Ask the Trade: Does the bike business need to shrink in size or grow the pie in customer numbers?

It is a widely held view that the bike industry’s ever-increasing number of brands are fighting for a shrinking slice of pie. With that in mind, isn’t it about time we started creating new customers? CyclingIndustry.News asks a panel of retailers what efforts they’re making to create newbie business…

Ruth Hargreaves, JD Tandems
As tandem only retailers, we are trading in a sector of the market that has shrunk in size in the respect that we have fewer brands now than say 10 years ago. Presumably this shrinkage has come about because the brands in question were finding our sector unprofitable. This shrinkage has not helped to grow the market, neither has it made selling tandems more profitable.

I have to question the implication in the question that the problems in our industry are caused by either an oversupply or a lack of customers though, but, in my opinion, rather that many of the big retailers are operating at a loss, and not only are they operating at a loss, but many have increased their turnover to boot, so they are taking a greater market share and still losing money. This makes the customer think that the IBD is over charging. Most consumers accept that shops might have higher overheads, but they do not realise that these dominant players in our industry are actually losing money and are therefore not selling their products at a high enough price.

Peter Kimberly, MD at Cycle Republic

I tend to disagree, from a Cycle Republic point of view, that the pie is shrinking still. Our city locations and emphasis on getting commuters moving has shown us the scope for customer creation.

Recently I took a 38 year-old out for a test ride and he hadn’t been active on a bicycle for 20 years. Once you get bums back on saddles it’s quite simple to convey the benefits of ditching other forms of transport leveraging the reasons the customer gives for giving cycling another go. Cities are getting more congested, pollution is choking us, obesity is rife; it’s not a hard sell, particularly if you’re shelling out heavily for an Oyster card, or similar.

Jonathan Cole, Director at Velorution

I think there’s an element of the bike industry having unreal expectations in many cases. Certainly brands need to get real on the costs of selling a bike. What industry doesn’t account for the product arriving not built? There’s a cost attached for a professional to finish the build, plus the cost of shipping the bikes around. This can often be as much as 5% of the bike’s value, so the margin needs to be reflected as such.

The number of manufacturers serving the current customer base will be sorted by the market in time. An awful and a good product can very often cost the same thing at retail, but customers will soon learn where to go. The key is to have the knack to be on the right side when stocking up, it’s not always easy.

Mick Murphy, Mickey Cranks

The large amount of brands in the market currently is confusing for customers, but good for IBDs as it gives us the choice to work with those that genuinely support us. I hear a lot from distributors that they want to support IBDs and then their business model proves quite the opposite. As a cyclist I have never seen so many people out and about riding bikes as a result of the 2014/15 boom in road cycling, and once the uncertainty surrounding the economy is over we will all benefit from the increased customer base that is out there.