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Depressing thought...

marshalolson

Turbo Monkey
May 25, 2006
1,556
259
The Industry™

In the end, the big 3-5 will survive and determine that it's only worth selling $8,000-15,000 bikes and drop the "cheap stuff"...
The volume is in starter bikes. They have massive long-term investments into huge fixed costs (factories) that can only be ammortized through enormous volume.

More likely in this scenario is that if 3-5 bigs only survived, they would no longer compete on brand (ie stop selling the $3000-$10,000 bikes), go direct-only (ecomm + brand owned stores), and stop supporting racers/races/etc and only focus on the volume. The expensive stuff is simply loss-leader marketing to sell townies and kids bikes for Giant, Cannondale, Trek, etc.
 
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norbar

Turbo Monkey
Jun 7, 2007
9,914
509
Warsaw :/
If US unemployment hits 30% as many are predicting, you can bet your ass that the bike industry isn't going to somehow magically weather that storm, and it's not going to only be the small companies or the companies making shitty products that go under. Hell, if unemployment hits 15% which seems pretty low considering, you can make the same bets.
Who predicts 30% unemployment? I have so far seen GDP drop predictions but not unemployment ones.

Then again I'm happy to be living in a country that has actual worker rights so coronavirus doesn't mean everyone gets auto fired.
 

norbar

Turbo Monkey
Jun 7, 2007
9,914
509
Warsaw :/
RECOMMENDATIONS

Brand
(1) need to urgently create a next-gen go-to-market on the fly
(2) access as large of a line of credit as possible to float your retailers
(3) make sure your stores get premium and halo products in --- and figure out how to drive consumer demand for them
(4) refrain at all costs from closeouts, and if you have to, own in on your site vs. instead of .com closeouts

Store
(1) call your best customers and ask/beg them to buy gift cards. It a 0% interest rate liability, but its also pure cashflow in the cash register today, and helps consumers come back to you vs. online closeouts later.
(2) get any remaining previous-year demo product (like all of it) listed on ebay, geartrade, craigslist, TGR, Mtbr, etc as fast as possible. Its paid for already, you covered your cost, the inventory will rapidly depreciate, and its important to have pull for latest and greatest.
(3) focus messaging to all of your customers on service first... more people are outside now than ever. They need nutrition, foot ware, sunglasses, tune ups, etc etc. Focus on selling consumables as the leading marketing message. Its a message of hope and a message of palatable consumption.

Consumer
(1) get outdoors
(2) don't panic
(3) buy what you need, when you need
(4) choose to invest into the things that really matter to you (like your local specialty retailer)

----

TAKEAWAY
It is time for stores and brands to get on the front foot.
Every day that passes which is reactionary increases your risk.
I don't think "Premium" products are a way to go for anyone. If what you say is true then people should shift to "what is necessary" way of buying. The recent boom of super high end bikes was related to post-crash growth. This means no BS companies and stuff that does the job without extra bells and whistles will be king again. 2007-2009 DH bike world was way more price-conscious than it is now.
 

marshalolson

Turbo Monkey
May 25, 2006
1,556
259
I don't think "Premium" products are a way to go for anyone. If what you say is true then people should shift to "what is necessary" way of buying. The recent boom of super high end bikes was related to post-crash growth. This means no BS companies and stuff that does the job without extra bells and whistles will be king again. 2007-2009 DH bike world was way more price-conscious than it is now.
Not sure I am following your point...? Yes there are more parts that you can buy that are really expensive, but that's called innovation too (ie. dropper post vs. fixed, carbon vs. alloy rims/cranks/bars).

2008 Boxxer World Cup = $1599
2020 Boxxer World Cup = $1699

I sold the shit out of Edge AM rims in 2009 at the shop.
As well as alu V10's frames for like $2500 and Yeti 303's for like $3200
And fanboys lined up around the block dumping money into Sundays, Demos, etc back then the same way they do now.

I would also argue that riding is CHEAPER now for a sophisticated shopper who times their purchase with promotion thanks to the rise of chainreaction, Bike24, Chinese Carbon suppliers, etc etc. I bought a brand new XT chain, cassette, XTR brake pads, and RF chainring online all for less than wholesale juust last week, and that would have been impossible for everyone other than shop employees back in 2008 (and retail/wholesale on this gear is essentially the same now as it was then too)

Anyhow, no real point here. Just an observation.
 
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mtg

Green with Envy
Sep 21, 2009
1,670
1,260
Denver, CO
This is only part of it. Here is a first draft of something I am working on that might be interesting for some.

BRAND IMPACT
large scale Supply chain disruption will take a long time to really uncover the impacts
Sample sets not produced like normal.
Sell-in 2021 and go-to-market events (shows, sea-otter, world cup, etc) cancelled.
Stores asking every brand to maximize dating or simply won't pay / go bankrupt creates cashflow risk
Stores cancelling/refusing/reducing preseason delivery creates inventory risk
Pre-baked marketing narratives are woefully out of touch with current market conditions.

BRAND IMPLICATION
Broken go-to-market cycle for 2020
Entirely new market conditions to sell-in 2021
Receiving product 2020 too late and lower demand for it
Cashflow on risk to be crushed by late/non payment
Tons of inventory and no real outlet (many .com's are on spending freeze)
Expect to see a ton of closeouts for sale on brand .com property

----

SHOP IMPACT
Aged inventory is depreciating much more quickly than normal
Cancelation of preseasons to minimize assuming new debt means less pull product to draw expert cyclists in
High fixed costs already (rent, wages) to a barely break-even business

SHOP IMPLICATION
Constraints in getting low-cost debt due to liabilities on balance sheet (mainly accounts payable and rent)
Increased demand for service on low end/basic/starter bikes (ie time intensive but low average order value)
Decreased demand from expert cyclists who now have more time to fix their gear @ home (less best margin customer)
Hourly store employees will be/being laid off.

----

CONSUMER IMPACT
Consumers will start flooding the market cleaning out their garage with used product (PB, Ebay, MTBR)
Strong culture shift of buying necessity vs. interest
Lack of strong "pull" products currently on the market that are MUST HAVES for expert-level cyclists
Lack of cohesive marketing rollouts and in-season lightning rod events (ie world cups)

CONSUMER IMPLICATION
Increase in availability of closeout product is forecast
Increase in participation of peer-to-peer selling
Decrease is "reason to buy" marketing exposure
Increase in "run what you brung" culturally

----

RECOMMENDATIONS

Brand
(1) need to urgently create a next-gen go-to-market on the fly
(2) access as large of a line of credit as possible to float your retailers
(3) make sure your stores get premium and halo products in --- and figure out how to drive consumer demand for them
(4) refrain at all costs from closeouts, and if you have to, own in on your site vs. instead of .com closeouts

Store
(1) call your best customers and ask/beg them to buy gift cards. It a 0% interest rate liability, but its also pure cashflow in the cash register today, and helps consumers come back to you vs. online closeouts later.
(2) get any remaining previous-year demo product (like all of it) listed on ebay, geartrade, craigslist, TGR, Mtbr, etc as fast as possible. Its paid for already, you covered your cost, the inventory will rapidly depreciate, and its important to have pull for latest and greatest.
(3) focus messaging to all of your customers on service first... more people are outside now than ever. They need nutrition, foot ware, sunglasses, tune ups, etc etc. Focus on selling consumables as the leading marketing message. Its a message of hope and a message of palatable consumption.

Consumer
(1) get outdoors
(2) don't panic
(3) buy what you need, when you need
(4) choose to invest into the things that really matter to you (like your local specialty retailer)

----

TAKEAWAY
It is time for stores and brands to get on the front foot.
Every day that passes which is reactionary increases your risk.
It sounds like a good time for a shorter supply chain and leaner manufacturing :)
 

marshalolson

Turbo Monkey
May 25, 2006
1,556
259
It sounds like a good time for a shorter supply chain and leaner manufacturing :)
Agree 1,000%

Companies with the most efficient GTM (ie fastest and least expensive) and shortest Supply Chains will win.
The bigger the challenge the greater the opportunity.
Right now the opportunity favors the little guy.
it will be interesting to see who goes on offense.
My view is that the 800 pound gorillas have very large ships that will be exceptionally difficult to put onto a new course, given completely different and likely very long lasting market conditions.

Just for fun, here is a post I wrote on linkedin on this subject from a couple days ago

>>>>

As the effects of disrupted supply chains, closed ports, and tradeshows slowly unveil their implications, the clear takeaway seems to be... brands with the overall most efficient process through their value-creation cycle will be those that recover fastest.

When viewing your company holistically, and so many things on pause right now, this time is the moment to internalize and get better as an organization. A few key areas of focus:

(1) Product Ideation - quickness from concept to sellable sample
(2) Supply Chain - from design file to customer delivery
(3) Go To Market - from product launch to payment
(4) Retention - the time between a first order and the next
(5) Finance - daily and weekly KPI, Monthly close, quarterlies

Zooming in and focusing on small iterative improvements to reduce process times in each of these sectors can really stack up and make huge organizational improvements. Saving flow time means saving money and capitalizing on slower moving competitors.
 
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norbar

Turbo Monkey
Jun 7, 2007
9,914
509
Warsaw :/
Not sure I am following your point...? Yes there are more parts that you can buy that are really expensive, but that's called innovation too (ie. dropper post vs. fixed, carbon vs. alloy rims/cranks/bars).

2008 Boxxer World Cup = $1599
2020 Boxxer World Cup = $1699

I sold the shit out of Edge AM rims in 2009 at the shop.
As well as alu V10's frames for like $2500 and Yeti 303's for like $3200
And fanboys lined up around the block dumping money into Sundays, Demos, etc back then the same way they do now.

I would also argue that riding is CHEAPER now for a sophisticated shopper who times their purchase with promotion thanks to the rise of chainreaction, Bike24, Chinese Carbon suppliers, etc etc. I bought a brand new XT chain, cassette, XTR brake pads, and RF chainring online all for less than wholesale juust last week, and that would have been impossible for everyone other than shop employees back in 2008 (and retail/wholesale on this gear is essentially the same now as it was then too)

Anyhow, no real point here. Just an observation.

Yes there were super expensive parts back then but how many brands pushed 8000$ bikes?

I don't even know why you mention sundays when the top spec was what? 5000$? Lower end spec was super affordable. 2nd model boxxer now is 1399$. The 2010 models available in 2009? 950$. Also maybe you had a shop in dentist country I don't know. I know what bikes I've seen in Morzine, Leogang, Maribor. The really really nice bikes were 5000-5500 bikes while many people had 2500-3000$ bikes. Now you have an extra level of pricing above that and those bikes are seen quite often.

You are making very local observations to counter what I have said but even your original post mentions buyer behavior will change. Your original post in the section about consumer behavior has

CONSUMER IMPACT
Consumers will start flooding the market cleaning out their garage with used product (PB, Ebay, MTBR)
Strong culture shift of buying necessity vs. interest
Lack of strong "pull" products currently on the market that are MUST HAVES for expert-level cyclists
Lack of cohesive marketing rollouts and in-season lightning rod events (ie world cups)
You basically say here customers will be more pragmatic and it will be hard to market fancy high end stuff and then later you recommend shops fighting for high end products. It can only be one or another. If you have a shop like yours then maybe you can continue selling dentist bikes but if the GDP goes down by 3-10% as people predict then people will turn to direct order stuff and high-end small volume brands as well as most expensive complete builds will probably not the best choice for shops to have. Unless of course you have already built a relationship with your customers then maybe but you will still take a hit.


Also Chain Reaction was there back in 2008. Buying super cheap was also super easy back then. I've built my 2010 Legend on Boxxer World Cup, Saints, X0's and basically all I wanted for around 3500$
 
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norbar

Turbo Monkey
Jun 7, 2007
9,914
509
Warsaw :/
As if companies going auto bankrupt were any better. :rolleyes:
You do realize countries in civilized parts of the worlds also offer help to companies? My country is a bit bad at it but they will crumble under pressure. Still not firing everyone forces some companies to look for creative solutions how to still operate. We are hit by coronabs but I assume less than US. Without money in regular customers hands companies will go bankrupt. Savings are worthless if you have no customers. Honestly HK did it best as it just had a huge consumer stimulus. I think cheeto is considering that now too
 

norbar

Turbo Monkey
Jun 7, 2007
9,914
509
Warsaw :/
Companies with the most efficient GTM (ie fastest and least expensive) and shortest Supply Chains will win.
The bigger the challenge the greater the opportunity.
Right now the opportunity favors the little guy.
it will be interesting to see who goes on offense.
My view is that the 800 pound gorillas have very large ships that will be exceptionally difficult to put onto a new course, given completely different and likely very long lasting market conditions.
While I generally agree you miss one point. Little guys may simply be less resilient to drops in demand. I agree that it's an opportunity for small creative companies that are a bit more flexible than the giants but this only relates to those that are in decent financial condition and are not hit too hard.
As the effects of disrupted supply chains, closed ports, and tradeshows slowly unveil their implications, the clear takeaway seems to be... brands with the overall most efficient process through their value-creation cycle will be those that recover fastest.

When viewing your company holistically, and so many things on pause right now, this time is the moment to internalize and get better as an organization. A few key areas of focus:

(1) Product Ideation - quickness from concept to sellable sample
(2) Supply Chain - from design file to customer delivery
(3) Go To Market - from product launch to payment
(4) Retention - the time between a first order and the next
(5) Finance - daily and weekly KPI, Monthly close, quarterlies

Zooming in and focusing on small iterative improvements to reduce process times in each of these sectors can really stack up and make huge organizational improvements. Saving flow time means saving money and capitalizing on slower moving competitors.
One thing that's important is brand identity and customer relations. I know it's part of retention but it's important and imho needs more detail. You can see it in the restaurant business. The places that created a bond with their customers get takeout orders now, the ones that didn't are screwed. I know it's apples and oranges but imho it will be even more important with bikes. Customer loyalty and a coherent image will matter a lot since those brands will lose less customers to cheaper alternatives than those that were bought out of convenience or traditional marketing that is not possible for now.

For the first time local dealers for big brands will also make or break them in many markets. I know a few reps who are great at customer relations and they will do well but the ones who live by "don't ask questions you moron just buy" will probably be hurt more. The problem for many brands the good work or damage has already been done and now it will be hard to drastically reshape brand image. At least until we can all leave our homes
 

HardtailHack

used an iron once
Jan 20, 2009
2,553
415
I only have to think as far as suspension, where the goal is selling a new product, rather than making something that actually works (and then refining it in the coming years).
Yup, bikes are very similar to car audio, it's newer, shinier and it's better because we fucking say so, and no you can't have any detailed specs!

Maybe people will learn that N+1 isn't the greatest idea after all, might be a lot of CX and fat bikes up for sale soon.
Marino is down to a one man operation, as they represent the cheap end of the custom market I'd assume they will recover quicker than most.
 

Gary

"S" is for "neo-luddite"
Aug 27, 2002
3,121
1,219
UK
No real point to my post either
Yes there were super expensive parts back then but how many brands pushed 8000$ bikes?
Mate, back in1996/7 Rockshox elastomer sprung, plastic damping cart 4" travel Judy DHO retailed here for £1199
An off the shelf GT DH bike (mainstream brand) retailed at almost £5k
as did Cannondale's complete DH bikes.
The Giant ATX1 when released was considered great value. it was £4k
Intense M1 frame alone was £2799
some top end rim brake 9 speed road bikes were £5k

US to GB exchange rates then were something close to $1.8 to £1

so. no. $8k bikes are nothing new. Not in the last 2 decades.
Do you need to buy an $8k mtb to mountainbike to a high level nowadays? No.
Did you need to back then? No.

I guarantee something like this at 1/3 of the price
is a faster more capable bike than any of those mid-late 90s bikes with every single part fitted to it outperforming those old bikes.


CRC started it's mail order shop in '98 so no-one even vaguely savy had to pay full retail prices for parts then either.
Merlin cycles was the goto cheap UK mail order shop previous to CRC and they've been going almost as long as I've been riding mtbs

Don't like the top teir prices? Fuck it, don't pay them, ride something better value and let your riding do the talking. Not being on the latest $8k bike doesn't hold anyone back until they get to WC level (and even then... meh)


Bikes really aren't all that important. Ride what ya have and let it make you happy
 

norbar

Turbo Monkey
Jun 7, 2007
9,914
509
Warsaw :/
Mate, back in1996/7 Rockshox elastomer sprung, plastic damping cart 4" travel Judy DHO retailed here for £1199
An off the shelf GT DH bike (mainstream brand) retailed at almost £5k
as did Cannondale's complete DH bikes.
The Giant ATX1 when released was considered great value. it was £4k
Intense M1 frame alone was £2799
some top end rim brake 9 speed road bikes were £5k

US to GB exchange rates then were something close to $1.8 to £1

so. no. $8k bikes are nothing new. Not in the last 2 decades.
Do you need to buy an $8k mtb to mountainbike to a high level nowadays? No.
Did you need to back then? No.
Gary this is why I mentioned time around last crisis. 2007-2010 not 1996. I remember those days and yes they were as crazy as they are today. So I get that that it's not the first time companies were crazy with expensive parts. I'm just saying if we want to look for market trends we have to look at the last crisis. Back then the market was much less high end focused. I worked as a bike journo then, got lots of stuff for testing and for free and there were many many fewer super high end boutique parts made from he-man's penis than there are now.

Also yeah I remember the days you mentioned. I paid some crazy money for an elastomer manitou SX. Hell my DNM front fork in 2003 was around the same as boxxer teams were in 2010. 2002-2003 where i was moving from XC to DH was rather silly. Very few DH bikes were under "3 kidneys and your firstborn" price but that changed with time.
 

Gary

"S" is for "neo-luddite"
Aug 27, 2002
3,121
1,219
UK
it wasn't really until 2000 the evil overlord and most hated of the mainstram companies Specialized normalised the price of a DH frame with the Big Hit - £550 Frame including a £300 Fox RC shock and their pricing had fuck all to do with any trend really. intense continued to sell pretty much the same thing for 5x the price.

I genuinely don't even remember any financial crisis around 2007-10 :drag:

My point though was.
I don't actually care about the price of new new shiny shiny. I never have.
I genuinely just like riding bikes. some more than others but still pretty much any of them.
all of us on here already have perfectly good bikes.

Folk losing jobs/security/homes/health/loved ones is important
New bike related shit just isn't!
 

marshalolson

Turbo Monkey
May 25, 2006
1,556
259
Yes there were super expensive parts back then but how many brands pushed 8000$ bikes?

I don't even know why you mention sundays when the top spec was what? 5000$? Lower end spec was super affordable. 2nd model boxxer now is 1399$. The 2010 models available in 2009? 950$. Also maybe you had a shop in dentist country I don't know. I know what bikes I've seen in Morzine, Leogang, Maribor. The really really nice bikes were 5000-5500 bikes while many people had 2500-3000$ bikes. Now you have an extra level of pricing above that and those bikes are seen quite often.

You are making very local observations to counter what I have said but even your original post mentions buyer behavior will change. Your original post in the section about consumer behavior has



You basically say here customers will be more pragmatic and it will be hard to market fancy high end stuff and then later you recommend shops fighting for high end products. It can only be one or another. If you have a shop like yours then maybe you can continue selling dentist bikes but if the GDP goes down by 3-10% as people predict then people will turn to direct order stuff and high-end small volume brands as well as most expensive complete builds will probably not the best choice for shops to have. Unless of course you have already built a relationship with your customers then maybe but you will still take a hit.


Also Chain Reaction was there back in 2008. Buying super cheap was also super easy back then. I've built my 2010 Legend on Boxxer World Cup, Saints, X0's and basically all I wanted for around 3500$
Not going to argue. It sounds like your localities are just catching up to global trends that have been present since the earliest days of mountain biking.

2008 Sunday World Cup was $6700 retail, With alloy cranks, rims, handlebar, etc... and tons of people poured cash into them to upgrade further.

in 2004, when I started DHing for real after, working professionals (lawyers, real estate developers, Investment bankers) bought $10k road bikes. Manual laborers (landscapers, welders, bike shop employees) rode DH bikes. And they pimped their DH bikes out to the n’th degree, just like now.
 
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jonKranked

Press Button, Receive Stupid
Nov 10, 2005
62,395
8,659
media blackout
The volume is in starter bikes. They have massive long-term investments into huge fixed costs (factories) that can only be ammortized through enormous volume.

More likely in this scenario is that if 3-5 bigs only survived, they would no longer compete on brand (ie stop selling the $3000-$10,000 bikes), go direct-only (ecomm + brand owned stores), and stop supporting racers/races/etc and only focus on the volume. The expensive stuff is simply loss-leader marketing to sell townies and kids bikes for Giant, Cannondale, Trek, etc.
this. high end MTB is a fraction of a percent of the sales volume of the big 3. high end road makes up a few percent. entry level bikes and commuters hands down makes up the vast majority of the manufacturing and sales volume.
 

marshalolson

Turbo Monkey
May 25, 2006
1,556
259
this. high end MTB is a fraction of a percent of the sales volume of the big 3. high end road makes up a few percent. entry level bikes and commuters hands down makes up the vast majority of the manufacturing and sales volume.
the margin percent is also higher in lower end bikes, since premium products rely on aftermarket branded components vs unbranded oem components.
 

jonKranked

Press Button, Receive Stupid
Nov 10, 2005
62,395
8,659
media blackout
Cables and inner tubes are among the very highest margins. you're not going to get rich from selling either of those from a shop though.
No but when someone comes in and buys a trek 820 then you sell them a helmet, trunk rack, and riding shorts you're doing pretty good.
 

Gary

"S" is for "neo-luddite"
Aug 27, 2002
3,121
1,219
UK
No but when someone comes in and buys a trek 820 then you sell them a helmet, trunk rack, and riding shorts you're doing pretty good
well on your way to being able to take home a branded tin of baked beans for dinner that night.
 

Jm_

Turbo Monkey
Jan 14, 2002
11,045
3,139
AK
well on your way to being able to take home a branded tin of baked beans for dinner that night.
But I deserve 20% off retail for that bike, because I'm the only person in the history of the world that has ever worked hard, and I'm white, and I'm special, and I have cash, and I can just go buy something online instead.
 

norbar

Turbo Monkey
Jun 7, 2007
9,914
509
Warsaw :/
Not going to argue. It sounds like your localities are just catching up to global trends that have been present since the earliest days of mountain biking.

2008 Sunday World Cup was $6700 retail, With alloy cranks, rims, handlebar, etc... and tons of people poured cash into them to upgrade further.

in 2004, when I started DHing for real after, working professionals (lawyers, real estate developers, Investment bankers) bought $10k road bikes. Manual laborers (landscapers, welders, bike shop employees) rode DH bikes. And they pimped their DH bikes out to the n’th degree, just like now.
I think you are overestimating "tons of people" the fact that locally there are hubs of rich people doesn't change that bike parks in the old crisis were not flooded with super speced bikes. There is a difference between "there are people who buy expensive bikes" and "expensive bikes are common". I am not disputing people were specing the shit out of their bikes, hell I did. That was a time where I bought a ton of ti screws to make my bike lighter because we were all weight weenies back then. I'm just saying average consumer behavior was different and also builds by mfgs were different (way more boutique brand parts on builds now than in 2008). It's just strange to me that in one post you admit buying behavior will change, people will be more pragmatic and in a hurt economy somehow it's a good choice for shops in general (and not in places that were relatively unaffected) to chase premium stuff and you suggesting people buy premium products in the same time during times of financial crisis is a bit strange.
 
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marshalolson

Turbo Monkey
May 25, 2006
1,556
259
@norbar - 100’s of stores are blanket-cancelling ALL future orders to avoid unplayable AP.

my view is they need a couple vector products to pull people in this summer.

Do I think this will be the leading edge of stores business? No.

does there need to be a couple sexy demo bikes? Yes.

you are conflating two different things and looking for discontinuity where there isn’t.

no offense, but you don’t know anything about me. I am not speaking locally. I have served as global head of sales and marketing for premium action sports brands since 2005 and regionally since the 90’s
 
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slimshady

¡Mira, una ardilla!
The Industry™ is already re-factoring itself to market budget friendly bikes and associated merch. Look at Pinkbike, they have almost patented putting "costs MOAR than $8k" as a pro reason to buy a bike in their "reviews", and now they are running a series on budget models.

Marin, Schwinn and other not-so-welcome brands were already packing much more bang for the buck than the "big three", and with the upcoming recession this movement will surely be adopted by the whole biking sector.