As you’ll see, there’s a wide range of responses this month from grim to optimistic.
We always ask a follow up question. This month’s question was, ‘Apart from total sales do you have any key measures that you keep an eye on to gauge how your shop is going?’
It was interesting to see that all six shops we called had different measures that they used.
Robert Thompson of Bicycles Plus in the outer south western Sydney suburb of Campbelltown, NSW said:
Business is up the s*@! but thanks for asking!
As you know I’ve been in the industry for many years having previously owned a store for 12 years until 2000 then I came back in about 2007 with this store.
I’ve been here for 10 years and we are setting records by the month by calendar year to date, but those records are all at the wrong end. We’re having our worst months ever. We’re something like 30 odd percent down for each month compared to last year, which wasn’t a great year itself.
At the moment we’re on our second worst year to date, a very close second mind you, for year to date over the whole 10 year period.
I’ve seen this coming for many years and fortunately I’m reasonably prepared for it. I’ve taken various measures to batten down the hatches for when this time eventually came.
I was telling people last year that we were about to see the worst Christmas that the bicycle industry had ever seen… until next year.
The world’s economy and Australia’s, is going to hell in a hand basket. I don’t think this is a cyclical trend, it’s a spiral, not a cycle and the spiral is heading downwards.
I do speak with some other store owners from time to time and I pretty much know for a fact that those who might hold contrarian views to myself, it inevitably unfolds that they were lying.
These other store holders were putting up a brave front. I don’t know if that was because they’re delusional or because they simply can’t accept that things are as bad as they are.
So it’s all doom and gloom from me, I’m sorry. I see no light at the end of the tunnel. It’s a perfect storm, is the best way to put it. Many factors involved. Obviously the internet is a big one, the general state of the economy.
As I see it, nothing is working in favour of the bicycle industry.
It’s not as though the weather has been bad, because we had an Indian Summer this year. My location and demographic here I see as a bellwether because we have a wide mixture of local customers from rich to poor.
I do believe it will only be the toughest who manage to survive. I see the end stage being very few retail stores and mainly dispossessed former shop owners and mechanics running around in service vehicles, probably delivering bikes for cycle companies that are selling direct.
Delivering, assembling and doing at home repairs.
However that said, I will be one of the last men standing! Because I have seen this coming for years and I am preparing for it.
I’m taking advantage of any and every special from suppliers that I can get my hands on. So whilst my turnover is dropping significantly, I’m improving my GP (gross profit) and margins in all areas across the board.
The next step will be further cost cutting. That will be a reduction in staff hours worked.
(Regarding key measures) Gut instinct and intuition! It has worked well for me for many years.
Gary Piddick of Spokes Bicycles in the inner eastern Melbourne suburb of Abbotsford, Victoria said:
Business is quite ok actually. At this time of year of course it’s a bit flatter than it normally is but in particular the growth in our electric bike business helps us a lot and continues to help us. With the new brands available and the broadening of the market, it helps us a lot.
We probably sell almost 1:1 now, ebikes to normal bikes. It used to be less than that, but I think our normal bike trade has dropped off a bit and our ebike trade is continuing to grow.
Our maintenance side of the business, called Urban Fleet, is really strong and continues to grow. We work with Australia Post through Electric Vehicles (a separate company), We work with Domino’s (home pizza delivery) and we also have a number of other smaller fleets.
We have a group of people who do maintenance on site. We’re electrical vehicle specialists and we do more than just repair the bikes. We advise on the commercial side of how to run their fleet most effectively. We monitor the types of failures and breakdowns and give them financial reporting on that side of the business.
At the moment we’ve got five staff including myself just on that side of the business. We also have three employees in the shop doing the retail side.
We established Urban Fleet as a separate entity because it’s a different style of business. We’re servicing in the order of 1,500 bikes. A lot of them are working very hard.
The food delivery possibilities are growing at a rate that’s quite astronomical. The number of players that have entered recently and the demand for food delivery is quite remarkable. That’s the big growth that I would say is about to hit us.
There’s a lack of quality equipment being used. As that settles down it will be a far better commercial market there than it is at the moment. What we need to get through (to customers) there is the actual costs, rather than the perceived costs.
A lot of the operators think that low cost equipment is going to be the best solution but we’ve shown through our data is that it’s actually not. The main thing with the fleet is to have the vehicle on the road and available to you at all times without breakdowns. So your equipment level is important and your hourly rate improves with better equipment.
(Regarding key measures) For our retail store, our key measure is our workshop throughput. Bike sales give you cashflow, but a workshop gives you a sustainable business, and we’ve always taken that approach.
So our key performance area is always our workshop.
Second to that is our bicycle sales. With bicycle sales, we really encourage long term relationships with our customers and our electric bike side of the business allows a lot more latitude to do that.
We’re consciously growing that side of the business. We’ve got Bosch accreditation, Kalkhoff accreditation, Magura brake accreditation and we’re really chasing that part of the business.
Darryn Derrico of Derrico Cycles in the northern Tasmanian city of Devonport said:
Obviously it’s the quieter time of the year, but we’ve been pretty steady still. There’s always something to do. We’ve had a really good summer. It’s quietened off a little bit but we’re still busy in the workshop and still selling a few bikes, so it’s pretty good I reckon.
Coming into winter is always quieter for us because the weather is a lot colder here.
Giant is still our main bike. We do a few Fuji bikes but we pretty much concentrate on the Giant stuff.
Electric bikes are taking off a bit more, we’re selling more electric bikes.
We’ve predominantly been doing The Electric Bike Company ones (TEBCO) but Giant are bringing in their own electric bike this year apparently, so that will be interesting.
More people in general are definitely riding bikes around this area. We’ve got a pretty strong road scene around here at the moment. There’s a lot of guys who are new to the road scene riding bikes who have never been on road bikes before, so we’ve had a pretty good season with those.
We have a shop ride that leaves from here at 6:00 am every morning. I haven’t been on the ride very often lately mate! (laughs)
I was during the summer but I’ve been hiding a bit the last couple of months. I haven’t raced for 20 odd years.
(Regarding key measures) We use MYOB as a computer system and I spasmodically look at different sections.
I honestly don’t worry about it too much. I mean, what it is is what it is. You can’t pluck sales out of the sky, but every now and then I’ll have a look and see what’s going on.
Greg Ford of Fast Forward Bikes in the north western Adelaide suburb of Kilkenny SA said:
Business hasn’t been too bad. We’ve just moved shop from 423 Torrens Road down to 407 Torrens Road. We’re about to bring on board GT Bikes and Gios and start doing our own reconditioned bikes as well.
But things have been pretty good, although it’s leading into winter. I really can’t complain.
I’ve been going for about seven years now. I went to the bank and asked for a $5,000 loan and just built it up from there.
We’re getting there. Times have been a bit tough. I hurt my back. I had a part time job. And that made it a little bit harder, but there is a light at the end of the tunnel. I’m looking forward to the next 10 years.
It’s just something I wanted to do. I’ve raced bikes myself. I was working in a bike shop and I thought, ‘I can do this for myself, so let’s do it!’
Originally I worked at Riccardo when they were building bikes in Adelaide.
I actually started business from home in Prospect way back in the 80’s. I had a business partner who came in and little did I know, he was the one who robbed me. That made times a little bit tough but I bought him out. I thought, ‘Have another go. Do it yourself. No partners this time. Then you know where you’re going.’
(Regarding key measures) I like to check on how many services I’ve got to do. If I’ve got 20 or so services in during the week and can sell three or four bikes it’s all good.
Bike sales will be a lot more going forward because I’ll be holding a lot more bikes on the floor now. We were selling Jamis and Cube but unfortunately Monza dropped Cube and went to Cannondale and Bicycle Express (in the city of Adelaide) have got Cannondale so they wouldn’t supply those to me. So it left me in the lurch for a good road bike.
Now Gios have come on board and I’ve been selling Jamis for a while. I had KTM as well and XDS.
Michael Laberton, of The Bicycle Centre, Maroochydore on Queensland’s Sunshine Coast said:
Business is fairly quiet at the moment. We’ve moved shops. We’ve been in our new location now for about 10 months. We’re still in the main part of Maroochydore. But other retailers I talk to outside of the bike industry are saying the same thing, that business is fairly quiet.
We moved out of a home maker shopping centre about two k’s away. It was a forced relocation because Supercheap Auto wanted to expand into our store. So they gave us the option to move into a bigger shop, paying horrendous rent, which as you can imagine, I didn’t want!
So we had the opportunity to move to a shop the same size in a main street location with much reduced rent.
We’re a Bicycle Centre, so therefore we’re affiliated with Advance Traders and our main brands are Norco, Merida and Lapierre.
For us it’s mountain bikes and hybrid / commuter bikes. We’re not really road orientated.
(Regarding key measures) It’s a bit harder for us this year. Because of the point of sales system I use, I usually refer to the corresponding month from last year to see how we’re tracking, but because this is a new location it feels like we’re starting from scratch again.
So you can throw all the old data out the window, because we were in the other location for such a long time.
We are getting a lot of our customers coming across from the other location, but I don’t know if people are inherently stupid or just don’t like change. They go, ‘Oh, we thought you’d closed down!’ Even though you advertise as much as you can to tell people that you’re moving, it’s very hard to tell everyone that you have in fact moved. We did the social media stuff, but unless you’re someone like Bunnings who can open a shop of that huge size and can spend the money on advertising… we’re still getting dribs and drabs of our old customers coming across.
But we’ve gained some new customers. The signage and the road frontage is pretty good. We’ve got a lit sign out the front and a 10 metre sign on the building. It’s a brand new building too. A row of four shops.
Paul Baldock of Revolutions Geraldton in the Western Australian regional town north of Perth, WA said:
Business for the year has been very quiet in terms of retail, but servicing has picked up. Where people don’t want to buy a new bike, they’ll fix up the old one.
The whole town has seen a bit of a downturn and is quite flat and I think that we’re feeling a bit of that pressure as well.
But it seems in the past month or so that things are feeling different and on the turn or at least flattened out.
I know the guys in Perth say it’s pretty quiet down there in terms of bike sales.
Giant is my main brand and there’s a few bits and pieces of everything else.
(Regarding key measures) I try to keep an eye on what each customer spends in terms of an average. I monitor that against the same time last year as a goal, because I’m still fairly new and all my data’s fresh and I haven’t got a lot of history to go back over.
I look at total number of sales against the same time last year as well as average dollar spent.
I also keep an eye on labour costs in regards to servicing. Just to make sure that, if you pay a guy eight hours a day to do servicing, I want to make sure that at least 70% of that time is charged out.
I understand it’s a bit harder now that there’s only a couple of us here at the moment. That’s probably going to pushed down to the 60’s when you’ve got to go and help a customer. It’s a bit more difficult to monitor the time spent away from servicing.
We need to make sure that servicing is profitable and that we’re charging out the correct amount of time.