Ask the trade: How are you managing the cost of living crisis?

Costs and more costs! Your business might be making more profit on sales than ever, but without keeping a lid on overheads reverse gear looms. CI.N asks the trade how they’re managing their cost of doing business at this time…

What overhead or supply costs have caused the greatest harm to retail in recent months?

Mat Clark, Brink UK

The biggest cost of sale increase for us has been as a result of the slowdown in normal cash buying. With 0% finance options being the only answer for more and more consumers, retail margins are being eroded from anywhere between 6% to 15% and even more with some Cycle to Work schemes topping 20% commission charges to the retailer. In a 30% margin business that’s not sustainable without charging the consumer.

Ben, Afan Valley Bikeshed

We have just built a new shop and our electrical standing charge is crazy expensive because they knew that if we wanted to be connected to the grid we had to pay pretty much whatever they said. In a normal world it would have been 38 pence per day, but now it’s £2.61 a day!

Where have you made refinements in order to manage outgoings?

Mat Clark, Brink UK

We have recently been trying to reduce fixed costs as much as possible across the board and implemented a whole swarth of cost-saving exercises, from cancelling tech subscriptions to having fewer bin collections. The business is now running pretty lean, but we are now in a good position, with a great team and as supply gets better we should see positive results.

Ben, Afan Valley

Bikeshed Due to building the new shop our outgoings are all over the place, so it’s hard to keep an eye on screws and wood, as well as paying the electricity bill. Sadly we have had to cut down on the bacon rolls in the morning.

Which element of trading appears most stressful looking into the months ahead?

Mat Clark, Brink UK

Ebike sales represent around 40% (maybe more, if supply was better) of our overall sales and the lack of supply of Shimano-equipped bikes is a direct hit on turnover. This lack of supply obviously affects everyone involved, but with brands driving demand for models that are then delayed up to a year it makes it very difficult for retailers to capitalise on initial demand and then manage consumers’ expectations of delivery.

Ebikes also steal market share from acoustic bikes which are now relatively slow-moving compared to pedal assisted bikes. That means we are seeing some normal bike models hanging around on the shop floor a little longer than we’re used to, but sales are still good for us on enduro bikes and general trail bikes, just a little slower than usual. Our supply partners have been fantastic in helping us manage this supply shortcoming, however brands launching new models without stock really does need to stop.

Ben, Afan Valley Bikeshed

The greatest stress is trying to keep an eye on when stock is due and when the invoices need to be paid. We have been having to order more of our standard parts in one go, rather than order just enough to keep us going, so when the invoice comes in rather than say paying for three mechs we are now paying for 15.

Read more: 43% of youth considering a transport change as cost of living crisis bites.