How's Business? March 2016

With several of the major brands running factory backed bike sales at the moment, for this month’s follow up question we asked, ‘What level of bike discounting from bike wholesalers are you seeing now compared to this time during previous years?’ 

Dean Grace from Deano’s Bicycle Repairs on the Mid North Coast of NSW said:

It’s not too bad this week. It was a bit quiet at the start of the month, but it’s starting to pick up a bit now.

Bell sales are fantastic! (laughs) With the new laws people are jumping up and down and needing bells in a hurry. (Dean is referring to new laws in NSW that have massively increased the fines for a range of cycling ‘offences’ including not having a bicycle bell.  Ed.)

I deal a lot with the road riders, so they need something that will fit on their (oversized) handlebars. So it’s been a strap-on bell that they’ve been buying a lot of.

The strap-on ones are the way to go. They fit on everything.

The two brands of bikes we mainly sell at the moment are Fuji and Apollo. They’ve been going pretty well. They tick over nicely and it’s a nice supplement to the repairs business, that’s for sure.

I’ve been in business coming up to one year in two weeks’ time. I started from scratch. I was working for another bike shop here in town, but we parted ways and I didn’t want to retain, so I started my own up. It has been working really well.

(Regarding bike discounting…) It’s going up. I’m seeing a hell of a lot more of it these days. I have to deal with it day to day.

People in and say ‘such and such bike shop is selling their bikes for this much, how much will you do yours for?’ It does become a little hard to compete with sometimes, but I’m holding my own. 

Marcus Walker of Walker’s Wheels in Montmorency on the north eastern edge of Melbourne said:

It’s quite busy at the moment, just before Easter. We’re flat out getting bikes ready for everyone going away.

The sun’s still out down here, so that’s good.

Lots of repairs. A few sales, but obviously very competitive in the bike sales area at the moment. Everyone’s trying to give stuff away. But certainly repairs keep me going. There’s plenty of those on the deck.

I’ve moved more into Specialized bikes. Still doing a few Avanti’s and branching into the ebike market a bit more now.

It’s a bit hilly here and it attracts the older crowd who are scared of hills. Much derision amongst the purists obviously, but I quote myself as Bob Dylan when Bob went electric!

I’m a cycling Judas or something… (laughs).

I probably keener on the conversion kits than the dedicated ebikes. The people who are buying them are generally an older sort of crowd and they’ve got that value where they think, ‘I’ve already got a bike!’

They don’t want to buy another bike, so if we can convert their bike over to an electric, they see that as being better economics, even though the price comes in about the same as a dedicated ebike.

But they’re happy because they’ve got a bike. They just don’t use it. If we motorise it, then they’ll use it, and that’s what we’ve found has been the case.

I’ve been using kits from James at Ordica. They’ve been quite good with spare parts and backup. We’ve done about 20 kits so far and haven’t had any problems to date.

We’ve certainly had a number do high kilometres already.

I read in Bicycling Trade the other month where Sydney Electric Bikes were being interviewed and they said that people actually use them quite frequently. And we’re finding that people are wearing out tyres and tubes and brake pads.

I actually prefer the front wheel drive kit. I actually put one on my own, for want of a better word, drunken bike, I call it, because it zig-zags home occasionally! (laughs)

It’s one of those long wheel base Extracycles, and the long wheelbase makes it pretty hard to crash.

I’m still only half way through a tank of fuel that I bought for my car in December. I use the bike everywhere now.

It’s very hilly out here. Even the missus would entertain the idea of going out for dinner on the electric bike but she wouldn’t entertain the thought on a normal pedal bike.

(Regarding bike discounting…) I think the sales have moved a bit earlier. Maybe the market’s a bit slow and they’re trying to jump ahead of each-other discounting bikes down.

I’ve been really holding my ground. As I’m getting older and grumpier… I might end up writing Ray English’s column at some stage, but I’m happy to walk away.

People ring up and say, ‘What’s your best price?’ I don’t really want to chase that discount market.

I almost equate it to being in a trade union. If one of us sells out, then we’re all sold out. But if we all sit there and say, ‘Mate it’s $699. That’s the price.’ And if we all hold our ground, then we’ll all go ok.

I equate it to being in a bike selling union. I might be naïve, I don’t know. But as soon as someone rings me with a price from another shop I say, ‘Go and get it.’ I’m not interested in chasing it because someone will walk in tomorrow and buy the bike at full price.

Our main suppliers have jumped into early autumn sales on the bikes that don’t sell anyway.

The stuff that’s selling well you still get your good price for.

But I’m not even playing the discount game anymore. If the wholesaler sets a special price, well then we’ll sell it for the special, but there’s really no negotiation from there. That’s the price. 

Claude Altin of Mega Bike in the city centre of Adelaide SA said:

Business doesn’t seem to be too bad. It’s been quite consistent in a positive way since last June-ish.

The commuter trade coming through into the city has risen dramatically. Specifically commuter bike sales seem to be very strong… and strong up to about $2,000 which is quite amazing.

They (a commuter spending $2,000) would buy a Felt that is extremely light, with a carbon fork but with the ability to run luggage on the back and spec’d with 11 speed Ultegra.

It’s not so much a flat bar roadie, which can’t carry panniers or anything like that. This is actually very strong. I personally have put them into the tourer category because they make an excellent tourer.

There are also more and more people wanting to do things like Three Peaks and the Alpine Classic and even guys who want to do the really hard core stuff like do the whole series. So they’ve already done the Victorian Three Peaks and now they’re going to do the Queensland one then they’re looking at doing the Tasmanian one.

I’m seeing it through our fitness classes. (Claude has a fully equipped spin studio set up in the basement of level of his store.) They’re getting stronger and stronger as a way for the time poor person to do these other things. We’re now running six classes a week.

(Regarding bike discounting…) Until this very day I’ve seen very little. But as of this week I’m seeing a whole range… One of my companies is introducing something they’ve never done before. A road strong company bringing in mountain bikes. Now they’ve put a 20% discount on them. I think they want people to know. It’s Esperia, who has released a new mountain bike brand to Australia called Torpado. Torpado is very strong in the mountain bike scene in Europe. They took out a couple of places in the outback classic in South Africa which is considered one of the hardest mountain bike races in the world.

But they tend to work on really lightweight bikes, highly spec’d. Here we tend to focus on dualies.

The government is paying for mountain bike parks to be built here and they tend to be more of an obstacle course nature. So a different kind of riding to Europe.

 

Mega Bike Adelaide

Dougal Scott of Palm Beach Supercycle which now has three shops spanning the Gold Coast region of South Eastern Queensland and far northern NSW said:

It’s definitely pretty steady. We’re not breaking any major records but business is very good.

The Gold Coast is growing. The mountain bike scene is getting better slowly but surely. People are starting to get geared up for the Commonwealth Games (which will be held on the Gold Coast in 2018). People are building tracks. Bike clubs are getting aligned with government and finally getting some more trails built which is awesome.

Trek is our number one brand and we do Electra and we do have a few other smaller brands.

We’ve recently purchased a shop that’s been around for a long time, down in South Tweed, just over the border. Now we’ve got three shops all under the one umbrella.

So when we bought the old shop we took on board Apollo and Malvern Star but we are predominantly a Trek shop. It was called South Tweed Bicycle Centre and it’s now South Tweed Supercycle.

(Regarding bike discounting…) We always do Trek Fest at this time of year. There’s good discounts across a pretty large range of bikes. It’s not everything but we’re moving a lot of bikes and there’s pretty decent discounts from the wholesaler.

It’s always super competitive. That’s not changing. It’s just how it is. 

Wayne Evans of Cyclemania in North Perth, WA said:

It’s temperamental if I can put it that way. It’s not gangbusters, although there are days when it is gangbusters. But in all, it’s ticking over but not going nuts.

We’ve got a big following here and I work very hard to ensure that the standard of customer service, their interaction with our staff and their experience in our store are kept as high as we can. We’re always doing training and I actually used your last publication with that story of the store in Adelaide, Bicycle Express as a talking point for our Friday night meeting.

We had a staff meeting that went for a few hours and we talked about some of the dilemmas in the industry and how we stand above the noise and ensure our viability.

I used that article and made everybody read it and sign off on it, so that we can be all aware that even though times in Western Australia with the mining sector going poorly, it’s not to say we can’t have a situation with the business still growing or at least maintaining a flow of customers through the door that allow us to tread water for some time.

I think it’s very tight out there. It’s not easy. As I said, some days we’re going gangbusters but other days we’re thinking, ‘What did we do? Did we scare them all off?’

So it’s not a regular flow of money through the till like it used to be, but you can still have good days.

In recent times I’ve seen that the top end of the market is pretty dead. A lot of stores don’t carry a Dura-Ace bike on the floor any more. We don’t carry anything more than a Di2 Ultegra.

The one thing that really alarms me is the amount of people buying online and bringing stuff into a store like ours to get it fitted. Or fitting it themselves incorrectly, or fitting it themselves and not even bothering to come to a bike shop.

It’s amazing when I hear people like Shimano Australia say that their business is still growing and other suppliers telling me that their business is still growing because they must be missing out on an awful big chunk of money.

We are in this unfortunate position where it’s a very tight economy and people are buying online for the savings and convenience. I think it’s better now that the Australian dollar is not on parity from the USA. We look a lot more competitive.

I had a customer last week where we didn’t have the part they wanted, and not many stores in Perth would have. I said, ‘I can order it for you. It will take two or three days to get here once we know the supplier has it. Would you like to order it?’ And this customer’s response was, ‘No, I’m just going to go online and buy it.’

I said, ‘It’s going to take you two or three days to get it anyway, even if you do buy it online. Why not buy from a local store?’ He said, ‘No, it’s easier for me to order online and when I get it I’ll fit it myself.’

That alarms me. People are very short sighted. If it’s a similar price and if we can get it in a similar time frame, by Jove, support the bike shops for crying out loud or they’re not going to be there forever to support you.

I really have pondered lately whether or not our bike shop is going to survive for the next five to 10 years in the current way that things are.

As a retailer I’m always questioning my suppliers about what are they doing to protect their own network of dealers but also what are they doing to protect themselves as an agency.

Take for example Shimano. Shimano in Japan and their manufacturing facilities, wherever they’re located… a unit’s a unit. They don’t really give a damn. But they’re losing a core part of their business when you think about it.

And this is something that Shimano global have to wake up and see. Because if you’ve just got the lowest common denominator being price and you release the latest product or better innovative product and you don’t get the message out to your buying public because your stores are no longer stocking your products because they’re going to get shopped online.

Your sales arm and your information arm is lost because all of a sudden no-one (shop staff) is talking about it.

Over a long period of time you’ve got opposition like in Shimano’s case, SRAM, Campag or anyone else for that matter. Particularly in the P&A world where you’ve got lots of manufacturers of brake pads, cables and shoes and handlebars and all that other stuff that Shimano bring in under the Pro banner… they’re going to lose out because people like us who used to be premium dealers are no longer carrying the product.

I’m going to try to find other products to sell that are not going to be so readily shopped online. Ultimately the industry does suffer because innovative product gets burned out by the lowest common denominator.

(Regarding bike discounting…) It’s a mixed bag. On old stuff like 2015 models, some of my suppliers are dropping their prices by 20% or 30%.

But I don’t see major cuts. We’ve seen some stuff from major manufacturers where they do a factory backed sale. It might be 3% or 5% more this year but it’s not massive where you can see huge chunks of price coming off the top, because they’ve still got to make their overheads.

What I have seen, is big discounts in P&A. P&A is the stuff more likely to be bought online whereas a bike is more likely still to be sold through a bike shop. Although we’ve seen Canyon come into Australia and I can see Trek, Specialized and Giant moving down that road in the next five years.