Why not start a bike shop from scratch with no prior bike industry experience, in a back lane in the run down end of town? Then don’t stock any road or mountain bikes at all and don’t do any paid advertising for your first 18 months.
How do you think you would go?
Metro Cycles in Newcastle is guilty of all of the above and they would answer, ‘Great!’
Newcastle, NSW, is a deceptive city. It would rarely be described as glamorous or high profile compared to Sydney which is just under two hours away to the south. But the greater Newcastle region has a population of 434,454 which ranks it seventh largest in Australia and larger than high profile capital cities including Canberra, Hobart and Darwin.
Bernard Hockings and his partner Lyn saw a gap in the Newcastle bicycle market and jumped in.
“We opened about a year and a half ago,” Bernard recalled. “We’ve been constantly expanding, revising and improving on our original plan but keeping in the spirit that originally motivated us. That was to set up a shop that addressed transport bicycles.
“We were very much inspired by the sort of shop that you’d see in Northern Europe. There were plenty of shops in Newcastle doing an excellent job of selling mountain bikes and road bikes but we thought there was certainly a niche for us to focus on commuter bikes, touring bikes, cargo bikes, electric bikes… in fact we do everything except sports bikes!
“But anyone who thinks that we’re inner city yuppies, I’ve been a builder since I was 15 so I aint no yuppie!” Bernard laughed. “But also, we’re not playing. We can’t afford to lose on this.
“We get on great with Two Wheel Industries across the road. They do a fantastic job of road bikes and it’s nice to have a friendly shop next door where we’re really happy to send people who want something we can’t offer and likewise they send customers to us. That’s a good example of cooperation in the industry.”
From a starting with a handful of bikes, within 18 months of trading Metro Cycles has self-funded their expansion into a wide range of brands with perhaps 150 bikes either on display or in boxes ready for assembly.
“We also work very well with some online businesses like Papillionaire, who are predominantly an online retailer,” Bernard continued.
“I think we’ve got a perfect balance there where we get the benefit of their online presence and their point of sale tools but then they get the big benefit of having a local retailer that can demonstrate, assemble and service. We don’t have to carry a lot of their stock because they get bicycles to us overnight. So we have enough to demonstrate but then we give people the choice of buying online directly or buying from us for a bit more. They usually say they want us to assemble and look after it, so it’s a good model.
“Probably our best selling bike are cargo bikes. So many households now have a second car just for dropping kids off at school or sport and so either a long tail or a Bakfiets that can carry a couple of kids for a couple of thousand dollars and you’ve replaced your second car. If need be put a motor on it and they’re just great. We’ve now got families who are carrying three, four or five kids on bicycles and loving it.
“We’re also getting professionals now moving into ebikes because they realise that they can actually run their business off an ebike. The most recent example is a firm of architects who bought their staff bicycles.
“A property strata manager came to us from over the road. She has to travel all over the region visiting her properties. She’s gotten rid of her car and now does it on an ebike. I think she’s clocking up 1,500kms a month.
“Then of course the folding bikes Brompton, Tern, Dahon, they fit into that commuter package really nicely.”
Clearly the range of stock that Bernard is describing does not fit into the typical Australian bicycle shop mould, but neither does Bernard and Lyn’s backgrounds or motivations.
Bernard explained, “The thing that motivated Lyn and I to invest our futures in a bike shop was seeing the role that bicycles can have in improving people’s lifestyles and improving the quality of our cities. Our main motivation is to support Newcastle’s renewal and help it head into a more positive direction by encouraging people to get on a bike.
“My life has been in the building industry as a carpenter, builder and sustainable development consultant. For the last 15 years I was very much focused on sustainable building and did a lot of work in Australia and New Zealand promoting that. There’s a really natural connection between sustainable building and the advances that are being made there and the promotion of cycling.
“Lyn’s was a landscape architect and likewise, when you’re involved in urban planning you realise the key ingredient for making this better is active transport.
“Only a month ago she actually decided to work fulltime just in the bike shop, which is great because it’s great to have a woman serving customers and servicing bikes.
“There would be better ways to make a quid. If I was only focused on making money I would have stayed in building!” Bernard laughed.
“I do absolutely think this is a sustainable business model which is why my partner was happy to leave an established professional career to work with us here. The absolute core to it is longevity, long term relationships with customers.
“I can look back on our first 18 months of trading and can see all this stock that has been built up through our turnover. It’s not debt. It’s not initial capital investment. We started off with a handful of bikes down the middle and we’ve built up a really big collection of stock.
“I think over the next six to 12 months we’ll still continue to do that and we’re still paying the bills and paying wages. I think the investment really pays off over a 10 year period. We haven’t done any advertising because Newcastle is a town that is where word of mouth is good and for every happy customer you get 10 more customers. So we just focus on giving really high levels of support. No one walks in the door without being greeted by staff and we engage with them and work out what they want. It’s all about advice and service.
“It’s a sense of belonging and trust that I think a lot of modern commerce has lost. Maybe it’s because my background has been as a builder where so much relies on your reputation and you’re only as good as your last job.”
As well as virtually no signage or advertising, so far, 18 months in, Metro Cycles still has only the most basic one page static website. There’s not even a listing of their brands, let alone an online store.
“Online retail is obviously more efficient,” Bernard conceded. “I’m talking about the big online retailers because when you look at the amount of time we spend dusting our stock you think, ‘Who needs that?’
“Plus the risk involved in just having bikes in boxes, bikes on the floor, it’s obvious if you just want to move products from a manufacturer to a consumer, then online is the way to do it. The thing that is missing there is what do people want out of a city? What they want is interaction with people. That’s why humans gather in cities!
“They want a nice environment where they can talk to people they can relate to and trust. Trust takes time to establish and cement and they want to know if you’re going to be there in five years to look after them. Our focus is advice, service and support and we sell bicycles as part of that.”
For Metro Cycles they see training of their customers as a core business activity.
“We run a lot of cycle training,” Bernard continued. “We do introductory cycle skills classes as well as advanced safe city cycling. We also run bicycle maintenance workshops.
Despite there being a dozen other bicycle shops in Newcastle, Metro Cycles has not found it necessary to discount their bikes.
“We might trim a few percent off if people buy more than one bike, or they buy a lot of accessories we’ll certainly put together a more attractive package,” Bernard qualified.
“But one thing we won’t do is we won’t have ‘clearance sales’. That so damages the brand name. It also builds up an expectation and people will just wait until there’s a clearance sale. “When I was talking to some other bike shops they just said, ‘Get rid of your stock, don’t hang onto it!’ I said ‘No!’
“If you know you have to sell your stock, you’ll be really careful about what you buy in and if you’re only getting quality stuff, it will sell. I can honestly say that we haven’t put anything out on clearance. If we get a really dud product I just won’t sell it and say it was just a learning process.
“There have been a couple of electric bikes that we bought in when we were experimenting at the lower price range, one I sold and bought back from the customer the other one I just returned to the manufacturer and said, ‘I’m not selling it!’
“In the building industry we had a term for guys that were ‘buying jobs’. They weren’t good enough to get regular work, they come in and they undercut you on a quote massively. You bought the job and it means you’re no good. A fair price, good products, a bit of patience and you don’t need to do it.”
Metro Cycles is already bursting at the seams for floor space, but fortunately the old inner city car tyre workshop that they’re in has more space out the back.
“We started in the front section,” Bernard recalled. “It’s 120 square metres and we’re expanding to about 200 square metres over the next month.”
Clearly this will cost more time and money, but Bernard’s building experience will allow him to do the fitout himself.
His main challenge has been finding the time. Despite working long hours and employing a full time staff member, Gus Potts, and some part timers, Bernard has found himself flat out just keeping up with customer demand.
“Both Lyn and I have both had pretty successful careers,” he said. ‘We’re not trying to make a million from this shop. We’re not trying to pay off the mortgage. We actually want a good lifestyle ourselves. We care about the renewal of our city and we’re trying to make a positive contribution to that process.
“Building a huge business is not our number one criteria. “It certainly has to be profitable and we want a good lifestyle, but we are focused on the quality of what we do and the outcome so we’ve got a limit on how much growth we want to get into. If you’re going to be a local bike shop that has a personal relationship with your customers there’s a limit to the size.
“I do think there’s pretty much two poles. You either go for the very high volume, high turnover, very efficient retail mechanism or you go for a local bike shop where it’s about service and integration with your community.”
Having such an unusual range of bicycle stock for an Australian shop, Metro Cycles needs mechanical skills that are rarely found in Australia, so they came up with a lateral solution.
He explained, “We brought a mechanic over from Holland because dealing with roller brakes, hub gears, upright bicycles... I know some bike shops were charging two hours labour to change a tyre on a bike with hub gears and chain guards. When we were interviewing this guy I was telling him that story and he said ‘How long does it take you guys?’ I said ‘I’ve got it down to a bit under half an hour!’ and he said, ‘I’ve got it down to eight minutes!’ It was really valuable having him bring their skills and methods over.
“It is a fun learning process. I actually think we’ve got a lot of stuff covered now. There are not a lot of people who can walk in the shop that we haven’t got the right bike for.
“The integration of training is good too because we get a lot of people over 40 who say they’ve never rode a bike and we’ll set them up with the right style of bike and teach them to ride it. Literally people who are convinced that they cannot ride a bike, I can say ‘I can guarantee that I can teach you to ride a bike,’ and it works. If you can walk and stand on one leg you can ride a bike. In fact we say what we do is teach them to forget that they can’t ride a bike.”
Similarly, no-one taught Bernard and Lyn before they started that you can’t succeed with a bike shop like theirs in Australia. Just as well.