the global bike supply chain, “all I wanna do is bicycle, bicycle, bicycle.”
This post gives the views of its author, not the position of ESCP Business School.