Bicycle Sales Increase
Dealer sales
Ad hoc stats from the Association of Cycle Traders (ACT) show that independent bicycle dealers had a good year overall, but a very challenging fourthquarter. In October 2008 63% struggled with decreasing revenues. September was different and showed that 65% of the dealers were able to increase their turnover while also in August, July and May the number of dealers that reported revenue growth outnumbers the ones that said to experience a declining turnover.
The independent chains continued to take market share from single store IBDs but true independent chains are now rare. Cycle Surgery, for instance, expanded in 2008 but is no longer independently owned. It’s part of the Snow+Rock group. Formerly London only, the Cycle Surgery store brand was carried over to stores in Romford, Wirral, Birmingham, Didsbury, Port Solent, Bristol and Chertsey. It now has 15 stores nationwide.
The biggest of the powerhouse IBD chains - Evans Cycles - spent much of 2007 and early 2008 fending off claims it was about to be sold. It was seeking a bigger shareholder, said Evans, with cash to fund expansion. In April, a deal was finally inked. Active Private Equity acquired a majority stake in the business via a combination of acquisition and growth capital. In the past five years Evans Cycles has added 20 stores and expanded outside of its South East England base. It now has 31 outlets.
Raleigh Rolls On
2008 was the breakthrough year for Raleigh UK’s three year old retail franchise package, Cyclelife. This has the potential to rebuild the Raleigh brand via a growing network of dealers. In February, Raleigh became a member of the British Franchise Association. By April Raleigh had signed up its 100th member.
Cyclelife dealers get preferential trading terms from Raleigh, stock finance, store development consultancy and finance, and operational and finance support for marketing activity. Raleigh’s aim is to develop a network of 200+ Cyclelife dealers.
Healthy Halfords
Sales of satnavs and bikes enabled Halfords to havea relatively good 2008. Relative, that is, to much of the rest of retail. The High Street had a rough year on the whole and Halfords managed to grow - albeit only slightly - in tough operating conditions.
The year started with the high-profile sponsorship of Team Halfords Bikehut, built around Olympic hopeful Nicole Cooke. She later won gold in the women’s road race but by year end she had to found her own team when Team Halfords Bikehut switched its emphasis to male cyclists only.
In March Halfords reported 7% year on year growth. By the middle of the year, sales were still increasing but only by a paltry 1.7%, year on year. By September the growth had slowed to 1.6% year on year. Revenue for the 26 weeks to 26 September was GBP 407.1 million (€ 455.3mn) up from GBP 400.7 million (€ 448.2mn) in 2007.
CEO David Wild said:
“Halfords has seen a solid trading performance. Against challenging comparatives and a tightening consumer environment, revenue grew by 1.6% withperformance weighted into more defensive, needs driven product categories.”
A company statement said growth was:
“Provided by a cycling market benefiting from increased use of cycles for leisure, health and commuting. These core categories represent almost half of revenue.”
As well as standalone Bikehut stores, Halfords has recently rolled out a test store format for standalone stores in York and Norwich. Designed to look and feel more like independent bike shops than corporate stores, the Cycle Republic test format has ‘researched positively with customers’. Halfords believe that there is the potential for at least 50 stand-alone cycle stores across the UK.
Fuel Price Hikes Sell Bikes
The summer of 2008 was wet but the escalating cost of fuel - a major media story - meant cycle usage grew, especially in big cities and most definitely especially in London. The mainstream media banged on and on about the ‘bike boom’ caused by higher petrol prices.
Many media pieces focusedon new converts to cycling. And, with the zeal common among converts, they recounted how they may have started cycling because of the spiralling price of fuel but they discovered how much faster cycling is in towns and how much weight they’ve lost and - the knock-out punch - how much fun it was. All good stuff for the image of cycling.
Bike sales didn’t seem to rise, although sales of get-your-bike-back-on-the-road accessories went through the roof. Halfords commissioned a survey which showed that 42% of Brits might switch from cars to bikes.
The survey, to promote the Halfords Cycle2Work scheme, found that saving money on fuel was deemed to be the greatest benefit for switching to two wheels, with 89% of respondents citing this would be the main reason to change. 69% said environmental concerns could make them switch.
Paul Bullett from Halfords said:
“Whilst we accept that bikes aren’t feasible for every journey, if people living within as little as a five mile radius from work switched to pedal power not only would they see immediate savings on their fuel bills but they would also benefit from improved fitness too.”