Specialist cycle retailers to win more business following Halfords' announcement?

IBDs to benefit from Bikehut and Cycle Republic rebranding

Chancellor of the Exchequer Alistair Darling’s budget last month confirmed that Britain’s current recession is the worst in seven decades.

But in stark contrast to the gloomy news, the largest retailer of bicycles in the country Halfords reported like-for-like sales growth in the cycle sector.

Other major retailers outside the cycle sector have not performed as favourably with many posting significant losses – making the results all the more impressive for the retailer – and for the cycle sector.

Halfords’ positive results are a good sign for the cycle industry too, according to ACT:

“At face value Halfords is clearly selling a lot of bikes which is certainly a sign that cycling remains popular and as a result this is generally a good thing for the industry, although I do always question their discounting tactics and product quality,” Mark Brown told BikeBiz.

“Whilst Halfords might have the lion’s share of volume they certainly do not have anything near a similar share of value.”

However, manufacturers and retailers haven’t remained totally unscathed by current difficult financial conditions.

German manufacturer Isaac Bikes recently went into voluntary liquidation and Halfords has taken cost-cutting steps to bolster its position by dropping its Cycle Republic and Bikehut specialist retailer brands.

Halfords CEO David Wild explained the reasoning behind the brand cull: “Our early action to reduce costs and maintain a prudent balance sheet provides a solid platform for future earnings growth.”

And Halford’s decision to drop the brands is good news for bike dealers, according to ACT: “I think specialist cycle retailers will win more business as a result of the rebranding of Bikehut and Cycle Republic,” Brown told BikeBiz.

“Halfords has not been able to mimic a specialist independent retail offering, which suggests local bike shops can maintain and grow their local market share as a result. I do not believe customers who are seeking a higher value retail offering will want to enter a Halfords Metro or Superstore to buy their mid to high-end bikes and accessories.

“Of course the Boardman brand could be the ace in the pack in terms of access to a premium brand but I cannot believe this new strategy can truly establish its positioning via superstores and metro sites,” Brown added.

As part of the results Halfords revealed that the brands stocked in the defunct Cycle Republic and Bikehut stores would be integrated into its superstores.

ACT’s Mark Brown questioned whether the firm would increase space for cycling, or reduce store ranges: “Halfords won’t want to lose its existing volumes, so cycling space may remain the same but with a greater emphasis on key lines and best sellers. I am curious to see what happens to brands who supported Bikehut and Cycle Republic.

“Will the new strategy want to involve these brands and will they be happy to see their products stocked in a standard Halfords superstore?”

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