How's Business? April 2015

When I talk to dealers around Australia about what they think of our ‘How’s Business?’ column, they sometimes think that everyone must be telling fibs and saying that things are better than they really are.

So this month I decided to drill a little deeper with my follow up question and ask, ‘How are your current sales, compared to the same time last year and previous years?’

You’ll see their responses to this question in the second half of each dealers’ comments.

Of course, you can only read their printed words and don’t have the advantage of listening to their expressions and tone of voice, but in my assessment the vast bulk of dealers who take part in How’s Business are refreshingly frank about everything as they see it.

Jeffrey Stoll from Tom’s Cycle City in the Riverina irrigation town of Griffith NSW said:

Sales are probably down a little bit, but our workshop is going quite well. We normally have a good workshop but it’s up a little bit.

The sales are not too bad, but it is a little bit quiet.

My father in law’s business. He started it more than 45 years ago. This is its second location. We’ve been here 30 years. It’s definitely the oldest bicycle store in the area and certainly in Griffith, so the name’s been out there quite a few years.
We certainly have a good reputation and good customer following.

There’s another bike store in town and two other people who dabble in bicycles, but it’s not their specialty.
Even for us, we’re not purely bicycles. We’re a Stihl Power Agent as well (chainsaws, garden implements etc). It complements the bicycles’ dips and lulls as the seasons go up and down.

But the town itself is a pretty good cycling town. It’s got a fairly good road scene, which is good. High end mountain bikes… our terrain in this area is not really suited to that, but certainly up to $1,500 mountain bikes go reasonably well.

March sales were better last year than this year, but it traditionally slows as our weather gets colder. Most of our cyclists are recreational cyclists. We have a core group that will ride year round, but the majority are climate driven, so the sales of bicycles drop off when the weather get’s cooler and picks up when the weather gets warmer.

We have a fairly cold winter. Our mornings will get down to zero, minus one, so you’ll only get the hard core cyclists out on those mornings.

Tom (Apolloni) is still involved with the business. He’s 90. He still comes in every day. So we have four staff including him. The business started in the main street. The family had a business called Tom’s Gift Centre then Tom introduced bikes into that store but his wife got sick of him having bikes everywhere, so she kicked him out and that’s when we moved to our present location!

Brett Rossiter, speaking only on behalf of his own store, Bicycle Superstore, Dandenong, Victoria and making no reference to other stores in the Bicycle Superstore group said:

Business has still been strong in repairs. The business has changed now. It’s all year around now, quite steady, where it used to be very seasonal.

Bike riding has grown so much over the past three or four years. But it’s tough with so many bike shops opening and more competition with the internet and everything, you just have to do something a little bit different or offer that extra service.
It’s still very strong in the hybrid area. Commuting bikes have picked up. More people are getting out and riding the rail trails and bike paths as a family, so that’s been a strong thing for us.

The 29ers have been a good seller too because it’s a bike you can do commuting on as well as go into the bush with. We find we’re doing the slick tyre changeovers and they’re keeping the original tyres for when they go into the bush.
I’m down about 10% looking at the turnover as a whole. This year has been very up and down. You think you’re having a good month and getting in front and all of a sudden you have a terrible month so it takes you back that little step. The GP (gross profit) is up which has been really good, so it makes that difference.

We’re buying smart. Buying things in more bulk so that we get that discount to help the bottom line and we’re trying to sell more parts and accessories through suggestive selling.

We have start up kits, which help sell more parts by saying, ‘This is what you really need when you get a first bike!’ It’s not just the bike, it’s the things you need for it. The pump, repair kit, a little saddle bag with all the basics.

Adam Nicholson of Pump n Pedals in Cairns in far north Queensland said:

Business seems to be picking up. We’re doing a few different things. We’re doing a lot of community building. We’re being very proactive rather than reactive.

We’re sourcing different community members rather than relying on the middle aged men in lycra to assist us with revenue.
One of the campaigns that we’re launching is a Women’s Bike Party. This is to demystify cycling for women, to help educate them about riding on the road and really break down the barriers between outside the store and inside the store.

We have security cameras around the building, and a couple of times we have seen ladies walk up to the door and then leave without even opening the shop door. We think that’s because it’s so intimidating to walk into a male dominated store or even a male dominated industry. Even though we have ladies working in the store, and it’s a beautiful, clean store. It’s not old and black and dingy. But we want to be able to break down that barrier.

So we approached all of the schools around Cairns and we’ve created a mother daughter aunty grandmother style ride which is six kilometres and it’s called the Bike Party. We’ll have the police shut down the roads for us and it ends up at a beautiful Cairns restaurant which looks over the water. That’s where the party kicks off.

A six kilometre ride is achievable for everybody to do. The schools benefit, because for the school with the most participants, half of the proceeds of the ride will go back to that school to purchase whatever sporting equipment they choose.

Just as an example of the size of this ride, the girl’s only school has pledged to have 600 girls to do the ride. These are non-endemic cyclists. These are girls who didn’t have cycling on their radar two months ago. Now they’re very excited about riding.

The only way they can enter the ride is to actually come into the store. That’s going to break down the barrier. They come in, the get introduced to Trina who walks them through the process. They get a beautiful number plate which is decorated with the Quasar (Specialized Women’s logo) and they’ll do the ride in a fun and safe environment.

The ride kicks off on 3rd May. We’re hoping to get huge numbers. Registration has been incredibly popular.

Some of the results have already been surprising. We’ve had gentlemen walk in who haven’t been to the store before with quite old bikes, but they just want to give it a bit of a spruce up because they’re lending it to their neighbour who is doing the Women’s Bike Party.

So it has affected both men and women, which is great.

This event is our own initiative. We did all the marketing for it.

Our sales are up on last year and previous years. We have a tracking system here which gives us hour by hour, day by day, month by month if we need it. We can break it down to what we need to focus on at any particular time.
Last month was our largest labour month, that is, labour charged out from the workshop. January, February and March are generally quiet but we put through more labour than ever before.

June kicks off our busy month. We’ve got Ironman Cairns and also a mountain bike race called the RRR. It slows down a little in August but September, October, November are cranking as well.

Shirley Sunter of Victor Harbour Cycle and Skate in the seaside holiday town 80 kilometres south of Adelaide South Australia said:

Business has been ok. We’ve had a reasonable summer, even though we’ve had a cool summer, it was quite good.
Because of the low dollar, we had a lot more of the holiday home owners in Victor Harbour come down, so Victor was really pumping this summer. So it’s been good.

We’ve done quite a few bike sales. Our main market here used to be hybrids and family bikes. A lot of the hybrids have dropped off and we’re selling many more flat bars, a lot more road bikes and, even though there’s not much in the way of trails around here, a lot more mountain bikes.

Nearly all of the local road cyclists have now got mountain bikes, so we’re doing quite well in mountain bikes, which is quite astounding.

Victor Habour is a holiday town. Fifty percent of the houses here a holiday homes. A lot of them are owned by very wealthy people who don’t even rent them out.

We saw the same thing happen last time the dollar dropped around 2009. We had many more people coming here (instead of going overseas for holidays).

Fifty percent of the residents are self-funded retirees. That’s why a big part of our business used to be selling hybrids, comfort bikes. But because their income has been reduced by lower interest rates, they don’t have such a disposable income as they used to.

We still sell to some retirees, but a lot more to younger people. More people are cycling, so I think that helps.

We do sell to quite a few Adelaide people, the holiday home people will often come and buy from us. Because we’re open for servicing on the weekends, we get quite a lot of servicing from Adelaide. The workshop’s just flat out.

People who are coming down for the weekend will actually bring their town bike down here to have it serviced and take it back. Because they don’t have a parking problem here, our workshop’s got quite a good reputation and we’re probably a little bit cheaper!

Our sales are better compared to last year. But for us, it has a lot to do with the fact that more of our holiday home owners came down this summer. They’ve got quite a lot of disposable income and because they’re here on holiday, they’ve got time to shop.

We definitely have done better this summer than we did last summer.

Clive Mercer of Mercer Cycles International in the historic port city of Fremantle WA said:

Business is still good. We’re down on new bike sales. The workshop is still very busy. Accessory sales are still very good. We stock a wide range of p&a.

Our p&a sales are good because we don’t rely on stuff people can easily get on the net. Yesterday we fitted a Shimano groupset for somebody who got it off the net. We checked prices and we can’t even buy it from Shimano for what he paid for it.

But that’s not where our strength is in p&a. Our strength is supplying range, economical up to mid-high end. Things that are hard to buy: clothing, shoes, pannier bags… a lot of people still want to come here and touch and look and check that they’re getting the right thing.

We’ve tried to steer away from stuff that people just get off the net.

We’re probably down 15% on new bike sales. The end of the mining boom here has obviously had some effect. I think retail, anything like that, the confidence in spending money drops. In other businesses I’ve heard of, trade has really dropped off dramatically but I think the advantage the bike trade has is that it’s something that people have become more aware of for general health. People enjoy bike riding. The commuter aspect to save money… people view cycling as a way to economise as well as get fit. So when things get tight we’re not as affected so greatly.

I’ve got a sister whose business is in soft furnishings and her business has fallen dramatically.

Last year was a bumper year. So we’re about 15% down since 1st July 2014, but current sales for this last month would be equal to last year.

Sales this financial year so far are equal to the 2012-2013 financial year. We just had a really good year last year. Otherwise all previous years we’ve steadily grown by about 10% a year, even more than that last year, but this year has come down a little.

Shane Wolki from Pushys Bike Warehouse in Fyshwick a retail, commercial, light industrial area, on the edge of Canberra ACT said:

Business is great. We’re growing at expected projections and very happy with everything. We’ve run out of room where we are and about to take on more space. We’ve got the whole building here, but we’re opening another shop next door.
We’re actually opening up a Pushys Plus store, a high end store. It’s bigger than where we are now, so we’re going to be more than doubling our floor space. It’s a Pushys concept store rather than a bike brand concept store.

Bike wise, everything in the new store will be over $2,500 and in the old store, everything under that, but there will be a bit of crossover. We’re not going to take any p&a out of the current store, but we’ll add some extra brands and some of the high end stuff that we can’t fit in here will go into the new store.

Our ebikes will stay in the current store, but will go where all the performance road and mountain bikes are at the moment. We’re aiming to open the new premises late June / early July.

We’re really looking forward to getting it off the ground. There will be a café in there and all that sort of stuff. That’s just normal, to have a coffee shop these days if you’ve got room.

We’re up on an average of 15% to 20% on last year. If you go back three years, we’re nearly 50% up. It hasn’t really slowed. Taking on the new site will help us go to the next level.

We’ve just run out of room for storage, for mechanics, for bike builders.

We’re basically just selling to Canberra customers. We do not deliver any bikes. Everyone has to come here to pick them up. A lot of people come to Canberra for work (short term). The out of towners might buy p&a but they don’t buy bikes.
I’m very fortunate to be blessed. God shines his light on me because I’m faithful to him. I put a lot in that. You do it for the right reasons. We’re very generous with what we give away. We’ve got a philosophy in the shop if anyone asks for a donation to anything we never say no. We always give. I think if you’re generous with what comes out of the business, it will get blessed, what goes into it.

Other than that, just hard work, good staff and customer service.