Shimano’s 2010 Challenge

I recently came across an interesting discussion thread on roadbikereview.com forums. The question was put: Is Shimano Dead? It was prompted by a contributor commenting that all he has been seeing in magazines recently is SRAM. A key point to come out in thread posts is the excellence of Rival and Force as more than viable alternatives to the, roughly, Shimano equivalents.

Thinking back to earlier this year and the Taipei Show, whilst Shimano’s position could have hardly be said to be bad, the company had lost a telling degree of market share. The close of Q4 2009 saw revenues 20% down on Q4 2008 with the annual net profit down 62% on the previous year (also included fishing equipment). In the area of bicycle parts revenues had decreased 22% on the previous year. The recession had a lot to do with this. But other factors were also at work here one being an increasing encroachment on the company’s market share by other players.

Prior to Taipei Cycle 2010, Shimano forecast a sales turnaround to the upside for 2010 over 2009 in the order of a little less than 10%. Apart from reflecting expected recovery from the worst of the recession, this was also about a change in strategy aimed at arresting this loss of market share. This loss was largely due to manufacturers’ increasing resort to part substitution linked in complicated ways to an impression that the company thought a bit too highly of itself.

Another significant issue has been delivery delays of components to suppliers – up to an average of 3 months in the case of the high end Ultegra and Dura Ace groupsets. Giant has long relied upon Shimano for components in a mutually very beneficial relationship. But even GM Tony Lo has publicly commented that if other mega-corporations eg. Intel, can deliver on time, then Shimano should be able to do the same.

Shimano has begun to address these issues, particularly the image of aloofness. Internal company reorganization had seen the recognition of directors Shinji Fukuoka and Chitoshi Yuge, who have seen service through the watches of several Presidents, have taken new senior advisor positions. There has been a marked change in the way the organization now interacts with suppliers.

For most of 2009 I was building bikes overwhelmingly with SRAM components. A complete SRAM Rival groupset, for example was an extremely popular alternative to S105 and Ultegra. In my view, Rival is as good as, if not better than, Ultegra.

This year has seen the introduction of SRAM Apex and I have been building more bikes with this groupset than Rival. There has also been a swing back to Shimano on the part of dealers. I have been putting many bikes together with Tiagra and the new 105. SRAM has placed second this year in relation to Shimano in what has been quite a turnaround. Price hikes from SRAM as well as a much improved orientation on the part of Shimano to customers seems to be paying dividends.

As it turns out, in the first 3 quarters of 2010, sales were almost breaking 16% so things are definitely on track. The interesting story will be seeing what market analysts make of the transition. The rebound of the market as we are swept along by the recovery is certainly a key factor. But what about those other issues?

Is Shimano dead? Not by any means. But if my customer feedback on their SRAM groupset purchasers is anything to go by — “getting used to the Double Tap system took a bit, but now I’d never go back” is a common response — corroborated by SRAM’s vastly increased visibility and market acceptance, then a significant change has taken place.

So just one of the things to watch out for with great interest will be Shimano’s reporting of figures as we head towards the year’s close and headlong into Taipei Cycle 2011. The issue now would appear to be by how much will the final result exceed the targets set at the end of last year? It will be interesting to see Shimano’s position one year on, in the year of its 90th anniversary. It’s sure going to be an interesting start to the year and an extremely busy four days come the 16th of March!

7 thoughts on “Shimano’s 2010 Challenge”

  1. Thanks for always putting out interesting content. I always learn something when I come to your site. I’ve never tried SRAM, but from all the talk I’ve been hearing lately I might end up going to that on my next bike.

    Darryl

  2. Luckily for Shimano, they own the lower end with Sora/Tiagra. SRAM competes well against Dura Ace, Ultegra and 105, but for the lower-end of the market there is really nothing to match Shimano’s hold on the lower end, which make up the majority of bikes that are sold.

  3. Hello, Sabinna!
    That’s my first post here, and I must say that your blog is amazing!
    About Shimano x SRAM, here in Brazil, Shimano still dominates, but SRAM’s market share is indeed growing. Our road bike market is really small, but growing fast, and entry level bikes have maybe a share of 90%, so Tiagra and Sora dominate. Apex is starting to appear, but it’s price is closer to 105’s. Do you know if there will be a renovation of Tiagra for 2012? It’s a nice groupset as is, but it really could use ten speeds… What worries me the most is the apparent demise of Campagnolo, and that got worse when they phased out the entry level groups. Campy here is becoming increasingly rare and only appears on the bikes of the super rich, like Dogmas, C50s, and facing hard competition from Di2. Do you think that this is something that’s occurring in a worldwide basis?

    Well, sorry about that many questions and my broken english, and thanks in advance!
    Best regards

  4. Thanks Danilo. Tiagra is a nice groupset and is confirmed to move to 10s. I guess Campagnolo will always have a following and will be around for some time to come.

  5. Thanks Darryl…I don’t think you’ll be disappointed by giving SRAM a try. I wonder a bit about their chains which I mentioned in a post a while back, but that’s really not a big deal.

  6. Thanks a lot, Sabinna! Maybe the next Tiagra will have a cassete with a 11-32 or even a 11-34, aiming directly at SRAM Apex… And shift cables under the bar tape can be taken for granted, no? Competition between brands is always good, and I really hope that Campy can be around. The quality is there, and I remember that Xenon and Mirage were very good as far as entry level goes, but never gained much traction on OEMs. Maybe they just need to improve marketing and distribution, and an agressive price policy.

  7. I find that customers choose either Tiagra in a triple or Apex with the double and very low ratios. It will be interesting to see if the cables are re-routed out the back of the shifters–it’s certainly a cleaner look.

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