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A bike company offers Black customers reparations in the form of a discount

A cyclist is reflected in a puddle as he rides along the beach in Chicago, Illinois, January 13, 2014. After a blast of Arctic air gripped the vast middle of the United States last week, bringing the coldest temperatures in two decades, above freezing temperatures rolled into the city to melt the snow and ice. REUTERS/Jim Young  (UNITED STATES - Tags: ENVIRONMENT SOCIETY)
Rivendell Bicycle Works has decided to do a "micro-reparation" by providing a discount to Black people. REUTERS/Jim Young (UNITED STATES - Tags: ENVIRONMENT SOCIETY)

As companies grapple with their roles in contributing to racial equality and inequality, diversity and inclusion programs have taken on more importance in the corporate world.

But in retail, one well-regarded bicycle brand led by an industry legend is innovating a more direct approach to address racial inequality: reparations in the form of a 45% discount for Black customers.

Rivendell Bicycle Works, based in Walnut Creek, Calif., is offering the discount not because they are “a nice thing to do, but because they’re owed,” Grant Petersen, Rivendell’s president and founder, wrote in a post explaining the new policy.

The company had been informally “dabbling” with this policy since July 2018 for walk-in customers and has sold three bikes and a few accessories at the discount. But amid this year’s racial justice movement and COVID-19 limiting walk-in customers — Rivendell is sold across the country but also maintains a brick-and-mortar presence at its HQ— the company moved to make it official and will kick off the program Oct. 12.

The company is allocating 10% of its bikes for the discount and will not raise prices on other bikes to pay for the program.

The move is meant to acknowledge that significant amounts of wealth in the country has come at the expense of the labor of Black people, a group that specifically has been disadvantaged more than others from slavery, Jim Crow laws, mortgage discrimination, and other forms of financial discrimination.

Bracing for controversy

Petersen said he hadn’t seen any other businesses do something like this previously — nor has Tom Meyvis, a professor of marketing at NYU Stern School of Business who studies marketing and consumer behavior.

Meyvis said exclusivity of discounts often makes customers cry “unfair,” though consumers often find it acceptable to provide discounts to certain groups “who have an obvious need or limited resources (e.g., lower income, kids, elderly) or who they may feel earned the discount through their sacrifice (e.g., military or nurses during a pandemic).”

“Whether ethnicity-based discounts framed as reparations fall into this category is unclear to me,” Meyvis said.

Petersen and Rivendell anticipate blowback and have taken great pains to explain their position.

Christine Schopen, president of the Westchester Cycle Club, takes a ride across the Gov. Mario M. Cuomo Bridge bike and pedestrian path on its opening day, Monday, June 15, 2020 in Tarrytown, N.Y. The new 3.6 mile path runs from Tarrytown across the Hudson River to South Nyack, N.Y. (AP Photo/Mark Lennihan)
The Gov. Mario M. Cuomo Bridge bike and pedestrian path on its opening day, June 15, 2020 in Tarrytown, N.Y. (AP Photo/Mark Lennihan)

“Your non-Black tycoon great-grampa may have been born poor, may have been a sharp and clever go-getter at the top of his class, may have overcome his buck teeth and bad breath, but he wasn't born Black,” Petersen wrote in the company’s post.

Reparations have taken place in various forms around the world throughout history and they have recently become a growing part of the conversation about race in America, even being considered by states like California and even being approved by the city of Asheville, N.C.

Rivendell said it was urged to include others who have faced discrimination and to base the program on income, but in the interests of simplicity is choosing to keep it based on race. The challenge, of course, is identifying those who qualify.

“This is the most challenging and awkward part of [black reparations pricing],” Petersen wrote. “Within two days of launch, we had a disturbing number of questionable inquiries.”

Petersen told Yahoo Finance that there has been “huge” interest so far — not all of it good.

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This went out to “all the major outlets” on Thursday. 🗣 You can “read all about it” by clicking on the link in our profile above ☝🏼 Rivendell Bicycle Works Offers Black Reparations Pricing WALNUT CREEK, CA (October 1, 2020) Starting October 12, Rivendell Bicycle Works, the 26-year-old San Francisco Bay Area bicycle company, is rolling out reparations pricing for Black customers. Rivendell's CEO, Grant Petersen says, "The American bicycle industry has been racist, often overtly racist, since 1878, and Rivendell has been obliviously—not "obviously"— racist ever since 1994. We say this not to scold the industry, not to scold other bicycle businesses, and not to be on trend. For the last two years, Rivendell Bicycle Works has offered a 45 percent discount to Black customers who shopped in person. COVID has curtailed that. They are going national with the same plan, but now with a name and an acronym: Black Reparations Pricing (BRP). Ten percent of Rivendell’s bikes and frames will be allocated for BRP. In the 12-month period beginning October, 2020, they’ll make about 850 bikes, 85 of which will be set aside for the discount program. In its BRP plan, Rivendell adds, "Racism doesn't respond to inaction or self-proclamation. In other words, it doesn't go away when you know, even in your bones, that all people are created equal. It responds to anti-racist action. Reparations are an example. Not because Reparations are "a nice thing to do," but because they're owed. Reparations acknowledges that, in this country, white wealth—recent or inherited/generational, has been ‘earned’ by the labor of Black people, who, even after slavery, were never given a leg up. Your non-Black tycoon great-grampa may have been born poor, may have been a sharp and clever go-getter at the top of his class, but he wasn't born Black.” Rivendell is also offering their customers the opportunity to contribute to the BRP fund with every purchase they make. ———————————— Comments welcome! Trolls and profanity directed at offers cheerfully deleted. ———————————— #rivbike #reparations #blackreparations #blackreparationspricing

A post shared by Rivendell Bicycle Works (@rivbike) on

“People pretending to be black, people who ‘identify as black,’ people who seem to be trying to get us to trip over our toes on this, people who think it's unfair, people who think [black reparations pricing] is racist,” Petersen said. “Basically, people who, to use ye olde cliche [sic], were ‘born on third base and think they hit a triple’...and don't want Black people to get an at-bat.”

Discounts for various groups are commonplace, but it’s unclear if Rivendell’s might face legal challenges. In its post, the company said that doesn’t matter.

“Slavery and Jim Crow laws were legal,” Petersen notes.

So far, the company says the response has been quite positive, something Meyvis says is often an interesting element when companies embrace polarizing positions. When Nike decided to use Colin Kaepernick as the face of a new campaign in 2018 following his anthem controversy that left him without a job in 2017 (he eventually settled with the NFL in 2019), there was some blowback. But it ultimately benefited Nike as supporters outnumbered the critics.

“Most businesses do not aim to cater to all consumers, so if they alienate some part of the market, yet increase their standing with other consumers (who perceive this as an example of corporate social responsibility), then the net effect may be positive,” said Meyvis.

Rivendell stresses, however, that this is not marketing and the company is expecting to take a profit hit.

As Petersen writes, “It's not a plus for us, it's just long, long overdue, and we have to.”

Ethan Wolff-Mann is a writer at Yahoo Finance focusing on consumer issues, personal finance, retail, airlines, and more. Follow him on Twitter @ewolffmann.