Toward the tail end of 2016 CyclingIndustry.News undertook some market research within the independent bike retail sector. What we hadn’t bargained for was the generous level of data returned to us by a pool of 74 shops ranging small operations to medium in size. Here we sample some of the opinion returned to us. To inquire about the full market report, click here.
At the present time, what is causing your business the greatest difficulty?
Online competition and grey imports
No surprises here. The single biggest complaint of the independent bike dealer relates to online competition and grey imports damaging the bike dealer’s ability to retain a decent profit margin. Some 67% of our pool rated the threat to their business as “high” and a further 24% “moderate”. Just 8% of dealers remained unconcerned by the threat of online.
Coming in second place among the threats rated “high” among bike shops, the challenge of unfair pricing and margin squeezes saw 57% of shops complain. Compounded by currency fluctuations further applying pressure at all levels of the chain, a solution to this problem is unlikely in the short term. 25% described the issue as a moderate concern.
Emergence of direct to consumer
Dealers often speak of a new age of bike in a box custom, with not just supermarket bought bike boxes nudged through the door, but now high-end brands cutting out the distributor pushing boxes to the end-user’s doorstep. The result concerned 50% of our respondents highly and 33% moderately. Many will of course take the high-margin service work, but remain aggrieved at the loss of a complete bike sale, particularly at the high-end.
Linked to the aforementioned online retail quandary, declining footfall in store is forcing retailers to get creative. 46% expressed significant concern on footfall. We recommend tuning into Cadence Performance’s profile for some creative ideas to draw new customers. Alternatively, perhaps assess your store marketing and how you can turn social media to your advantage.
Staff overheads, including pensions
It wasn’t an uncommon to hear toward the tail end of 2016 that bike shops in financial difficulty are increasingly being forced to consolidate on staff numbers. 33% of our retail panel outlined that staff overheads, including Living Wage and pension commitments were of a high level of concern at the present time. A further 40% described this as a moderate concern.
Almost identical in the breakdown, 33% said that premises overheads were a significant worry to their business and 40% a moderate concern. Interestingly, Local Data Company research showed that, standing at 12.1% in January, the retail vacancy rate recently fell for the second month in a row to its lowest level since peaking in 2010.
Perhaps one of the biggest, but often under the radar changes in recent years has been a gradual emergence of omni-channel sales from brands. 31% of retailers have described this as a concern to their business, worrying about being bypassed. 40% had the issue on their radar and described this as a moderate threat.
Poor supplier stock
Lower than anticipated, but perhaps one of the bigger variables store to store, just 26% described their supplier’s lack of key stock as a significant downside to their trading. The bulk, some 47%, described this as a moderate problem, suggesting most shops have had experience of poor supplier stocks, though perhaps things are slowly improving?
A somewhat startling difference between the perceived threat of online retail and local competition. Just 23% reported being concerned by others in the local vicinity. Our research unfortunately neglected to dig deeper here to break the category into perceived threat from other independents and chains.
Just 13% described couriers as giving their business a frequent headache, whether related to price, damage in transit or lost goods.
just 8% described this as a problem for their shops, suggesting that most have their waste disposal under control.