As you’ve noted, the issues here are intertwined with one another.
The lesson that we got drilled into our heads in the run specialty channel about 15 years ago was this: if you compare our stores on the basis of price and convenience against shopping online, we lose that battle every single day. So we have to make that comparison about something else.
There’s three areas where bike shops can really stand out from an online marketplace: fit, service/repair, and community building.
Fit, in my opinion, is something that has lost the plot since COVID. I think part of that boils down to the shift in consumer behavior that we saw during COVID to more and more online or delivery based models for everything from sporting goods to groceries to everything in between. But I also think that’s a manufacturer problem, too – we (collectively) are not doing a good enough job explaining how paramount fit is to ride experience.
Service/repair: as bikes become more complex, and more of a pain in the ass to wrench on, this has to be a place of investment. I have a local shop in town (population: 22,000) that I’ll take our whole fleet of bikes to. Why? Friendly service, convenient, high quality work, and fair prices. There’s jobs I could do myself that I choose to send to them instead, simply so that I don’t have to spend the time on them. It frees up more of my time to ride when I can – that’s critical.
And community building is a whole other can of worms, which is helped by lowering barriers to entry to group rides, helping with bike infrastructure improvements, and otherwise becoming an embedded location in the community.
Margin isn’t helped by the QBPs, etc. of the world, but unless everyone moves to self-distribution / standard carriers for wholesaling it becomes a bit of a moot point.
This all said, this also hasn’t stopped specialty run from becoming dominated by larger regional chains and/or Fleet Feet. It’s still got pockets of gold in it, but as the boom of people who opened run shops reaches retirement age, they’re realizing their succession plan is to sell to Fleet Feet, another fellow retailer, or let the store die. (This is much the same as what you will probably see with a lot of run and triathlon races over the next decade, too.)