Performance Bicycle Shops shutting down – what does it mean?

The retail apocalypse has caught up with local cyclists. All of the Performance Bicycle shops in the United States are in the midst of store-closing sales. The San Diego region had six stores between Chula Vista and Oceanside. Some have already shuttered.

When reached by phone, an employee at the La Mesa location informed me that while no definitive closing date has been set, their liquidation sale was well underway.

Two years ago, Chapel Hill-based Performance Bicycle was purchased by the Philadelphia company Advanced Sports International. The acquisition seemed to make sense as the Philly company owned Fuji and other brands that Performance stocked at the time. The move also allowed them to sell Performance’s house-branded accessories in overseas markets.

They then formed a new company, Advanced Sports Enterprises, to handle the Performance Shops. While the new company’s online bike sales remained steady, their new retail acquisitions lost money. According to an article in the bicycle trade publication Bicycle Retailer, CEO Patrick Cunnane claimed that the company was set to run out of money in January. He also revealed that the purchase of Performance was driven by heavy debt that the company owed Advanced Sports International at the time.

"We bought (Performance) because two years ago Performance was heavily in debt to [us]. If Performance had failed then, [we] would have failed. So, we would have been in this same position but two years ago," Cunnane said.

I visited the Performance shop on Midway in late December to check out their sale. While there, I tracked down a manager to see if he could speak about the store closures. No luck. He told me the employees were under a gag order to not talk with media about the bankruptcy.

Luis Ibarra, the owner of Edison Cycle Co., operates three local, brick and mortar bike shops in Pacific Beach, Poway, and Del Sur. Even though Performance had six shops in the region, he doesn’t feel that was too large of an imprint for the area.

“Spread out is doable, if you do it right,” Ibarra said. “We have a few shops and it works for us. Ours are spread out a little further than them though. Bicycle Warehouse has six or seven locations in San Diego and, according to my vendors, they’re pretty successful. They have a strong marketing presence and they don’t focus on price, they focus on service. They do well. I don’t think it had to do with that. It was the products that they offer, and the customer service were the major issues.”

Ibarra likes to visit his competitor’s stores to get a better grasp of their operations. He said that Performance seemed to suffer from a “price first, service second model.” He felt that the stores weren’t very presentable and felt as if “they were run over.” He also believed that Performance suffered from long wait times in their service department.

“If someone comes in for a tune-up, we strive for a 24-hour turnaround from when they drop it off. They might quote a week or ten days and god forbid it’s a special-order part—it might take a few weeks. We place orders daily, so if we have a special-order part there’s a good chance we’ll have it tomorrow. If we don’t need parts, we’ll just get working on the bikes right away— even if it means we have to keep someone overtime or come in early to get it done,” Ibarra said.

As for the general health of the retail bike business, Ibarra feels that it is chugging along just fine. While certain categories are struggling, sales of mountain bikes and electric bikes “have more than made up for those segments” he said. He is moving forward with plans to open more local shops but admits that times are tougher for other retailers.

“There are some shops that are struggling, but they’re either shops like Performance, or the old-school mentality mom and pop shops that aren’t embracing technology through their point of sales systems. They’re not using social media as their primary marketing platform. They’re not sending out email communications. They’re not doing multi-channel sales. Our stores sell online on our website as well as through third-parties such as Amazon. We do about 40% of our revenue through Amazon.com,” Ibarra said.

Nationwide, the Performance retail stores employ over 1500 employees. This isn’t going to be akin to Qualcomm leaving town, but it will put a decent number of locals out of a job. One bright spot is that the guys in the service departments shouldn’t have too much trouble landing new gigs.

“Believe it or not, there’s a lot of demand for bike mechanics because it’s a trade skill and there just aren’t enough people training in jobs like that. So, it’s tough to hire mechanics. If someone even hints to me that they might be leaving to go work somewhere else, or I hear it through the grapevine that they might be looking, I do whatever I can in advance to try and save them. It’s a hard job to fill,” Ibarra said.