Extra UK: CEO Will Fripp on how Storskogen investment is one in stability

For the past few years Extra UK has been making incremental changes, hiring proven industry experience to manage its operations, carefully handpicking new labels and, just recently, taking on a new majority investor in Storskogen. CEO Will Fripp gives us behind the scenes insight…

For those who missed it, Extra has a new majority shareholder. Can you tell us about the deal, Storskogen and what the new parent’s backing means for Extra?

It’s an exciting time for all at Extra. Brian and John started the company in 1995 and have consistently grown the business since then. Looking forward, they want to take a well-deserved gradual step backwards and start to enjoy life a little more. In seeking new investors they wanted to be sure they were passing the baton to the right people in order to ensure the long term health and prosperity of both the company and its dedicated staff, as well as the Extra’s long-standing distribution partners with whom we have worked so closely over many years.

We have a recently reshaped, enthusiastic and committed management team and Brian and John remain involved as directors and shareholders offering support and guidance so that there is no loss of experience or expertise.

Unlike those involved in many of the deals the industry has seen over recent decades Storskogen are not your typical VC investors. They acquire well managed and profitable businesses with a view to supporting and funding their growth in a decentralised manner, trusting the existing team to do what they know best. I understand that Storskogen now owns over 110 companies internationally, some even within cycling, and to date, have never sold one. Only weeks in the positive influence is already apparent to myself and the team. They are a pleasure to work alongside and they’re there when we need them.

Presumably the Storskogen investment improves Extra’s hand, but what, if anything, is planned?

Essentially its ‘all change, but no change’ outwardly and inside. The business just has additional support, investment for growth and an even broader pool of experience to build upon. Customers should experience no change linked to the investment in the medium term – but with ambitious growth plans, Storskogen’s backing and our passionate, experienced and entrepreneurial team at the helm, it’s a case of watch this space for future news.

Extra is of course not alone in suppliers having added fresh financing – has the industry somewhat entered a new era where investment will lead to higher standards, better infrastructure and possibly a narrower field of competition as time goes on?

Change is the only constant right? Over my career in the industry, the landscape has constantly evolved. We’ve seen consolidation of supply, outside investment, outside recruitment and increased professionalisation alongside consistent growth in our sport. Cycling and the industry have modernised and grown consistently. Along with its overall resilience, this makes it an interesting investment opportunity; so, I guess that side is inevitable and in general, has had a positive effect.

Environmental concerns are a great trade wind for our sport and for cycling as a means of transport. This remains the case and has even been accelerated by the recent pandemic. The UK differs from most other international territories too in that it is particularly influential in both commercial trade and consumer media terms globally. We often lead the way in the global marketplace in developing new routes to market and significant or disruptive positive change. Since Brexit we’re an even more complex beast and the value delivered by good UK distributors has never been more important.

Extra has brought on a wealth of experience in the past few years. How have the added skillsets helped develop the company?

We are blessed. We recently celebrated eight of our team’s long service of between ten and 21 years. That’s nearly one-third of our overall team who have been dedicated to Extra for over ten years – so it’s not all about the new. This foundation keeps us grounded and their experience and service are invaluable.

That said, yes, we are not only growing, but like many businesses experienced some ‘post pandemic’ change within the team. Through this combination and the hard work we put into being a great destination employer we have been very fortunate in welcoming lots of experienced new hands to the Extra family. Since I joined, we have welcomed eight new members across the management, brand and sales teams and there have been internal promotions too. We also have two new retail specialists supporting our brands with in-store training, merchandising and more.

A stronger even more experienced team, all passionate cyclists and from within the industry.

Looking more broadly at the industry, what trends do you see becoming more prominent on the business side and how will Extra adapt?

Successful businesses add value, whatever their position within the supply chain. That’s a real focus for us and has been from the start. Successful distribution is more than simply importing, selling and shipping boxes, we want to add real value to our brand partnerships and with our retail customers. This means investing in our brands, providing user support, building consumer demand, not just B2B, and offering quality feedback for cooperative product development in line with market needs. We’ve been doing this for a long time and it remains a real focus that grows as the market evolves and complicates!

Better use of technology is a real focus for us this year and going forward, with significant investments in our business systems aimed at offering our partners an even smoother and more seamless experience.

Overall, the supply chains in our industry are shortening. Where they are not is where people are not just adapting reactively but where they’re adding value to their service within partnerships that transcend that of customer and supplier into a true partnership. In my opinion Brexit amplifies the need for this also.

When it comes to retail there appears to be a trend of investment on the service side and a refining of bike stocks carried – what other retail trends are you seeing?

The pandemic helped float a lot of ships. The smarter recipients of this benefit have invested in their stores and their teams whilst saving something for rainier days. This hasn’t always been easy as many were forced into forward commitments to stock that has arrived at less than optimal times. But the service side of the industry has remained solid, as has the continued growth of eBike and eMTB in particular, sparking its own ecosystem of upgrades and related products.

Improving the retail experience, with closer partnerships with fewer suppliers remains a clear goal for a lot of retailers. We are working hard with our partners to deliver on this, supporting them with in-store displays, training and supporting their sell-through.

High-end road and gravel also remain buoyant, yet still fraught with supply issues. Our range of P&A is very closely linked to this premium, enthusiast end of the market.

What themes are you seeing with successful retailers at present?

Every retail style in our market has its place, but it’s clear from consumer feedback that the bricks and mortar bike shop is still incredibly important to consumers; even more so as the eBike and eMTB categories blossom. There is no substitute for the specialist advice and support a local dealer can deliver. A recent survey I saw on premium bike purchasing decisions places a combination of warranty, support, local availability and retailer recommendation as absolutely paramount, alongside the product’s brand and specification.

The internet and eCommerce remain key channels for all, but the pandemic saw a huge growth in local community and local economies. This was especially true for IBDs who remained open during the lockdowns, rebuilding local relationships so that consumers once again experienced their value. Dealers can continue to nurture and leverage those communities by focusing on retaining customers, keeping new entrants in our sport providing service requirements and following them on their upgrade journeys.

Test riding a bike or even testing an accessory remains a really important part of the consumer’s purchasing process. It’s something that IBDs should consider a key component of their marketing mix, range planning and in-store experience.

How is Extra shaping its brand portfolio around its customers and what brands are key for both in-store experience and bike servicing needs?

Extra already represents a pretty comprehensive and carefully curated list of brand partners in the UK and Ireland. We’re fortunate to work with forward-thinking brands with strong market presence, who are constantly adapting their ranges in line with consumer trends and evolving and with so much potential. So, we are well placed as things stand, but we have range gaps and are working to fill some of these in the near future.

Mainstay products from Topeak and Abus deliver against consumer demand for quality and innovation. They provide a ready-made in-store solution for so many categories delivering value, innovation, great margin and quality throughout their ranges.

Fi’zi:k and Crankbrothers both deliver diverse and comprehensive category solutions alongside fantastic in-store support both in terms of display solutions, merchandising, training and even staff benefits like significant discounts to access products for personal use. Both brands invest in and believe in our IBD retail partners, as well as incredibly comprehensive marketing plans to build consumer demand and aid product sell-through.

Although not a groupset distributor, Extra has a very strong service portfolio. Our exclusive close partnership with Pirelli has seen that brand grow exponentially in the UK in terms of breadth of range and consumer demand and this will continue with over 16 product launches this year and a new Italian factory providing even more seamless quality and speedier supply.

This year also sees the start of an even closer partnership with Enduro Bearings, pretty much the centrepiece of our workshop offering and an essential brand for any workshop these days. We’ve seen great growth in this category and recently, through a more direct supply relationship, have been able to reduce SRPs and increase dealer margin across an expanded even more competitive, high-quality range. A bearing is not just a bearing, these guys take their expertise incredibly seriously.

How is stock availability for 2022?

I think the whole industry is aware that there is something of a glut of stock developing throughout the supply chain in the UK, although not always the right stock, delivered at the right times. No doubt inevitable after a period of shortages that has frustrated IBDs and made for a tougher winter for some. I think, however, there is a strong move back toward stability. It’s certainly desired by all with less scrambling around for available parts and a move towards proper range planning and partnerships once more.

Market volatility across freight and raw materials availability, as well as cost increases everywhere are well known to have hit all levels of the supply chain hard. However, in recent range reviews we have numerous brands where we have reduced both SRP’s and increased dealer margin, bucking the current trend. We are doing all we can to mitigate further increases and frustrating stock-outs and when things do have to go up we ensure they remain competitive and try and to give good warning ahead of time too.

Our UK suppliers of RRP and Rockstop, for example, both have UK production and have been able to deliver consistently during the pandemic, as well as developing new products at a time when for many of the bigger brands it’s been almost impossible. They also suffer from raw material increases and the complications that Brexit have thrown up but have done a fab job of delivering stability, innovation and constant supply.

We have invested into greater stock holding, firmer pricing and are doing all we can to bring back greater stability. We are well-placed with a good balance of stock for the coming season. We’ve been working hard with our suppliers to grab what additional production allocations we can on the key lines that have been harder to keep in stock consistently, as well as committing to purchase orders much further ahead than we have ever done before.

What did COREbike’s visitors tell you after such a long show absence?

‘Welcome back’ seemed like a theme at COREbike for all. It was great to get the industry together once more after such an absence and great to once again be showing the trade all that’s new at Extra. It was only days after the news about our recent investment so there was plenty to talk about. COREbike has always been a great opportunity to show new products and we had plenty on show, from Crankbrothers shoes which have been a really big deal for us, through to new brand partnerships like Rockstop, who were even showing some prototype additions to an already new range. I think visiting Extra at COREbike also opened our customer’s eyes to the number of workshop brands that we carry.

Over the past six months the new leadership team have been hard at work preparing for the new season, making lots of changes in line with dealer feedback received over a long period of dealer visits. Small improvements in how we deliver larger deliveries, documentation, improved statements, new terms and conditions, a move from 30 days from date of invoice to 30 days to the end of the following month to simplify payments and improve credit, lower carriage on Enduro Bearings, a new promotional calendar more closely aligned with dealer needs – the list goes on and will continue to evolve. All of that, on top of the new B2B website, launched this Christmas and our new trade catalogue, now in dealers’ hands.

How can people open an account with Extra, what are the terms and where have you sales rep coverage?

We are fortunate that due to the brands that we distribute, most accounts already deal with Extra or Cyclex, our Irish subsidiary. We have twelve people out on the road, including sales management, our national account managers, seven area sales managers and two retail specialists, so pretty thorough coverage.

Of course, our account base continues to grow, but we work hard to care for and protect all our invested retail partners; so every new account we accept is a considered decision, and individual brand access is a separate decision beyond that. But we do accept workshop accounts supported with open access to much of our workshop portfolio, such as Enduro Bearings, Pirelli Tyres and Tubes, Orange Seal tubeless sealants, tapes and valves, SwissStop pads and rotors, Capgo Cables, Connex Chains and a whole lot more.