Brush And Crush

Harley Davidson has gotten to work

December 10, 2017

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Plagued by fewer sales to millennials and Gen Ys, the 114-year-old motorcycle giant tries to change. Racing needs to learn from their example.

by Dean Towers

This past summer I received a note from Justin Horowitz. Justin, as some of you may know, is interested in investing and he came upon a story about Harley Davidson called, Millennials Could Be a Problem for America’s Iconic Motorcycle Brand.

“Our data suggests the younger Gen Y population is adopting motorcycling at a far lower rate than prior generations,” AB analyst David Beckel said in the note. “Gen Y’s are aging into the important ‘pre-family’ cohort of riders and Boomers are increasingly handing over their keys to the smaller Gen X population.”

This, as Justin said to me, certainly sounds familiar.

The reasons given for Harley’s loss of market share are also quite familiar. Cycling, in the world of potential self-driving cars, seems anachronistic; rider safety is a growing concern in a time when parents are worried to send their kids to football practice; and, of course, these once blue collar bikes are expensive — especially so with the absence of good paying blue collar jobs. When we add the fact that secondary markets are proliferating, it makes for an uphill climb.

Despite the evidence at hand, Harley Davidson has not crawled into a ball and complained. They went
to work.

Harley’s research shows buyers have their first “motorcycle moment” by age 9, so to touch the younger demographics who are not at showrooms, Harley became a sponsor of a new popular video game called “Crew 2”. This road racing adventure game allows the user to cruise streets and highways across the U.S. virtually, and for the first time users are able to ride a Harley.

Further, they’ve started more traditional partnerships, like a new deal with the Ultimate Fighting Championship. By concentrating this joint venture (and others) on video and mobile, the iconic brand has seen a bump in sales from demographics that have never been well represented as Harley buyers.

Harley Davidson has a goal of 2 million U.S. riders by 2020, and benchmarks have been set for many new demographics.

Trying new things and branching out is something not new to this company. I remember not long ago at a seminar, the presenter told a story about Harley Davidson seeing a statistically significant number of Google searches coming from Iraq. When the company researched the phenomenon, they concluded the traffic was from American soldiers, looking to make a possible purchase when their tours were up. Harley Davidson not only created a financing program for the military, they even built limited edition military bikes. This all from a set of Google searches.

Time will tell if some of these measures – and I’m sure others that are in the planning stages – will work or fail. But at the very least, they’re trying. If you’re a shareholder of the company, you can’t ask for much more than that.

Turning the page over to our sport, despite the same problems, I don’t see a lot happening by way of strategy; marketing or otherwise.

This week in the Thoroughbred Daily News, it was reported that a new bill in Ohio was advanced allowing fantasy sports games, with racing not represented. This is probably not by accident, because racing has long been reticent to embrace fantasy as a way to attract new customers.

Fixed odds and exchange wagering – these too held with much contempt by racing’s old guard – are another prime example of something new and vibrant not being embraced.

Meanwhile, in Arizona at the racetrack industry symposium, presenters from overseas talked about new ways to wager. These innovative products included allowing customers to sell their serial wagers after one or more legs, or cancelling a bet (at a potential profit) at any time during a race. Most of these innovations would be great to explore and experiment with, no doubt. But, as the DRF story notes, “the approaches largely capitalize(d) on the use of tools that are not in place at U.S. bet-processing companies.”

Also in Arizona, takeout rates were talked about by economists, ADW operators and gamblers. All agreed the rates are too high to attract tech-savvy, modern gamblers (something we’ve written about in terms of millennials here).

What is sometimes maddening about the sport of horse racing, in my view, is that its brain trust often scratches their heads about how something – in this case, few younger people betting on horse racing – is happening. In fact, when we get down to brass tacks, they should probably be asking themselves how it could not be happening.

Harley Davidson may not accomplish their goals, but they’ve come out firing. I, for one, would love to see horse racing fire a few bullets of their own.

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