“When will bike stocks return to normal?” That’s the question on the lips of shops and their customers alike. While coronavirus appears to be destroying large amounts of the economy, so much that the country is officially in recession, the opposite can be said of the cycle trade. Duncan Moore asks the trade what comes next…
When other retail outlets had to temporarily close at the beginning of the lockdown period IBDs were able to remain open, classed as an essential service. It was a good thing too, as with time on their hands and no gyms or swimming pools open people took to cycling as a way of getting some exercise.
This combination of circumstance saw the cycle trade in the UK experience a boom that may turn out to be even greater than the 2012 bump, when Wiggins took the yellow jersey in the Le Tour and followed that up with an Olympic gold.
However, what is the long-term effect going to be? At first, the trade began to rejoice as customers not only filled workshop slots with bikes needing repairs and servicing, as they were dragged out of sheds for the first time in years, but then buying new models with such haste that supplies began to dwindle. The big question now is will people keep riding and buying new bikes and more importantly will there be any bikes available for them to buy?
Once cycle shop owners realised they could open and that there was a demand for service work it was all well and good. However, the problem of stock supply was and still is more problematic. With the announcement of lockdown distributors put reps and telesales staff on furlough, expecting worse case scenarios. Of course, this is a world-wide pandemic and so that meant too that manufacturers in the Far East had issues around worker safety of their own to deal with. The situation had all the ingredients for a perfect storm.
“The simple truth is that since February, managing our future bike availability and our supply chain has been challenging,” is how Madison’s Own Brand Director, Scott Longstaff, describes the situation. He then goes on to note that Madison quickly realised that the situation was unpredictable and that the implications of the virus upon the business needed to be frequently re-assessed. “It’s been a constantly evolving situation that has needed close attention,” he says. “Our outlook has shifted a number of times – nobody could have foreseen the demand that we have experienced and the increased complexity of parts supply – due to shutdown related delays.”
That same issue of supply difficulties has been experienced by Col Williams of FLi Distribution, too: “Supply has and will continue to be affected by the combination of factory shutdowns across the supply chain and the increased demand in all sectors right across Europe.”
It has not simply been a case of suppliers and, in turn, stores getting stock in, the problem has been increased by the unexpected surge in demand from consumers. “We have seen unprecedented demand across all of our brands; whether that’s city, road, enduro, hardtail, or e-bike,” says Hotlines’ Head of Operations and Supplier Management, Ed Ibbetson. “Our biggest focus over the past months has been doing our best to explore all avenues to secure stock to satisfy demand, and to ensure that retailers are kept up to speed with stock availabilities.”
During a time when manufacturers would normally be preparing to launch MY21 bike ranges and retailers would be beginning to consider how much to discount existing models to release capital to be able to buy in the new stock and clear shop floor space to display it, the virus has turned everything upside down. Rather than struggling to clear existing stock, IBDs have found themselves in the situation of potentially struggling to get new MY21 stock.
Talking about the unseasonal increased demand for new bikes and how the supply chain was affected by the virus, Longstaff notes: “The impact of Covid-19 in the Far-East and the subsequent impact of that on factory capacities did delay our original delivery schedule.
“We’ve had to work closely with supply partners to optimise and prioritise production and delivery schedules to suit our customer base and what they are crying out for. Fortunately, we’ve got strong production partners who have worked flexibly and creatively with us to satisfy our requests and ultimately those of our customers and all of that work is now coming good.”
A high degree of flexibility has also been key to Hotlines being able to meet demand for bike stocks. “Luckily, we have a broad portfolio of bike brands; so whilst demand has exceeded our ability to supply for some of our brands; we have managed to secure stock from others to offset any shortages,” says Ibbetson. However, he then points out that the situation is still a long way from being resolved. “As you would expect, we have been doing our best to bring forward deliveries of bikes where possible; however, what is possible is limited due to supply chain structure. The overall view we have currently is that we will be able to deliver along relatively normal timelines for the brands we carry; with deliveries of MY21 bikes already in progress and set to ramp up in the coming months.
“We are on the cusp of starting to deliver MY21 bikes and so far, the delays indicated from suppliers have not been widespread or hugely significant. I think that the true impact on MY21 timelines due to potential component shortages will only really become apparent in the coming months,” he adds.
Despite the attempt to recover bike stocks at distribution level, retailers that have either left it late or in some cases lack the buying power to get to the front of the queue have been left disappointed and have taken to trade forums to question whether seeking supply directly themselves is a viable alternative.
For those companies that rely on European manufacturers rather than Far Eastern ones, the supply chain has seen unexpected disruptions too, as Williams explains: “Initially, as lockdowns happened in Italy and Germany, there was concern that lots of shops would be cancelling orders. Then when the UK didn’t close bike shops, or ban cycling the growth in demand we experienced here was then instantly matched as soon as the bike shops began to open in Europe.
“We are meeting all orders for KTM, Puky and Eightshot, although some are a bit later than we’d have hoped. Everyone has worked hard to ensure that no orders are cancelled. We’ve now opened up the 2021 order books and we expect the 2021 range to sell out across the board quicker than normal. The rise in sales means the planned delays in 2021 launches have got put back on schedule, as the factories we work with in Germany and Austria attempt to keep up with demand.”
With strong demand and uncertainty about the availability of MY21 bikes, distributors are now suddenly finding themselves having to consider how to allocate what product they have available with no guarantee that a second wave of COVID-19 infections won’t cause further disruption.
“Our order book has never been so healthy – which is fantastic news. As a result, our order volumes have increased given the phenomenal recent demand. We had good stock levels going into the summer and so we’ve been able to satisfy a huge level of demand,” says Longstaff before cautioning, “the truth now though is that there is only so much production capacity that can be drawn on to fulfil what the market is demanding. As such, we’re being very careful to be really fair with our dealer base. We’re confident that we can fulfil a high proportion of MY21 orders in the coming months.”
In the case of Fli Distribution, Williams is asking dealers to be optimistic with the orders for the brands he supplies pointing out that dealers can be relatively safe in the knowledge that if the UK market does collapse or even die down a bit, they can always cancel prior to bikes being shipped. “We can’t ring-fence or allocate,” he says, “shops just have to order what they are comfortable with and we’ll try to support with sell-through availability wherever we can.”
With the UK’s high street retail now beginning to return to normal what do bike sales look like; what lessons have been learnt in the cycle industry’s supply chain; and what does the future hold for a sector that has always been troubled by forecasting bike stocks?
“We are cautiously optimistic about sales for MY21,” says Ibbetson. “Whilst there will no doubt be a significant economic downturn, we also expect cycle sales to remain relatively buoyant.”
Williams is positive about sales, too, as he says: “If it’s got wheels, it’s selling for us. In fact, anything to do with cycling is selling for us. Whatever we can get stock of there are dealers in the UK desperate for it. We are not sure what the future holds, we’re just trying to make sure we prepare for both a continued sales spike, whilst also watching for potential supply problems due to increased demand across Europe sucking up all the stock, just as we potentially enter a recession and whatever Brexit brings.”
When asked what he will take away from the past few months Williams main suggestion is to be flexible and work with a selection of suppliers to keep overheads as low as possible because “there are decisions that are out of our control and we’re sure they will have a huge impact on the supply and demand of our supply chain and business model.”
“Hindsight is a wonderful thing but I don’t think we would have made any different decisions given the situations that confronted us at points through spring,” says Longstaff, reflecting on the past few months. “Lessons learned from this year are in the main only valid if we have another pandemic type situation and, obviously, I hope we don’t.
“The one thing I think I would have liked to have done better is communicating our supply position more clearly with trade customers. It would have been great to have been able to say what bikes were delayed and by how long. Unfortunately, even that would have been difficult in that even now some deliveries are still being delayed and some brought forward. We continue to have to be flexible and really do appreciate our customers continued understanding of that in what have been utterly unprecedented times.”
That need for greater communication is something that Ibbetson has seen Hotlines take on: “We have increased our regularity and consistency of communication; both with our suppliers and retailers. For retailers, this has meant simple but effective tools like regular email updates on key lines that we have stock of, centrally saved stock lists for all to access, and better range knowledge for our staff so we can find the models that closest match the needs of a customer when a specific bike may no longer be available.
“For our suppliers, it means even more regular communication to ensure that we’ve been the first in line to secure free stock, and also thinking creatively to find solutions wherever possible.”
The final word on bike stocks, however, goes to Col Williams with the simple message: “Order your bikes now – don’t think about it, if you think about it, someone else will get them.”