By Richard Bowker, Criterium Cycles director
In the early part of the 17th Century, the famous Tulip Mania gripped Holland. Steadily rising prices of tulip bulbs had tempted ordinary people to borrow money and speculate in tulip futures, so much so that bulbs were being sold and resold, many times over, without even leaving the ground. The crash came almost overnight in 1637 when rumours surfaced over the sustainability of the market. The price structure collapsed almost immediately, resulting in financial ruin for many ordinary Dutch families.
It remains an important lesson in what can happen when economic fundamentals and common sense are ignored as people become swept up ‘in the moment’.
2020 has been a remarkable year that has impacted the lives of all of us and it is clear that with recent announcements, it is going to continue to do so for some time yet. It has been a challenge to remain positive amongst the difficulties we have collectively had to face.
So when looking for silver linings in an otherwise pretty depressing set of clouds, cycling, at least, appears to have been one of the high spots. There are plenty of reasons why cycling should be doing well right now. First, it’s a really healthy thing to do. In an age where both personal and community health and wellbeing are shooting up the agenda faster than ever before, cycling fits the bill perfectly. Second, it’s relatively low cost and in a post-COVID-19 world where the economic impacts are likely to be felt long after we see a vaccine, that too is a good thing.
Cycling is also good for the environment. Whilst it may require energy to build the bike in the first place, once you have, it’s carbon neutral all the way and if it gets someone out of a car and onto a bike, then the returns are definitely positive.
During [the first] lockdown, thousands of people up and down the country rediscovered the bike. A survey by Cyclescheme (reported in BikeBiz in early August) suggested 83% of us had picked up cycling again as a result of lockdown, with a remarkable 24% saying they would not have started an exercise regime at all had it not been for lockdown. The cycle retailing sector responded to all this with gusto. Helped enormously by the decision of all Governments in the UK to designate cycle shops as essential retailers, sales of bikes surged.
At Criterium Cycles, no doubt in common with many others, we especially saw interest in e-bikes hit new heights as well as a desire to buy no-nonsense but excellent value for money entry-level bikes. It is no surprise that Trek’s outstanding Marlin and Dual Sport models have been flying off our shelves. Mind you, the same could be said of most bikes we had in stock as well as on order, such has been the demand.
And that demand looks set to continue strongly for the next 18 months and beyond. So much so that those who have failed to forward order bikes from their suppliers well into 2021 are going to find the situation tough, or worse. Governments appear to be getting the message too and converting rhetoric into practical action. In Edinburgh, where Criterium Cycles is based, Edinburgh City Council has implemented its Spaces for
People strategy with funding support from Sustrans and the Scottish Government. The strategy has made temporary changes to streets as lockdown measures are eased to support greater use of cycling and walking, as well as making it easier and safer for those using a wheelchair, other mobility equipment or even just pushing a pram.
This is excellent news, although inevitably in Edinburgh, as in pretty much every other urban centre, the debate remains polarised. Those who believe in cycling (and walking) applaud the changes whereas those who don’t generally criticise them. Only time will tell whether Edinburgh City Council is able to maintain these measures, though it is very important that it does.
So what are we looking forward to over the coming months and years as a cycle retailer?
Some say that the nation’s new-found love of cycling will continue unabated from now on and that cycle retailing can look forward to years of uninterrupted growth. We think that level of optimism might be a bit wide of the mark but there has definitely been a sea change in attitude. Even if the initial enthusiasm reported by Cyclescheme falls away a bit, we don’t expect it to fall back to pre-COVID-19 levels. We see e-bikes continuing their strong growth across all categories (leisure, mountain and road) and we see all-purpose bikes such as the gravel category also remaining especially popular.
Lobbying of policymakers remains just as important as ever before and cycle retailers will need to ensure their voice is heard as much as anyone’s. City councils and local authorities need to hear from as many people as possible that temporary changes to infrastructure need to be made permanent to consolidate, and grow, gains in modal shift.
The decision to encourage doctors to prescribe cycling as a tool to tackling our growing obesity crisis is another example of great news for the cycling industry. We need more sensible preventative health policies like these to cement the positive role that cycling can play in the nation’s health and wellbeing. One word of caution – the need to understand that cycle retailing is a business like any other has never been greater. As demand for cycling grows, careful budgeting, capital planning and financially astute decision making are more important than ever before.
At Criterium Cycles, we have invested time and resources in our modelling and forecasting capability this year, especially with respect to cash flow forecasting. This is critical – businesses don’t go bust for having too much cash in the bank yet plenty of profitable businesses go bust for the lack of it.
Cycle retailers can look forward to the future with optimism but there are still plenty of risks and factors to be navigated and managed so we will be applying as much rigour to our decision making as ever – the lessons of Tulip Mania remain as relevant now as they have ever been.