How did bike shops fare in 2019?

It’s no secret that the last few years have been a challenging time for retail. Store closures, business failures and job losses have continued as online has driven growth and competition in the sector. And with more and more consumers buying products on the internet, the function of bricks and mortar must change in step with consumer demands.

Recent British Retail Consortium (BRC) figures showed that in September last year, UK retail sales decreased by 1.7% on a like-for-like basis from the same month in 2018, when they had decreased 0.2% from the preceding year. Helen Dickinson OBE, chief executive of BRC, said that this was ‘no surprise’, given the spectre of a Brexit no-deal weighing increasingly on consumer purchasing decisions.

Earlier figures also revealed a decline in footfall of 1.9% in July, helping to contribute to the rise in town centre vacancies, which last year rose to their highest level since January 2015. In fact, the first half of 2019 saw a record net 1,234 stores disappear from Britain’s top 500 high streets, according to PwC, with retailers and leisure operators continuing restructuring activity and services increasingly moving online. There was a total of 2,868 store closures, equivalent to 16 per day and the most for five years.

One bike shop that closed in May last year was Jim’s Cycles in Northumberland, following the retirement of owner Jim Clark, a decision that was made partly due to the rise in online sales. Other closures last year included Lickety Split in Exeter and Cafe Roubaix in Retford, but established bike chains have suffered too – Evans Cycles has been forced to close some of its stores after being acquired by Sports Direct last year. And given the importance of high streets and town centres in our local communities, how concerned should we be by the rise in empty storefronts?

The rise of online
2019 has seen a challenging environment across many sectors, as brick and mortar retailers of all sizes struggle to adapt to the continuation of changing consumer trends and shopping habits.

“The preference to shop online over shopping on the High Street has become the norm for many, with many larger retailers such and M&S and John Lewis reporting a majority of online sales originating from mobile apps for the first time this year, supporting the notion that consumers are browsing and making purchasing decisions on the move more than ever,” says Simon from The London Cycle Workshop. But Simon says this trend is not new and the rise of online shopping, home deliveries and click and collect does not define retail in 2019.

“Although the business pages are never far from an account of the demise of a high street retail chain, or the reporting of the latest and ever-controversial CVA deal to keep a chain afloat, if you read the small print there are plenty of stories of retail adapting and thriving.”

But Vitas from Machine cycling café believes that the bike industry isn’t very healthy, the main reason being that products are heavily discounted online, which leads to harm being done, not only to the bike brands but also to every retailer who tries selling products at the RRP.

“The biggest online shops are backed by some serious investment and the big focus is on the sales performance, because investors want to make some profit. It’s all very much driven by numbers. The only thing they are able to compete on is the price. On the other hand, small brick and mortar retailers are able to offer passionate face to face conversations, live expert opinion and quick service. We are not competing with online prices and instead focusing on customer needs, providing small business flexibility and professional service.”

Good customer experience
So what can retailers do to thrive in the current environment? How easy is it to define what good customer service should be?

“Having a clean, well laid out store, housing good products, with friendly knowledgeable staff isn’t enough in 2019,” says Mike Cunningham of Cadence Performance. “Customer spending journeys are varied and more complex than ever before, with social media advertising and influencers, old fashioned media ads permeating every facet of our lives.

“However, ‘experiential’ retailing is being hailed as the key action that will save high street retailers. When you look at many of the retail businesses that have failed or really struggled over the last few years, they are quite depressing places for both customers and staff to spend time in. Consumers, retail experts, the bike industry and mainstream media are very quick to talk down bike shops as old, dusty places with a grumpy ex-racer behind the counter but the key issues facing bike shops are rents that are too high to sustain, margins that are too low to sustain and a lack of positive thinking across the industry.”

And it seems no retailers are immune to the challenges facing the current retail environment, including Sigma Sports, says managing director Ian Whittingham. “We’ve managed to buck the trend and achieve solid growth in our flagship retail store in Hampton Wick with our online business continuing to expand year on year, which is something we are very proud of,” Whittingham says. We continue to focus on delivering an excellent experience at every stage of our customers’ journey to differentiate ourselves from the competition, including investing in areas such as online content and in-store events.”

The demand for service
It can be easy to see how the internet may be winning over the high street. But where some sales figures may be down, the demand for workshops and the servicing of bikes remains strong.

“We firmly believe customers still want expert advice and quality after-sales experience,” Andy Wadsworth of BW cycling says. “2019 has been another year of growth for BW and we put this down to providing not only great customer experience but also a quality workshop, leading brands and bike fitting, fitness testing, personal training, physiotherapy, group rides and trips away.”

Richard Bowker, director at Criterium Cycles, says independent bike shops either have a service-led point of difference, or they don’t compete, and that this is a continuation of the trend that has been apparent for a number of years now.

“Our point of difference is an obsessive approach to customer service and loyalty. We have been rewarded with loyalty back. But every day is tough, every sale is hard-fought and anyone taking their eye off the ball for even a moment is going to fall behind. 2019 has been a good year for Criterium Cycles, arguably our best ever, with growing demand in e-bike and gravel to name but two specific areas. But we think it’s less about sectors and more about overall attitude and focus.

“We know we are only as good as our last transaction. Every week brings a new challenge. Retail is tough at the moment, perhaps tougher than it has been in living memory.”

Ben Othen of Bikeshak describes 2019 as “a year of sitting on the fence” and waiting to see what will happen next. “We have seen an increased demand for Cyclescheme and more commuter focused product.  Conversely, we have seen a drop in the interest of high end or ‘performance’ road bikes and product which has always featured prominently in our sales up until recently.

“I think a lukewarm retail environment and the steady drop in the pound/increase in RRP seems to be having an effect on how willing consumers are in parting with large sums of money. On the plus side, our workshop continues to be a key area of profitability in-store with customers choosing to repair and service rather than invest in new bikes. We’ve been consistently busy throughout the summer and continue to have a booked workshop through these early months of winter.”

Arragons Cycles is also focusing more heavily on service, with its technicians increasing their knowledge base and service offering through additional training. “We’ve invested in equipment and launched ‘Bite Size Bike Maintenance Classes’ where customers take over one of our stations to learn some tricks of the trade,” Sarah Graham says. “We’ve increased our BikeFit business and branched into a wider Hire network in the Eden Valley and North Lakes.

“We’ve spread the word of all these things, along with our #TeamArragons events via social media and we’ve seen more return from this over anything. This has not come without pain and fear, not least the constant doom and gloom in the news about the demise of the High Street. I look forward to seeing what the future has for our store and the High Street, as I believe that we are about to go full circle. Customers have come to value the experience, personal service and after-sales, rather than just price alone which is what we, as independent businesses, do best.”

E-bike growth
Other retailers summed 2019 up as mixed, with generally consistent turnover, but Alf Jones Cycles says that bike unit sales are down, pointing at higher average bike sale figures.

“E-bikes are absolutely the reason for this and has helped keep figures looking positive,” says Pete. “The challenge with this is higher investment in the bikes and higher stock value. I can imagine this can feel like a big risk to smaller dealers – it’s a lot of money tied up in stock.”

Demand for e-bikes has seen huge growth in the UK recently, with reports that Giant is expecting to sell 600,000 e-bikes this year, up from 385,000. This means the company’s sales growth will stand at 56% compared to 2018, it was reported.

“We’re always good at keeping an open mind to changing markets,” Pete continues, “and have done well with the gravel sector this year, the wider industry has embraced this style of bike and I feel that consumers like the idea of having a more versatile bike that can focus on the experience side of cycling rather than the competitive side.

“P&A and apparel are always difficult but again, we have held our own this year and managed to grow very slightly in an extremely competitive market. We have very strong brands in these sectors and having brands that appeal to one than one customer base is important to keep overall sell-through flowing.

“We face the same many challenges of modern retail and business that other high street retailers do. I feel that we address these and work around them as best we can. We always sell on our service and make the effort to go the extra mile to make the customer experience as great as we can.”

Political uncertainty
One of the major talking points this year has been around the political uncertainty surrounding Brexit, and the effect this will have on consumers. But Noah Fisher, director at Mamachari, says that despite this, 2019 has been a good year.

“Consumers I think are now inclined not to believe the scaremongering, that Brexit will negatively impact the economy and so on, and are getting on with the business of day to day life,” says Fisher. Most of our customers are certainly no longer worrying about it and seem very willing to part with their cash. Maybe it’s the long spate of good weather, or maybe the fact there are fewer of us in the field, but for those left standing, with fingers firmly on the pulse and tight reigns on the purse strings, things are looking tentatively promising.

“For now, at least, we take it day by day and hope that staying closely connected with the source of our revenue combined with conservative financial management, is a strategy that will be rewarded in the long run.”

Mark Almond from Revo Bikes says: “Web competition is still an issue but given our location, at a bike park, perhaps less of an issue than it is for some. By ensuring a fair retail price and offering strong service we are seeing repeat purchasing patterns and a high degree of customer loyalty despite the web competitor availability before and after their visit to ride here. We are hopeful that Brexit finally gets sorted one way or another – it is definitely having a negative effect on retail in my opinion – and that consumers feel confident to spend again as a result.

“We are also hopeful that distributors and brands continue to move towards an inclusive working relationship with their retail partners as opposed to trying to impose high MOQs and shifting boxes simply to meet targets. I strongly believe that the only way the retail sector can grow, and in many cases even survive, is if the whole supply chain works as one. We are all serving the same market after all so imagine how much stronger the whole industry would be if it worked as one and grew the market together.”

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