Ask the Trade: To what extent is Brexit uncertainty affecting bike retail?

The UK is now shy of a year away from formally exiting the European Union. With negotiations seemingly not going to plan we asked a panel of bike retailers their feelings on the process thus far and how it affects their trading outlook…

By what percentage on average have you seen price fluctuation from suppliers to date since the referendum?

Steve Baskerville, Bike Spanner
It’s substantial. Increases of 20% to 30% are not unusual and it’s continuing. Prices are still slowly ticking upwards, with no obvious reason, other than sweating what business they have for more profit.

Paul Thrupp, Cycling 2000
It’s difficult to put a figure on, but it’s fair to say that many products have gone up in price since the referendum, both bikes and accessories. In each case most suppliers are blaming the exchange rate and Brexit. What is difficult to understand is that if you look at exchange rates between Sterling and the Euro/Dollar over the past 10 years there is not that much difference.

We do have three bike and tyre suppliers whose prices have gone down by as much as 10% in the last few weeks. I don’t believe any price increases will harm business too much as long as all retail sectors at treated fairly by suppliers, whether it’s the IBD, internet or larger retailers. The most important thing is that the IBD continues to be competitive.

Richard Sault, Salt Dog Cycling
Since the referendum in 2016 we’ve seen prices increase by around 20% both at trade and retail price.

Ruth Hargreaves, JD Tandems
My suppliers have increased their prices by around 10%. Most of our purchases come in from the Far East and these have been affected by the fluctuations in exchange rates.

In the longer term, what impact do you anticipate new trading conditions with the UK to have on independent retail businesses?

Steve Baskerville, Bike Spanner
The biggest impact I think will be suppliers looking to the small business for profit. The big players are now at the point where they are far more powerful than the suppliers, and the suppliers know it. Suppliers have to keep them onside for turnover, but will squeeze the small business for the profit. Essentially small business will be subsidising big business, and so, perversely, financing their own executions.

It’s perhaps all about perception. Things are still on a downward trend I’d say, but as a workshop business we’re better acclimatised to it, and in some cases prepared for it. So, while it will get worse, it’ll feel much the same, or even a bit better. As a business we saw 20% and above growth as we entered our second year last year. We are planning for that to continue and even improve some more this year. While the growth came naturally last year, this year we’re going to have to work harder and smarter to realise it.

Paul Thrupp, Cycling 2000
It’s too early to say what the long-term impact will be as I don’t think anyone truly understands what the new trading rules will be yet. The unknown is perhaps doing more damage than the actual changes. My biggest concern is the loss of EU workers who make a huge contribution to our local economy, regularly use a bicycle to commute to work in our local area and to whom their bike is a valuable mode of transport.

Richard Sault, Salt Dog Cycling
Profit margins will tighten even further and costs will rise making it tougher, but at the same time it should slow down the heavy discounters. It’s just not sustainable for anyone; even finance companies. I think there will be a move towards keeping less and less stock and relying more on suppliers. Stand out service and serving niche markets may be the only way to survive. I think with this tougher market it will drive the evolution of the bike shop and what people class as a bike shop. All over the UK I expect we’ll see variation of online, man in a van, showroom, coffee shop and other models.

Ruth Hargreaves, JD Tandems
The average retail business trades on the high street so there would be no reason why different trading conditions would affect them. We, however, retail both in the UK and Europe, so I foresee our exit from the EU to have a negative impact on our sales in Europe. Our customers are individuals and the prospect for them of having to deal with a business outside the EU is daunting.