British folding bike maker Brompton will seek to make acquisitions and investments in outside businesses as part of its growth strategy for the coming years, CEO Will Butler-Adams outlined to CI.N this morning.
Having made numerous assessments of the business in the wake of the Covid-19 pandemic, Butler-Adams and the Brompton board are of the belief that the virus has only accelerated what they foresaw to be a five year trend, consolidating a rush to take up cycling for transport into one chaotic year.
“My feeling is what we are going through is an acceleration that brings tremendous opportunity for bike industry, but we must stop must going from boom to bust so much; as a business we need to invest in yet stronger foundations. For our bikes there are gaps we could yet still fill with investments. We are not immune from the industry’s congestion pains; the world wants bikes and we would like to be able to supply them,” he starts.
The rush for bikes has, across the board, caused supply headaches and despite making its own derailleurs, among other proprietary goods, Brompton has not been entirely insulated from the pain felt.
“We could seek to acquire businesses downstream, including key suppliers. We are looking at complimentary accessory businesses and opportunities in supply chain, in particular, but I would not be averse to taking on young, bright companies who perhaps have an innovation passing through Kickstarter. The board and I don’t always agree here, but we don’t wish to become a cumbersome, lumpy business that stops experimenting and evolving. We don’t have specific targets, but I feel we could add value to many segments. A helmet investment is one area of interest.”
With production impacted in 2020 Brompton had experienced ups and downs in ability to supply, citing initial cancelled orders from bike shops as a reason why the consumer direct business built through the summer. However, Butler-Adams reassures that the network of IBDs remains a pillar and that, for the time being, this channel is apparently receiving a priority in supply over the firm’s own direct online and physical retail channels.
“In the UK we’ve had a difficult year providing for our dealer base. All of us were initially very afraid on first lockdown and orders were heavily cancelled. The way we dealt with this was to use our direct to consumer channel for the duration where physical footfall was lacking. Supply constraints meant we couldn’t suddenly catch up,” says Butler-Adams. “For me, it is important to make sure we retain the IBD network, but there is no magic wand to fix this past year. I feel it is critical to the cycling revolution that once world goes back to work the specialist services of the IBD need to be there to sell and maintain increasingly complex products, including the e-Bikes now on the market.”
Brompton now has a network of 1,500 shops around the globe and Butler Adams says that it is the export market and those stores that have helped the business record growth of around 20% for the past four years. With more robust foundations being constructed it is anticipated that rate could improve.
“We’re heading for 30% a year growth,” the CEO told CI.N, adding “We have employed 100 people in the past 12 months. We have found that when you bring specialist skills in house, for example as we did with the paint shop, then you can refine these skillsets to your product and challenge those staff to drive the product as a whole forwards. That is also part of the idea of our bid to grow via acquisitions. Most refreshing of all is that the news skills that have joined us have often found themselves at a crossroads, some due to Covid; but they’re actively deciding to put their skills to the use of betterment of the planet. They believe in cycling as a force for good.”
Brompton is now recruiting for a specialist in mergers and acquisitions, with Butler-Adams admitting “I’m just an engineer, I know nothing about mergers and acquisitions. We’d like to bring someone in who understands our business and expanding it.”