Economic downturn claims first bike shop victim

Posted by on February 9th, 2009 at 11:15 am

Opening night at Custom Bicycles of Portland-6

At the shop’s opening night
back in December.
(Photos © J. Maus)

Custom Bicycles of Portland, a high-end, custom bike retail shop and fitting studio that opened in Northwest Portland back in December, is closing its doors.

Owner Adam Reiser says the “perfect storm” of a bleak local and national economic picture hit his business hard. But there was more to that storm than just the economy. Reiser took a gamble on his dream that he could establish a new bike brand (Guru Bicycles from Canada) with a new purchasing concept, and do it on NW 23rd Ave., one of Portland’s highest-rent commercial districts.

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Opening night at Custom Bicycles of Portland-1

Retail space on NW 23rd is not cheap.

Back in December, I asked Reiser if he was worried about the gathering economic clouds. At that time, he said he wouldn’t know if they “sink or swim” until March, but he felt CBOP was “tight enough to weather the storm.”

Reiser had hoped to kindle Portland’s interest in triathlon as a way to keep his shop relevant and successful. Reiser — a top-tier professional triathlete — came to Portland from Austin Texas, where he built Jack & Adam’s Bicycles into one of the country’s Top 100 bike shops.

The closing of Reiser’s shop comes within weeks of other signs that show Portland’s bike shops are doing well amid the downturn. Southeast Portland newspaper, The Bee, reported last week that shops focusing on cargo and utility bikes have seen an uptick in business. And Sunday, the business section of The Oregonian reported that The Bike Gallery’s business is up over last January.

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sue
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sue

It’s sad, but not surprising. People are focused on the utility of their bike, not getting into racing. And current racers are selling off everything they can spare. Check the OBRA list. It’s more active than usual for sales.

Laura
Guest
Laura

Just sayin’…if I were going to drop that kind on $$ on a custom bike, I’d want to keep my $$ local with one of our many talented frambuilders. Even if the wait for one is much longer than 4 weeks.

Big Kahuna
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Big Kahuna

Isn’t that the same location that the Vespa shop used to be in? Seems to me that for NW 23rd given the high rents you need to move a lot of product to be successful, which is hard to do with high-ticket items (most window shoppers probably aren’t going to buy a custom bicycle or Vespa on impulse–if they are going to come to you for a specific item you’d be better off in a cheaper part of town). It’s a shame, but all other indicators show that the bike economy in Portland is healthy.

Brad
Guest
Brad

Another good idea ruined by a bad real estate decision. Put this in an industrial park in Beaverton or an old warehouse space near the Esplanade and it could have been a winner.

Steve
Guest
Steve

I’d think a SE or NE location for this shop would have managed to attract the same clientele and cut rent costs in half. But I suppose those neighborhoods are full of utilitarian frugalists who wince at spending more than $50 on anything related to their bike (like me!)

Steve
Guest
Steve

Also.. it doesn’t sound like this was a victim of an economic downturn, but rather a hastily planned operation. Most businesses need at least a year or two to establish themselves. Opening a bike shop in the middle of winter, and not waiting until the weather is nice to see how the shop fairs has me a little suspicious that there were other factors at work here..

Mark C
Guest
Mark C

When you first posted about this shop I was skeptical regarding its prospects, so it’s no surprise to me that they’re closing up. I also agree with Steve that the economy is not really to blame here. I never visited the shop, but judging by the photos the whole vibe seemed out of place in Portland. Maybe something like that would work better in Silicon Valley or even Seattle.

UncleMuscles
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UncleMuscles

Sue, actually the race scene is really growing in Portland. There have even been articles here on BikePortland regarding the exponential yearly increases in OBRA membership. Plus, real racers know that a $5000+ bike ain’t really much faster than a $1500 one. Hell, you can get a perfectly suitable used race bike for less than half that price. It’s always sad to see a bike biz fail, but I agree with some of the other commenters that this probably has more to do with a hasty business decision than a shift in bike purchasing attitudes and needs.

colin
Guest
colin

So is there going to be a closeout sale?

ggw
Guest
ggw

I doubt there would be much of a closeout sale. All the bikes were built to customer specifics. You’d be fit for a frame, choose your components and they’d send away for it. They didn’t have racks of ready-to-go bikes in the showroom like most retailers.

PC Walker
Guest

Is always sad to see a shop close, especially through no fault of the owner. Reiser obviously has talent. Nice to see some good news in the last paragraph though. I recently read in a retailers magazine that bikes, especially the comfort bike and commuter bike are expected to do well in 2009. Let’s all hope so.

Ian
Guest

I am going to disagree with the people saying it wasn’t Reiser’s fault. This is simply a bad location choice. I would guess the most expensive street in town for rent, and the average person shopping on 23rd is a west hills soccer mom. If you are going after a niche group of cyclists, why have a retail store next to the Gap?

ValkRaider
Guest
ValkRaider

What about Brooklyn Bikes on Milwaukie, closed up last fall after being open just one summer. Couldn’t that count as a bike store falling victim to the economy?

“Economic downturn claims first bike shop victim” might not be the best article title.

I agree though, that this shop probably closed more due to other factors than the economy. NW 23 stores need to cater to foot traffic and impulse buys. People looking to buy a custom made race bike would be just as happy going to a warehouse in the middle of nowhere.

Anonymous
Guest
Anonymous

It’s called the bicycle business for a reason. It’s a business.

I work with bicycle retailers across the country and I see this type of thing all the time. “I like riding bikes so I’ll start a bike shop”. Bicycle knowledge will get you part of the way, but without good business knowledge you will fail.

Many of the best retailers I know aren’t bike people they are business people. They chose to sell bikes but could just as easily chosen home appliances. Their understanding of business is what made them a success.

A rule of thumb is that you need enough cash on hand to carry you through 12 months of expenses. It doesn’t sound like that money was there in this case.

Small businesses in the Leisure sector have a 20% failure rate in the first year. A further 15% go under in year two. Another 10% go in year three and another 10% in year four. So only 45% of businesses in this sector survive 4 years. Pretty bleak numbers.

Peter
Guest
Peter

I’m waiting to see if the high-end DC-based bike shop/club goes out of business. There are a couple of them here in SF, too. It could be, and indeed it does seem to be, a perfect storm of bad economic conditions, but then again, rarely is the question asked, is our would-be bike shop owners paying attention?

It’s true that the very rich continue to get wealthier, but that’s like the top 2% of Americans (or less). Maybe enough of them want custom bikes? I kinda doubt it, though.

Jack and Adam’s deserves props, though, for their ‘starter packages’:

http://www.jackandadams.com/ASP/Hot.asp

They must not have worked, though, because the link is no longer available on the website. Still, I’d like to see a local bike shop offer similar product/service packages to new/would-be commuters.

I visited Jack and Adam’s a couple of times down in Austin, and it’s admirable how friendly they were and how inviting the staff seems to be, in coordination with their website (I was, and remain, a total tri- noob, but they were always cool.). They actually reach out to customers and sell them ‘the lifestyle’. If one local bike shop in the United States of America did that just for a single day, I could die a happy biker.

Of course, with the success of a place like Jack & Adam’s under your belt, I think it could be easy to become, uh, a bit over-confident in your abilities to produce a winner. 😀

That’s OK, though, flip the bike store into a classy, high-end commuter bike shop. Give it the upscale appeal of Mellow Johnny’s, and we’re rockin. Put up a few massive pictures from Copenhagen Cycle Chic on the walls — shoot, call the store ‘Copenhagen Cycle Chic’ (and get permission and pay the man, of course) and watch sales and fame ensue.

Linda Robinson
Guest
Linda Robinson

It wasn’t the first bike shop in Portland to close during this recession. There was a bicycle shop on NE Halsey (at about 120th) that went out of business last fall — after many years at that location.

Emir I
Guest
Emir I

I hate to see to see this shop go away. But frankly I think those Canadian frames were a bit overpriced… too ritzy really

Domann
Guest
Domann

Economic downturn? Excuses, excuses…

Eric
Guest
Eric

Sad to hear this….

There is an old saying in the industry that goes like this:
“If you want to make a small fortune in the bike business, start with a large one.”

Seriously, if they didn’t have bank to roll for 12 to 18 months, they should not have started this enterprise. I hope they can recoup some of the costs, and they land in a well funded job with a business person leading the operation.

Tonya
Guest
Tonya

I thought they were already closed. I tried to go there on a Thursday afternoon in January. They weren’t open (even though the posted hours said they would be) and no sign up. I walked by a couple times over the course of an hour and no sign of life. Hard to build a business if you’re not open when you say you’ll be.