Local bike stores were a mainstay of Cycle to Work when it really started ramping up in 2005/06. The scheme has been around longer, but it only really took off when the Office of Fair Trading issued a consumer credit licence enabling all UK companies to offer the scheme. Many employees who took it up were directed to IBDs to spend their vouchers.
But, from 2007 onwards, larger multiple chains entered the C2W market and business started to be channelled away from independent bike shops and towards these bigger retailers and online stores. While several of the larger Cycle to Work scheme providers claimed to offer employees a choice of IBDs to visit, it was clear the lion’s share of orders generated were fulfilled in their own stores. They were able to take business away from IBDs and corner the market as they could offer bigger discounts to the scheme providers.
As a result, IBDs were forced to settle, reluctantly, for processing vouchers while taking the hit on reduced margins, so it’s easy to see why so many local bike shops don’t like C2W.
More recently, lured by the prospect of better margins, some of the larger scheme providers have focused their marketing activities on the promotion of large online bike discount sites. This has taken customers away from the smaller local bike shops, and reduced the number of Cycle to Work orders they see in their stores.
The retail experience
There are so many good reasons to keep IBDs in the C2W market. Cyclists value the personalised experience, the expert advice from highly knowledgeable people, and excellent aftercare, and the ability to test ride bikes and try on clothing before buying. Plus, more and more consumers care about supporting their local independent retailers, and ethical employers want to help them do that.
Consumers should be able to make an informed choice as to whether they want the unique retail experience of an independent store or the speed and convenience of shopping online, for example, and there’s no doubt online is a big growth area.
Every single business operating in the cycling industry would agree that we all benefit when cycling – as a sport, hobby, mode of transport and as a culture – is promoted. IBDs do a fantastic job of promoting culture in particular: some double up as cafes for cyclists, offer organised rides, screen major races, and hold social events. A lot of them are heavily involved in promoting and sponsoring cycle events in their local area. If we don’t do more to support IBDs, it’s cycling that loses.
A balancing act
There’s a balance that needs to be struck. Some IBDs don’t realise the work scheme providers put in to win new business, or the cost of supporting businesses with the technology and admin needed to set up and manage the scheme; it’s even more expensive if scheme providers have to do that through an employee benefit provider’s framework.
But, at the same time, scheme providers have a duty to give IBDs a fair crack of the whip, and squeezing their margins by requesting bigger discounts isn’t going to achieve that. Helping employees of organisations that offer C2W to find their local bike shop more easily is a great way to go, as is involving the more proactive IBDs in roadshow and Bike Dr events held on employer sites to promote the scheme.
C2W scheme users have to visit their IBD twice: the first time to choose their bike, the second time to pick it up. Between those visits, they must put their order through the scheme provider’s website so they can set up their hire agreement and sort out their salary sacrifice. After that their voucher is issued. IBDs could make that process faster and more seamless if they helped the customer place their order in store on their first visit. This would also ensure the customer is committed to using their bike shop, and the customer wins as they get their voucher more quickly.
Cycle Solutions is now driving C2W participants to our partner store network of around 700 IBDs all over the UK. This complements our online store nicely, giving the employee options.
At the same time, we’re also committed to broadening the insurance replacement market, which has long been dominated by Halfords, Evans and Wheelies (now owned by Halfords), restricting choice to the policyholder who makes a claim. We are trying to rebalance this by offering options for stolen and damaged bikes to be replaced or fixed by an IBD from our partner network, which spans the whole of the UK.