The Brexit effect

This article was written by Rory Hitchens of Upgrade Bikes

We are all experiencing uncertainty about how trade will be affected when we leave the EU. The ripples of the initial Brexit shockwave can still been felt one year on, with the industry more cautious to stock in than before, even with regards to established and profitable brands.

After the initial reaction to necessary price increases, things did settle more quickly than
expected. To be fair, most of these
increases were applied to very stable products on which pricing had been held for a long time previously. At Upgrade, we were quick to implement these small price increases early on, so that 2017 would really feel stable again, albeit at a slightly higher price than before.

The fluctuating financial exchange
continues to be a major challenge for
distributors that trade heavily in foreign currency to source their products. Upgrade has many years of experience, and, as a result, we have some built-in resilience from the last few buoyant years, which has allowed us the flexibility to reduce our own margins, ensuring that our dealers can still benefit from the margins that they need. If turbulent times ensue, more fluctuations are likely.

Whilst our outlook is not gloomy, it’s not super sunny either: the industry has now crested the wave in road sales created by Tour de France and Olympic success. That said, we’ve seen that our new gravel bikes category has become particularly strong, with our early-to-market Kinesis product in this sector.

And, now the industry is beginning to benefit from the establishment of the British e-bike market, with demand rising not only among commuters, but also MTB enthusiasts. We think the outlook in this category is very good for IBDs. With the strong rise in e-bike sales, often to a brand-new, reborn customer, there are great opportunities for more accessory sales.

We are firmly established in a mature market now. This is shown with the consolidation of some of the larger businesses, namely Wiggle-CRC and ZyroFisher, along with the recent investment and planned expansion of the Tri-UK brand. This puts further emphasis on us as distributors to increase our efforts in providing initiatives that support and promote the independent dealers, who are an enormously important and valued segment of our business.

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