Is the grocer’s latest move into the cycle trade anything for IBDs to fear? Or just a load of hot air? Jonathon Harker spoke to some UK cycle dealers for their views...

INDUSTRY OPINIONS: Should bike dealers fear Tesco’s in-store ‘Bike Shops’?

“Good thing, bad thing, who can say? I think that time will tell, ultimately.

“Can a supermarket giant really manage to operate this? Historically there has always been a spread of cycle retailers from entry level to the high-end crème de la crème, and there has always been space for us all.

“If we look further afield into Europe and one of the biggest cycling Meccas in Europe – France – you’ve been able to buy a ‘Velo’ in a hypermarche for many years. And how strong is cycling there? Could this actually help support the cycling industry?

“I’m sure that during certain months of the year, summer and Christmas, Tesco will do quite well selling to the market that it attracts. But at the end of the day, the bikes it is selling aren’t a fantastic product, and customers will either tire of constantly returning products or just never ride them.

“Ultimately, I suspect that Tesco will roll this out into more of its superstores and I imagine that a few of the rivals, like ASDA, will follow suit. It’s not something that I see every supermarket doing, though.

“Would the kind of person who buys a supermarket bike really walk into an IBD and part with their cash? I suspect not. However, when the BSO goes wrong and the supermarket giant can’t fix it, where does this person go? –To an IBD that can then potentially benefit. Personally, I don’t see Tesco as a threat to IBDs. Its products, support, backup and service can’t match what a good IBD can offer.”

“It depends very much on how Tesco approaches things. Look into any big Tesco and you will see that the non-food stuff is sold on the box shifting principal. Boxes are put on shelves where the customer can help themselves and haul it off to the checkout. There may be a body around who can give some help if needed, but you cannot bank on their presence or the quality of the advice. More subtly, if you look at the stock you will find that the small number of standard items are about the same price as anywhere else.

“It’s only the Tesco exclusive brand stuff which is cheaper and that’s because it is bottom-end quality. If it goes the same way with bikes than you can expect a few feet of shelving with basic low quality, high margin accessories on them, together with some low-end bikes in boxes. If they do provide a build service then it will be Tesco, rather than customer, oriented. By that I mean the customer will have to wait and pick up days later and that sorting out warranty issues will be slow. That’s because its normal method of dealing with complaints –to apologise, give you a new one off the shelf and then penalise the supplier – is not an option for bike sales. In the end it will be competing with the other supermarket model retailers like Toys R Us and JJB and its presence will be largely irrelevant to the bike retail world as a whole.

“However, just supposing Tesco doesn’t revert to type and it does something very different. Just supposing it recruits some good, well trained staff, puts in proper workshops, allocates floor rather than shelf space, and even persuades some of the bigger manufacturers of better quality kit to supply it and create a series of real bike shops within the stores.

“That might stir things up a bit. It won’t happen, of course, because the profitability per square foot of such an operation would never meet Tesco performance targets. The fact that Halfords has struggled to make that model work won’t be lost on it.

“So, on balance, my own feeling is that the independent retail sector has little to fear from Tesco or any other supermarket. You cannot get away from the basic fact that what we do is incompatible with their business models.”

“Back in the early ‘80s, when working for Viscount Cycles, I was responsible for the Asda account in Reading. We supplied display racks and cycles with a full specification sheet to hang on the bikes. The only ones sold were cheap Italvelo folders – £69 in those days. Customers returned them even if the gears were not working just because they needed a minor adjustment.

“The untrained staff were not interested in the non-food department, and just had them replaced. I spent most of the time ‘fortnightly’ sorting the returns out that had been buried in the rear of the store under cardboard and roll pallet trucks and other rubbish.

“Tesco will only ever sell cheap product and the return will soon be seen as non- profitable. So, I believe it is a big mistake. Children’s bikes will probably sell at Christmas to those customers living in low employment areas, otherwise bikes will only take up floor space.

“The Asda experiment lasted less than one year. Cycle shops should not be concerned by Tesco’s move. Dealers will be able to charge to put the bikes sold by Tesco into working order, like many of us still do for the Halford sales.”

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