CI.N Issue 003 / 2022

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ISSUE 03 / 2022

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03 Editor_CIN03_2022_ms.qxp 03/05/2022 17:35 Page 1

FROM THE

E D I TO R

A NEW WORLD

Cycling Industry Chat @CyclingIndustry @MarkSuttonBike

AT the time of writing the sun is beating down and the first signs of Spring have arrived, but the accompanying cheer is somewhat lost in the headlines triggered by an unnecessary and brutal war. No good comes of such disregard for peace and at the forefront of our minds will be the predicament those fleeing find themselves in, now and for future resettlement. The bike industry, while powerless in many ways, has rallied to the assistance of war refugees in Europe and it was particularly heartening to see responses ranging from charity efforts through to priority job location for those with skills crossing borders.

It feels horrendous to consider the business implications when the humanitarian efforts are far from concluded, but the effects could stretch out the rough ride global economies have endured over the past two years at a time when many were daring to speak of a ‘return to normal’. As industry sales agent and economist John Styles pointed out in our last edition, there may no longer be a normal that we will recognise.

I shall continue briefly with the bad news as I’d like to conclude with some positives.

Commodity prices for oil through to aluminium, cardboard boxes and battery metals have moved sharply north. What little hope the trade had of a slowing of price increases has now faded. For those customers that roll out the line “I could buy a car for that”, well not in this market they couldn’t, but then again who would want to right now?

That leads nicely into an opportunity for the bike industry. The fact of the matter is our transport system is largely malfunctioning, but it is nonetheless essential to move people. Train price increases remain above inflation, fuel for motoring is unlikely to return to sensible levels for some time and our bus network is now used less than half as much as it was in the 1960s. Now is the time to open a reasoned dialogue with those who have taken a dim view on cycling for transport; they will be feeling bruised every time they don’t cycle. Crucially, with the electric bike, you can bypass the walls put up simply by asking “have you tried these yet?”.

While the road to ween ourselves away from oil dependence is a long one, severed ties with one of the world’s largest providers has created, in the EU at least, a springboard for renewed focus on green mobility. Indeed, upon the markets taking a dive with news of sanctions, clean energy held its ground, which is a good sign for sentiment surrounding all things deemed clean.

Investors were already throwing their weight behind the ‘mega trend’ of green mobility prior to Russia’s aggression. With cycling touted as one way to stick it to Putin’s oil demand, will we again find that bikes do brilliantly from a downturn?

Mark Sutton mark@cyclingindustry.news

www.cyclingindustry.news ISSUE 03 / 2022

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Raleigh’s most exclusive pump and lighting range Light the way you ride on

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05 07-08 Ask The Trade CIN03 2022_ms.qxp 03/05/2022 17:42 Page 1

ASK THE

PROFESSIONALS

SERVICE FOR THE SHED BIKE Has the pandemic and its pricey ripple effects prompted the consumer to think more about repair, or even leasing, rather than buying new? We catch some IBDs to gather their views on the trend…

THE PANELLISTS Ross Kempson

Cyclex

Gavin Hudson

Butternut Bikes

Len Simmons

Highway Cycles

“IT’S DIFFICULT TO KNOW WHAT’S GOING ON IN PEOPLE’S SHEDS...”

Ross Kempson Cyclex

TO WHAT DEGREE DO YOU THINK THAT PANDEMIC BOUGHT BIKES ARE STILL IN USE AND COULD A SECOND-HAND MARKET NOW HAVE BETTER VIABILITY WHILE CONSUMER BUDGETS TIGHTEN? Gavin Hudson > Butternut Bikes We’d love to refurbish and sell on secondhand bikes, but it’s not worth the time in most cases. Imagine we buy or are given a bike, we spend an effective £100 worth of time and parts (say an hour of labour, minimum), in order to do it up to sell. We then sell it for £150 and then there’s time in selling the bike, handing over, warranty etc. It just doesn’t work; we wouldn’t want to sell bikes that aren’t of a quality of a bike that we’ve serviced in the shop, so we can’t just flip them.

Some mechanics do this on the side and we’ve got a pile of second-hand bikes for any interested people who want to get into repairing bikes to practice on and make some money. Having said all that, the price increase of new bikes seems to have increased demand to repair, rather

than replace bikes. Spending £300 to repair a bike that cost £400 when new makes more sense when an equivalent new bike is now £600 and will likely have a mish-mash of parts built down to a cost.

Ross Kempson > Cyclex It’s difficult to know what’s going on in people’s sheds but we have had more enquiries recently from people who bought bikes from different retailers during the pandemic and are now wanting to sell them.

The reasons for this are anything from not using them as much as they did during lockdown to people who bought cheap bikes, shifted their habits to cycle more regularly and now want to change to a more appropriate size or style. I understand that Decathlon are now selling second hand bikes as part of a proactive trade-in campaign. We also consider trade-ins on a case-by-case basis as there has never been a very sophisticated used bike market akin to cars and motorbikes. Perhaps this will change now higher value eBikes constitute a bigger share of the bicycle marketplace.

Len Simmons > Highway Cycles It is not easy to tell. There is always a market for second bikes, but this has been balanced by the shortage of specific models of new bikes. Still, we are seeing more awareness around cycling and the benefits it can bring for you and your family in ways that were never really thought about before covid.

BECOMING A PANELLIST

HAS THE UK MINDSET SHIFTED AT ALL ON THE VALUE AND COST OF A BICYCLE OR E-BIKE, OR DO PEOPLE STILL SEE BIKES AS ‘TOO EXPENSIVE’?

If you are an independent retailer and would like to take part in future issues, e-mail: mark@cyclingindustry.news

Gavin Hudson > Butternut Bikes It’s certainly hit at the cheap end as a percentage of costs where you’re mainly

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ASK THE

PROFESSIONALS

SERVICE FOR THE SHED BIKE shipping ‘air’, like wheels and kid’s bikes. 14inch Ridgeback bikes are £349 now and customers really aren’t happy to pay that.

People are prepared to pay more for an eBike, but the waters are muddied by the cheap hub drive models. It’s painful when a customer comes in with a broken £1,000 eBike. It’s not cheap to them, but it’s not repairable either; that’s a really difficult conversation to have. We haven’t really reviewed our prices on workshop consumables nor labour, that will be a big test when we do. There’s also pressure to increase wages and I need to recruit a new mechanic (if anyone is looking!).

“I FEEL THAT IN HARROGATE, CYCLING IS LESS SEASONAL AND THERE ARE ONLY A VERY FEW THAT STOP CYCLING THROUGH THE WINTER NOW.” Jacob Young Prologue Performance Cycling

BECOMING A PANELLIST If you are an independent retailer and would like to take part in future issues, e-mail: mark@cyclingindustry.news

Ross Kempson > Cyclex Most of the price sensitivity we encounter is internal from staff being surprised at the scale of the increases. We don’t cater for the budget market in stockholding and our main retail store has shifted the average price point upwards, so the target customer is expecting to pay more for what is an important purchase for their needs.

Most people’s expectations about price increases seem to have aligned from every other retail experience they have, especially in the supermarkets which have been widely publicised. Personally, I have a suspicion that a lot of the traditional enquiries revolving around price and specification seem to exist in the buying public that are less willing to buy bikes online, so possibly the older demographic. I feel a lot of the savvy customers are well rehearsed in online research and then tracking down their chosen bike from an online retailer. I think this is less so with electric bikes and some brand loyal customers who appreciate the personal service of an IBD.

cycling, still support a strong argument for considering a bike over other forms of transport.

HAVE YOU NOTED ANY PREFERENCE TO REPAIR OVER BUYING NEW IN ANY PARTICULAR DEMOGRAPHICS? Gavin Hudson > Butternut Bikes The more well-off customer generally has an eye to sustainability (as they can afford it) and is more likely to want decent quality repairs to their nice bike. Even when ‘uneconomic’ to do so, they want to keep using their bike for environmental or sentimental reasons.

Less well-off customers want to repair for different reasons, which sometimes isn’t possible to do within budget. Some cheap bikes have a lifespan of only a few months, according to some info I’ve seen.

Durability isn’t cheap, and we’re only seeing this get worse with bikes coming out of manufacturers with off-brand substitute components.

At Butternut Bikes we subscribe to the Sam Vimes theory of economics (Terry Pratchett) that poverty causes greater expense to the poor than to those who are richer. A rich person can afford a £100 pair of comfortable waterproof boots

Len Simmons > Highway Cycles I think bikes are finding their place in the transport arena. Prices are pretty relative, with many other costs rising. This, coupled with sustainability awareness and the mental and physical benefits of

MARKET DATA 2022 AVAILABLE NOW > GET YOUR LICENCE FOR THE LATEST REPORT TO PURCHASE A LICENCE FOR THE 2022 MARKET DATA, PLEASE CONTACT MARK@CYCLINGINDUSTRY.NEWS

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ASK THE

PROFESSIONALS

SERVICE FOR THE SHED BIKE that last years and can be repaired. A poor person can only afford £50 boots which last a year, so overall they’ll spend more on boots and still have uncomfortable, wet feet. The same applies to bikes.

Ross Kempson > Cyclex In our store locality we have less bike to work scheme and finance purchases than some areas and both my managers agreed that most customers are choosing these schemes for budgeting purposes rather than cashflow shortage. Bike to work scheme customers seem to be more genuine in their need for finance to afford the bike they want but many customers using finance schemes (mostly interestfree these days) are just choosing this method because they can or just want to boost their credit rating. We had a customer with a £200k income who did it for this reason!

Gavin Hudson > Butternut Bikes The bike leasing model seems to be a major threat to business for bike shops, to be honest. We’ve already seen the impact of the kids’ club bikes and been hit from both the supply and demand side by this. Parents don’t want to buy kids’ bikes from us because the ability to lease and swap ostensibly offers better value than buying a bike.

Suppliers (understandably) focus on one huge account buying thousands of bikes rather than getting out-of-stock bikes to the IBD. One of our contract mechanics ran a workshop here and the number of bikes he was getting through in the warehouse was obscene. Here in London, you can hire a decent bike for £20 a month. That’s about the same cost as you should probably be spending on running costs and insurance over the year, so why wouldn’t you?

Len Simmons > Highway Cycles Finance availability and CTW schemes are good tools for cushioning the upfront cost for the customer. This year we have seen a significant increase in the use of CTW schemes.

Ross Kempson > Cyclex This is something we considered some years ago, especially in relation to eBikes, but we haven’t felt the need to pursue it and I wasn’t aware this was an emerging trend. Again, it could be due to the store locality and an above average wealth demographic.

THE BIKE LEASING MODEL APPEARS TO BE SLOWLY EMERGING – CAN THIS BECOME A NEW STRUCTURE TO TEMPT PEOPLE ONTO HIGHER TICKET BIKES?

Steve Grimwood > Elmy Cycles I think this is something that has legs, and we have been looking at this as a possibility once we can work out the logistics involved.

“I THINK THE VERY CHEAP MAIL ORDER E-BIKES ARE HELPING TO SEPARATE OUT GOOD QUALITY PRODUCTS IN SHOPS AND DEMONSTRATE ADDED VALUE...”

Steve Grimwood Elmy Cycles

BECOMING A PANELLIST If you are an independent retailer and would like to take part in future issues, e-mail: mark@cyclingindustry.news

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MARKET DATA 2022

PLANNING THROUGH THE

PANDEMIC

2021 HAS BEEN ANOTHER UNUSUAL YEAR OF TRADING. UPON REFLECTION, WHAT CHANGED AND WHAT TRENDS REMAIN?

51% OF BUSINESSES TOLD US THAT THEY HAD ADJUSTED THEIR MAIN SUPPLIERS IN THE FACE OF SOURCING DILEMMAS AND THAT’S A TREND THAT COULD REMAIN FOR THE FORESEEABLE FUTURE

cyclingindustry.news 13

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ANALYSIS

The second shot at gathering some of the pandemic’s impacts on bike retail broadened the scope on our assessment of 2020/21 trading by expanding the line of questioning significantly. Having lived with Covid-19 for heading over 18 months the goalposts had moved significantly on everything from supply of product, right through to just how familiar we had become with virtual events.

The Zoom era is now deep seated and popular enough to be hanging around into 2022. This year’s IceBike* remained digital in the face of the Omicrom challenge, while hybrid events remain planned for the Taipei Cycle Show and many more. The big question for anyone brave enough to put out a plethora of digital content is always, will anyone show up? For the most part, evidence suggests these digital events have been more popular than some might have expected.

Now organisers are planning with confidence, what about physical events? Starting with the bad news for event planners, 23% of retailer and workshop businesses now say they are happy to stay away from events having managed without during the pandemic. The good news is, a higher percentage (32%) declare they will return and there’s plenty of reason to catch up in person given the insight many of us will have missed by relying solely on B2B systems and emails for such a lengthy period.

So, what will be on the minds of accounts this trade show season ?

Primarily it will remain stock consistency. While some lines will be in better supply now than when we gathered our responses in Q4, 2021, 52% of stores see supply into the workshop as a primary concern. The ripple effects of this are profound against the context of prior years. 51% of businesses told us that they had adjusted their main suppliers in the face of sourcing dilemmas and that’s a trend that could remain for the foreseeable future with economic uncertainty still very much in frame. For those that have gained business, or been given the opportunity to retain new customers it’s no bad thing at all.

14 cyclingindustry.news

Last time around retailers were gleeful at the ‘bike boom’ and its effect on improving cash reserves. Some paid of debts, others expanded their network, some hired new staff and others exercised caution; 41% to this day remain with a good cash flow to carry into a year when stores fat may prove useful. After all, 44% expected, even before inflation took off toward 7% and war started, that consumers would be more cautious with their cash and that demand may very well slow; even with the bike’s compelling economics in hard times. 22% said they had worn through cash reserves by the end of 2021, though hopefully that expenditure will have been invested wisely to shore up resilience to future shocks.

Now for the topical point of the moment, direct-to-consumer trading. As CI.N has reported, there are mixed feelings on the subject, some suggesting it will be the end of the IBD and others intending to get involved in the service end of the deal. At 37% of responses, concern is limited at the present time suggesting that reaction online in the wake of Specialized’s announcement may have tilted toward the fearful end of the spectrum.

Is there an air of inevitability about such announcements, some have asked? It is indeed true that bike brands have had fierce direct to consumer competition for some time now, but not until recently have demands on each slice of margin been quite so heightened. Interestingly, the subject was briefly addresses in the DigiBike* Dear Dom discussion in relation to Saracen’s decision to go direct. Was it margin pressure that forced this? Madison’s CEO said not, alluding to historic perceptions of the brand being hard to shift among dealers, who were strongly encouraged to be the brand’s route to market. With margin pressures one reason for bike shops giving pause for thought on large stock holdings, this is one to watch, in particular as so many invest instead in their service business. 24% hired additional mechanics during 2021, with 76% stating their workshop trade had grown year-to-year.

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MARKET DATA 2022

WHAT MOST CHALLENGES YOUR FORWARD PLANNING?

ANALYSIS

Moving on from the challenges thrown up by the pandemic and on to how bike shops would like help on forward planning during turbulent times, there is a clear consensus that B2B systems have not been as accurate as accounts hoped they would be.

(Arguably this is to be expected during a black swan event, so we have some sympathy).

The have been significant investments made by many suppliers in their B2B systems in recent years and integration with ePos providers has certainly made the information flow into stores more detailed than ever.

While the frustrations must be taken in the context of upstream supply nightmares, accounts are increasingly calling for a rethink on model years and receiving a positive response in some quarters. The idea of sticking to a model year is currently very much reliant on manufacturing and shipping returning to normal patterns. In the absence of guarantees and with orders at the mercy of scrambled logistics, 44% of shops express frustration with the model years’ structure and right now might settle simply for firm delivery dates.

It looks increasingly likely that many stock shortages will now resolve toward the end of the year, with shipping giant Maersk among those daring to use the phrase “back to normal” alongside that timeframe. Whether a stock question or something else, 28% of stores would appreciate much improved response times from their suppliers when fielding questions that will affect their ability to do business.

Having gathered the responses prior to current political turbulence just one in five held concerns that existing conditions would hamper trading. We are now sadly faced with a war that is guaranteed to affect pricing of materials used to make bikes and electric bikes (read more on that later in this issue).

Finally, it’s worth noting that while training schools remain booked up at the present time, availability of skills remains an issue for the trade. In order to help you recruit, stay tuned to cyclingindustry.news/jobs for fresh opportunities as they land.

cyclingindustry.news 15

Hello Future See you at the most inspiring platform for the cycling community Messe Frankfurt 13 – 17 July 2022 Festival Days: July 16 + 17

17 18 20 John Styles CIN03 2022.qxp 03/05/2022 18:00 Page 1

ANALYSIS EV Fleets

SHOULD WE TAKE A CLOSER LOOK AT EVs? Reputation It does the industry no harm to keep its house in order, by using low emission vehicles while selling our low emission vehicles. Perhaps it wouldn’t do any harm to see the Pro-Peloton followed by electric support cars and sponsor caravan too?

Motivation Many in the industry (and indeed our consumers) have deep and genuine concerns about the environment. We are also quite a tech-focused industry, so, surely the latest, greatest and non-polluting technology is right up our street?

EV vs ICE TAX CHECKLIST*

Taxation Nobody likes paying tax and EVs realise big savings through your business paying lower tax. With no Congestion Charge, no ULEZ and no Vehicle Excise Duty for most vehicles. Plus, very low

Vehicle Excise Duty Congestion Charge (London) ULEZ (London) Fuel Duty VAT on Electricity/Fuel BIK Plug in Car Grant Plug in Van Grant Capital Allowances

BIK for both the employer and the employee, currently just 1% and locked in at 2% until 2025. And of course, none of the fuel duty + 20% VAT which makes up around half of what you pay at the pump. Keep in mind that any electricity that goes into your vehicle at home has a lower 5% VAT rate too. There’s even an equivalent to the “Cycle to work scheme” for employees who don’t qualify for a company vehicle. Meaning any member of staff could pay for an EV through salary sacrifice, saving both income tax and NI. Ask the Accountant Don’t be fooled by the screen price of an EV, it’s the ‘all-in’ cost that matters.

Whether you go down the leasing, purchase or used purchase route, your accountant knows your business best.

Here are just some of the cost-saving options you may want to discuss:

EV (under £50k) £0.00 £0.00 £0.00 £0.00 5% (home), 20% (public) 1% in 2022 (2% 2023-25) £3,000 £8,000 - £20,000 100% first year allowance

ICE Vehicle (typical 2.0 TDI) £155 £15 per day £12.50 per day 48%-52% 20% 30% £0.00 £0.00 Standard

*Conditions apply to many of the summary figures above, please check with gov.uk or your accountant for full and up to date information

L

et’s not fool ourselves, switching to EVs isn’t going to save the planet. They’re also not the solution to congestion, or the way out of the obesity crisis. It’s also a little perplexing that they qualify for various government grants and subsidies, while E-bikes do not. However, like the bicycle, their saving grace comes in the form of reduced emissions in usage and high re-cyclability. A quick Google search reveals EVs are 50% to 60% less harmful over their lifetime than fossil fuel equivalents. So, why might the bicycle industry want to take a closer look at EVs? Apart from cost reduction, I’m going to suggest three reasons: Reputation, motivation, and taxation.

“MY COST SAVINGS HAVE WORKED OUT AROUND £300 PER MONTH.”

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17 18 20 John Styles CIN03 2022.qxp 03/05/2022 18:01 Page 2

ANALYSIS EV Fleets

COST SAVINGS I’ve been running EVs as company vehicles since 2016. Firstly, with a (new) BMW i3 leased via my Ltd company, then later by purchasing an older (used) Tesla. I’m a high mileage driver who also has to contend with central London charges. My cost savings have worked out around £300 per month with both vehicles. That’s the ‘all-in cost’ of an EV vs the ‘all-in cost’ of running the diesel estate car I had beforehand. Of course, I’m not the only one in the industry making the switch:

Stephen Loftus – Chief Commercial Officer, Brompton A great example of a company which has considered both reputation, environment and their staff is Brompton.

Stephen Loftus tells CIN “We have six chargers and 15 EVs using the site and about another six vehicles on order through our salary sacrifice / leasing scheme. We have the infrastructure for another four chargers to be installed over next few months and we save about one ton of CO2 per month with the charging. It’s all part of our broader push on sustainability through all elements of our business.”

without feeling too fatigued, London to Dublin and back again was no trouble.”

Matt Wrigley, Sales Agent

Damian Hackett – Country Manager Orbea UK and Ireland.

As a higher mileage driver, who is also based in London, he’s realised several benefits from switching to an EV. He tells CIN “I must admit I’m quite blown away by the tech in these cars. My favourite thing is how you can wake up to a better car, with over the air updates they’re always coming up with something new. They certainly help you drive longer distances and arrive

18 cyclingindustry.news

Matt has been running a Tesla Model 3 on a PCP deal for the last two years, coming from a Škoda Estate car before that. His main reason to switch (being a self-employed agent) was to reduce cost.

“Last month I drove over 3,000 miles and it’s cost me approximately £150 in electricity from charging at home on a cheap EV tariff, with a little help from my solar panels. Even if I had a good diesel estate car, that would be a fuel cost in excess of £680 these days. That’s an incredible saving, on a car which is costing me very little in depreciation,

almost zero in servicing, all whilst improving the local air for my daughter’s future. I see lots of reps around driving in transporters, and not only is it costing an absolute fortune in fuel, but our industry also really isn’t being very green if we all used big diesels.”

He recently switched to a Tesla Model Y to get a bit more cargo space and found his Model 3 had lost very little value when it came to trading in, meaning his deprecation and overall running cost was even lower than he expected.

Tony Evernden – Owner Evernden Cycles Tony runs a Nissan e-NV200 electric van as most of his deliveries are within a 25-mile radius of his store. His 2017 vehicle had a claimed range of 106 miles, and nowadays does about 90 miles in the summer, reducing to 70 during the winter. He can charge at home and at work and Tony tells us it’s saved him around £200 per month in fuel, as well as being great to drive and very reliable.

In truth I’d really like a van, but right now, passenger cars have a lot more range, with many achieving 250 to 350 miles, while most vans are still in the 150 to 250 mile bracket. Whether you have your eye on a car or a van, turn the page for my top 5 tips for making the switch to EV...

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e·til·i·ty \ ē-ti-lə-tē ebike + utility + agility

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ANALYSIS EV Fleets

5 TIPS FOR MAKING THE SWITCH

1

TRY BEFORE YOU BUY You can find out if an EV will really fit into your daily routine by taking a longer test drive. If your local dealership won’t offer this, you could consider a short-term rental.

National companies like Hertz or SIXT have started adding EVs. There are some EV specialists too, like Portsmouth’s Volt-age or Onto, who deliver-to-your door.

Download ZapMap and ABRP on your smartphone before you collect your vehicle, this will help you plan your charging.

2

CONSIDER HOW YOU CARRY BIKES

tow hitch compatible, and some can only be “factory fitted”, so check the spec carefully.

3

CONSIDER CHARGING Most people have a (slow) charger nearby, perhaps in a supermarket carpark or town centre.

You can also charge at home using a three-pin socket, so if you rent an EV for a short period of time, you won’t need to get a home charger installed just to try things out. If you do take the plunge, a home charger offers faster fill ups and more convenience though.

When (rapid) charging, out and about, I’d suggest you top up “little and often” as the public charging network can often be full and/or unreliable. If you’re trying out a Tesla, it will also tell you where you can use its own superchargers as you travel around. If you’re trying any other auto brand, you’ll need to plan your charging stops and that may include signups for several apps. Again, Zap Map can help you there, have a look at Channel 5s recent programme “Should I buy an Electric Car” for more.

4

A test drive also means checking out those important stowage factors, like how many bags or bikes will fit inside, and whether you can add roof rails or a tow ball mount/rack. A word of warning on that one. Many EVs are optimised to reduce drag to maximise their range. And drag is, of course, exponential with speed. Although roof mounted racks don’t make a great of difference up to about 50mph, at motorway speeds I found that range can drop by around 30%. So, I switched to a tow mounted rack, which seems to affect range by more like 10%. However, not all vehicles are

DON’T BELIEVE THE OFFICIAL RANGE Like their fossil fuel equivalents, EVs have an official mileage which is based on a standardised government test. It’s not realistic and you probably need to take off around 10-20% for most published ranges.

5

LOOK AT YOUR DRIVING (AND LIFESTYLE) HABITS You may find that most of your journeys are local. If you only travel further afield a few times a year it may work out more economical to choose a cheaper vehicle with a lower range.

You can always hire a longer-range vehicle just for those trail park trips or family visits?

When it comes to lifestyle, EVs have

a few party tricks. From Tesla’s video games to entertain the kids or the new Kia’s ability to charge an external device from the battery. On a practical level, many have a “’frunk’, which as well as providing extra stowage can be more secure than a boot. And being electric, most have an App that allows you to defrost and warm up the car remotely on cold mornings.

So, perhaps it won’t be long before we see someone powering an eBike, lighting, coffee machine or cooker at a demo event, sportive or race near you?

YOU’VE GOT THE POWER

If an EV is to achieve its maximum reduction in both cost and harm, it’s only as good as the power that supplies it. Many homes like Matt’s have solar power and/or a battery system, to ensure their vehicle runs on the lowest or zero carbon electricity. Less common is solar charging at commercial locations. Whilst this might not be easy in High Street locations or leased premises, some in the industry own their warehousing or industrial units.

With spiralling energy costs, no doubt many are investigating this cost reducing measure. Installing solar could power both company vehicles and premises, now that would be a win-win.

FURTHER READING...

If you want to find out more about cost savings for your business vehicles, jump onto CIN’s sister publication “EV Fleet World” where you can find cost comparison tools and information about the latest electric vehicles on the market. And if you have a story to share about EVs, or any other cost saving or sustainability topic, please get in touch mark@cyclingindustry.news

Disclosure: The author has shares in Tesla and other EV focused manufacturers.

20 cyclingindustry.news

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22-23 PROFILE - Prevelo CIN03 2022_ms.qxp 03/05/2022 18:08 Page 1

PROFILE

PREVELO

MY FIRST BIKE The children’s bike market, having for some years been dominated by the chains, is bouncing back with the indie store. Now a Windwave brand, Prevelo’s Jacob Rheuben outlines why a quality product is winning round parents in store…

Smaller levers, grips and cranks keep things in proportion

Tell us about how Prevelo came to be?

When I was teaching my oldest son to ride it was really hard to find a quality bike with kid friendly geometry. At the time the premium kids’ bike niche was in its infancy and quality bikes were scarce. So, I had this vision for a brand and I told my wife about it over dinner.

Normally in these kinds of moments my wife’s role is to exercise her authority as my partner in life and stop me. I fully expected this idea to vaporize after that conversation. But when I told my wife the idea she loved it. Now we own a bike company; this is all her fault!

Kids’ bikes are not just small adults’ bikes – what have you done to adjust geometries and components and what research is behind these changes?

I’ve taught so many kids how to ride bikes that I’ve lost track. The biggest thing I notice is that young people learn to ride easier and ride better when they are close to the ground. There’s some physics involved - when the rider is lower, they have a lower center of gravity and become more agile. With a young rider it’s really important to make the rider feel confident. The key to getting a rider low to the ground is a

22 cyclingindustry.news

The firm has scored some high-profile and favourable press reviews

“WE KNOW THAT KIDS ARE ROUGH ON BIKES IN WAYS THAT ADULTS AREN’T, SO WE PROTECT AGAINST DROPPING, FOR EXAMPLE.”

low bottom bracket. We also use short cranks with narrow Q-factors. In addition to being ergonomically correct for small legs, these crank preserve ground clearance and lean angle with the low bottom bracket.

We also nit-pick every detail on the bike to try to optimise everything for children. We use rounded axle bolts instead of nuts on the axles to reduce harsh edges. We use small diameter grips and short reach brake levers, so the cockpit fits small hands. We also know that kids are rough on the bikes in ways that adults aren’t - for example, young kids tend to drop their bike on the ground a lot more that adults (often not gently), so our single speed bikes have forged reach dropouts that shroud the rear axle. We even worked with a pedal manufacturer to design special narrow pedals that fit kids’ feet while maximising ground clearance and lean angle.

The kids’ bike market has been a notoriously difficult place to compete in the past where big retailers brought in their own lines – how has this special focus on quality given the bike shop a product worthy of stocking in number again?

22-23 PROFILE - Prevelo CIN03 2022_ms.qxp 03/05/2022 18:08 Page 2

There may be some differences between the US market and the UK market in this area. In the US market, I would break the kids’ bike market down into three categories. The first is mass market (bikes sold at big box retailers like Walmart). Second is the independent bike shop for mainstream bike shop brands and, finally, premium (this is the niche that we are in).

The premium kids’ bike niche is the smallest of these three segments. In the US this segment is dominated by small niche brands that are focused on kids’ bikes (some of the bigger brands are just starting to dip their toe in this market).

There is little available industry data on this niche, but anecdotally, my observation is that it’s growing rapidly.

I have theories about why this is happening. Many of today’s parents have been lifelong cycling enthusiasts and they want quality bikes for their kids (and they recognise quality when they see it). Also, many parents see

looked by parents. Prevelo bikes are built to adult bike standards. Our frames and components are robust, plus our bikes are easily serviceable by bike shops, so they are easy to fix if things ever go wrong. Parents with multiple children will find that the bike lasts through more than one rider. When it comes time to move on, our bikes often resell at a price that allowed parents to recoup a good portion of the purchase price.

In the height of the COVID supply shortage, I saw used Prevelo’s selling for over retail, but that was an anomaly. When you factor this in, the cost per year of owning a quality kids’ bike is actually pretty low compared with the cost of other activities like football, camp, music lessons, and other extracurricular activities.

and Radius was developing kids’ hydraulic levers, so we were already planning on moving spec around.

Moving to these suppliers has insulated us from the ultra-long lead times that we currently see from some of the larger drivetrain and brake suppliers.

Lead times are still long, but not as long as they would otherwise be.

While we are not out of the woods, lead times appear to be improving.

Does the market suffer any of the same supply hold ups adult bikes do, or is it less affected?

What advice would you have to the bike shop staff member looking to introduce the parent to a quality kids’ bike for the first time?

I think it’s important to know your customer. For the mountain biking parent the benefits of Prevelo bikes are easy to explain. We have trail bikes all the way down to 14” that have slack trail geo and hydraulic disc brakes.

Parents that ride trails themselves often immediately recognise the benefits here without me even having to open my mouth. Parents that haven’t given bikes a lot of thought can understand the benefits of a quality bike. I’ve never met a parent that didn’t want their child to enjoy riding their bike.

Buyers of premium kid’s bikes understand that by purchasing a quality bicycle for their child, they are offering their child the best bike riding experience. Parents that are reminded how bikes were an amazing part of their childhood are more willing to invest to help their kid have an amazing childhood biking experience. Those that understand that a bike can weigh 70% of their child’s body weight understand that it is going to be difficult and less fun to ride if it weight and spec are not carefully considered. Those that are helped to envision how much they will value the time with their child riding bikes are more likely to spend money on a premium bike that will allow their child to enjoy that time more. prevelo.com

Prevelo has bikes ranging 12” to 24”

their children glued to screens. They want their kids to be outdoors and active, and believe that if they get their child a good bike they will be more likely to choosing cycling over screens.

Tell us about the build quality and idea that resale value can be factored into a quality kid’s bike purchase: This is a point that is often over-

The kids’ bike market was hit by supply holdups. Like all bike manufacturers, we are at the mercy of the slowest component supplier. However, we have had some luck. Some of the longest lead time items right now are drivetrains and brakes. By coincidence, prior to Covid, Microshift started working on kids’ bike drivetrains with short cage clutched derailleurs

How deep is the range and is the range unisex, or is there separate lines?

We have a 12” balance bike. We have our Alpha Series hybrid bikes in 14”, 16”, 20” and 24” and our Zulu Series trail bikes in 14”, 16”, 20” and 24”. The entire range is unisex. We do not believe that young girls and boys require functionally different bikes.

cyclingindustry.news 23

24 26 Laura Laker CIN03 2022.qxp 03/05/2022 18:11 Page 1

ANALYSIS Cycling longer distances

GOING THE DISTANCE F

The University of Westminster’s Active Travel Academy has launched a special edition of its journal, looking beyond the traditional focus of short, urban cycling trips to explore longer distance cycling.

Laura Laker caught up with the ATA’s Tom Cohen, and read the five Active Travel Studies reports, to bring you the lowdown…

or those unused to reading academic papers they’re not always an easy read, but cover some really important ground around what longdistance cycling is, how more trips could be made easier by bike and how to achieve that in an inclusive and environmentally sensitive way.

Longer distance cycling for interspecies mobility justice in Canada considers how active travel infrastructure can benefit all life, including humans, by replacing car space with cycling in a way that’s sympathetic to ecosystems and social inequalities. Such infrastructure, its author Nicholas Scott argues, could improve access to active travel among “marginalised and colonised populations, especially Black and Indigenous populations”, if built in the right places.

Using ride-along interviews in Halifax and Vancouver, with planners and cycling advocates and the author’s experiences, Scott discusses the success of two case studies and a need for “knitting together tens of thousands” of routes and places by cycle to achieve “interspecies mobility justice” goals.

Where longer distance cycling routes connect towns and cities with unbroken routes cyclists will increasingly turn to twowheel transport

“You can go out 14 miles away with the knowledge that you’ve got the battery to help you back if you need it!” Narratives of ranging behaviour and wellbeing in diaries of

24 cyclingindustry.news

eBike trial participants, charmingly details an 8-week electric bike trial among over-50s returning to cycling.

Using first-hand diary entries, alongside maps of ‘ranging behaviour’, it demonstrates both the power of electric bike trials, and of eBikes themselves, in boosting people’s confidence to cycle more and further. Participants explored near home and then further afield, growing their confidence and competence on the bikes, with all the resulting health and wellbeing benefits that brings.

In Distance, Time, Speed & Energy: A SocioPolitical Analysis of Technologies of Longer Distance Cycling, Peter Cox examines, among other things, the need for cycle routes to account for the physics of longer distance trips and different cycles’ characteristics, including electric bikes and recumbents. Cox discusses the most efficient machine design “per unit input of energy” (it’s not the road bike) – which matters because on long-distance rides, stop-start acceleration is the greatest energy output. The author discusses how this, among other time and energy sappers, such as poor junction layout, can be minimised with good design, improving the efficiency of longer cycling trips.

In “Cyclists, Dismount – Car Drivers, get out and push? An Autoethnographic Account of Long-Distance Cycling: Joy, Speed, and Unexpected Hurdles in Dutch Traffic”, Ida Sabelis relates her long-distance cycling experiences on paths often designed for ‘slow traffic’ in the Netherlands and Germany. On Sabelis’ velomobile, as well as sensory delights, she experiences pitfalls Brits would recognise, like: “cycle path combination… apparently designed by someone with no cycle experience” and “no real insight into the practical implications”, with criticisms of “fragmented” planning which favours drivers.

Sabelis asks what if we realised “longdistance cycling has the potential to avoid traffic jams, provide an alternative for bad public transport connections, and save city space for parking? Maybe then it is not ‘Cyclists dismount’ but ‘Car drivers look for an alternative’”.

The Netherlands has a programme of 300 fast cycleways, 52 of which are

www. l y on . c o. u k

24 26 Laura Laker CIN03 2022.qxp 03/05/2022 18:12 Page 2

ANALYSIS Cycling longer distances

complete, linking urban and suburban residential areas to places of work and study. In “Cycle Highways as a ‘liquid’ policy concept” Arnoud Lagendijk and Huub Ploegmakers interview 27 planners, engineers and lobbyists about development of these fast cycle routes (snelle fietsroute or SFR), to understand how they become embedded within public policy. Issues examined include naming and framing routes, attempts to standardise design, developing and delivering provincial

routes, ‘planning diplomacy’ – winning hearts and minds – and funding.

The Special Edition’s editors, Professor John Parkin and Dr Anders Fjendbo Jensen conclude: “Covid-19 has affected social connectedness and longer distance cycling may be a valuable method for enhancing connectedness and wellbeing. It may also create a greater level of mobility justice.”

The papers are available from www.activetravelstudies.org

TOM COHEN AT THE ACTIVE TRAVEL ACADEMY PITCHES IN...

WHAT WAS THE NEED FOR THIS SPECIAL ISSUE? People propose Special Issues for a variety of reasons, but I think mainly it’s because they think that the topic is topical and deserves some attention.

WHY IS THE TOPIC OF LONG-DISTANCE CYCLING PARTICULARLY INTERESTING TO EXPLORE? Perhaps [Anders, the editor] was thinking that there was plenty of focus on short distance, urban cycling and the need, therefore to widen our thinking a bit, draw attention to the fact that there’s an increasing amount of longer distance riding going on, and of different kinds.

WHAT COUNTS AS LONG-DISTANCE RIDING? I don’t think we were too categorical. In fact, I think we just take it as meaning that if you think of a journey as being longer distance, then that probably qualifies.

Is this a way of thinking about cycling differently? We usually think of cycling trips as shorter trips.

My take on that is that the electric bike is proving revolutionary in this respect.

And you will know as I do that there has been investment lately in the Netherlands into inter-urban cycle routes, reflecting the fact that people seem to be happy and able to travel further than they used to, when they were just doing it under their own steam. I think that’s probably the significant change.

SO, IT’S NOT JUST LEISURE RIDERS OR CYCLE TOURISTS DOING LONGER DISTANCES, BUT TRANSPORT CYCLISTS GOING FURTHER? The papers do address various different forms of riding; it’s not all leisure, but leisure is very definitely representative. I suppose that’s the interesting thing for me: longer distance cycling probably does mean a slightly different combination of purposes than you would get if you looked at a cross section of fivekilometre trips, right?

I think for a journey of 15k leisure is probably in the lead and utility would be in second place or maybe in third place, after taking exercise.

I wonder how many longer-distance trips are things like taking a train to the nearest station and cycling at either end, even up to something like 20 or 30 miles, plus how many more people would make these kinds of trips if decent routes were available?

If you can find a nice off-road route, it’s a complete game changer, because it turns what would otherwise be a possibly stressful experience and something you can expect to enjoy.

I did one ride which was York to Leeds, and I think I may have planned it poorly, but I did find myself alongside some very busy roads.

26 cyclingindustry.news

“IF YOU CAN FIND A NICE OFF-ROAD ROUTE, IT’S A COMPLETE GAME CHANGER, BECAUSE IT TURNS WHAT WOULD OTHERWISE BE A POSSIBLY STRESSFUL EXPERIENCE INTO SOMETHING YOU CAN EXPECT TO ENJOY.”

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29 30 33 PROFILE - Electric Bike shop CIN03 2022_ms.qxp 03/05/2022 18:27 Page 1

THE ELECTRIC BIKE SHOP

PROFILE

ON CHARGE In the first of two profiles covering differing business models in this issue, the quickly growing Electric Bike Shop chain sits down with CI.N to detail the journey and the ambition. Simon Cox asks the questions…

HOW DOES ONE APPROACH OPENING A MULTI-LOCATION BUSINESS DURING A PANDEMIC? Firstly, the pandemic is mostly irrelevant. For me it was more a case of: are the fundamentals of the market sound, is there a need, is there a solution? Do we have the people who can deliver, and can we do it with driving enthusiasm?

However, there were some issues that the pandemic raised, and we had to overcome these. The minute it was announced that bike shops were to stay open as essential retailers, we contacted all of our suppliers. Whilst many of our competitors cancelled or cut their orders, we increased ours.

One thing we could rely on was our capacity to spend on stock. For us, this wasn’t a gamble. It was a no brainer.

Did the pandemic speed things up?

Not really, as the number of sales that followed had already been planned. Any accelerated rate of sale was a doubleedged sword as the stock just ran out a bit faster than we had anticipated.

The fundamental plan which has benefitted us the most has been our approach to buying. Generally, within the market, an IBD would order the minimum from their supplier, then rely on the B2B for future sales. Our approach has been to forge true partnerships with our suppliers and order what we predict we can sell. For example, if we thought we could sell 3,000 we’d buy 3,000. We’ve kept it simple. The key for us is strong, mutually beneficial relationships with our suppliers. We’re all trying to achieve the same goal.

Because we had planned ahead and stuck to our guns, by the time 2020 had passed and 2021 came around, we had secured enough stock to allow us to open three more stores with a healthy fill level. We also had plenty more to come with our name on it, secured at all points along the supply chain.

When it came to the new store openings, it was tougher than usual to get all the people and products in place during the pandemic. Meetings that were held on-site were done online or on the phone. All of the new store recruitment was done on Zoom or Teams, with only the final face-to-face meet carried out in person, with perfectly managed social distancing practices.

The shopfitting team was kept to a minimum skeleton crew and bubbled into shift teams to keep everyone safe.

Our people really banded together, there was a real buzz on every new store project and a real sense of collective achievement when we finally opened the doors. Unfortunately, there could be no fanfare or grand opening as government advice was still to stay home.

cyclingindustry.news 29

29 30 33 PROFILE - Electric Bike shop CIN03 2022_ms.qxp 03/05/2022 18:28 Page 2

PROFILE

THE ELECTRIC BIKE SHOP

Photo credit: @Tim Cook The Harrogate store team

Even at the best of times when the economy is strong and you’re operating with a degree of certainty; starting up a business is a risky affair with a whole heap of obstacles and surprises along the way. One of the reasons we’ve continued our success since the pandemic hit the whole world so hard in 2020, is our belief in eBikes and eCargo bikes as incredibly important products both for now and for the future. More and more people are starting to agree with our view, and we’re doing our best to meet or exceed those customers’ demands.

THERE’S A NEW WAVE OF ‘CYCLING AS TRANSPORT’ BUSINESSES SERVING A CUSTOMER WHO MAY NOT HAVE RIDDEN JOURNEYS, OR EVEN RIDDEN AT ALL, PRE-PANDEMIC. WHAT OPPORTUNITIES DO YOU SEE WITH THIS AUDIENCE? The main philosophy or process is simple; make our stores as friendly and as welcoming as possible. All too often IBDs can be intimidating places, not by design obviously, but due to the seemingly specialist nature of the product and technical jargon that runs through our industry. Many of our customers are not really cyclists but are people who simply want to go cycling for various reasons. Usually it’s for leisure, commuting, as an alternative means of sustainable transport, and more commonly now for use within their business, which often results

30 cyclingindustry.news

in the purchase of an eCargo bike.

What we have done differently is welcome everyone, not just cyclists.

We recognised an important shift in the form of newly-evolved customer profile groups that appeared during the pandemic, and we made sure our teams in store recognised them so they could provide the best assistance during these changeable times. We had the commuter that still had to go to work but did not want to use public transport. We had those that could not go on their usual overseas holiday, or go to the gym and saw a chance to have fun with an electric MTB instead.

We also had members of the older generation that were not cyclists, but loved cycling. They saw this as a way to have fun or just get back out there riding with fewer aches and pains.

We invested a great deal of time and a keen focus of attention in recruiting the right people to recognise these different customers. We have since led these recruits through our extensive training programme, so they were fully prepared to make a real difference on our shop floors.

GROWTH IN THIS CLIMATE HAS BEEN HARD FOR MANY TO MANAGE; MASSIVE CUSTOMER DEMAND RESULTING IN STOCK SHORTAGES AND LONG LEAD TIMES – HOW HAS THE IMPACTED YOUR BUSINESS PLANS? Our strategy was buying in volume

pre-pandemic to service our growth, this dovetailed with the demand.

As for the long lead times, how you commit to your customer is of huge importance in terms of setting expectations. When setting expectations, delays and shortages were always factored in and fortunately, in most cases, we under-promised and overdelivered. Customers are happy to put down deposits and wait, as long as they are regularly updated. Knowing this, one of our most important KPIs is to speak to all of our customers on the waiting list for an order every fortnight, whether there is an update or not. Communication is key especially when some of the lead times were as long as eight months. We have no problem giving our customers their money back and saving their space in the queue. We both do and are seen to be doing the right thing.

As stock bikes (bikes not on a preorder) arrive at our warehouse from our suppliers, we carefully go through our customer backorder list and run a comparison against the list of what we have just received. Sometimes we are able to identify a similar bike that might have a different motor, battery or be a different colour, but might still actually suit a particular waiting customer’s need. In this instance, we contact that customer and offer them the option of changing to what is available now.

We’ve made sure our phones stayed

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29 30 33 PROFILE - Electric Bike shop CIN03 2022_ms.qxp 03/05/2022 18:29 Page 3

THE ELECTRIC BIKE SHOP

on at all times so our customers could contact us and we added a live chat function to our website so there was always someone there to talk to.

SOME SUPPLIERS HAVE INSISTED ON SUBSTANTIAL FORWARD ORDERS, WHICH, COUPLED WITH RELUCTANCE TO HOLD INVENTORY, HAS PRESENTED A CASH FLOW CHALLENGE FOR SOME BIKE SHOPS – WHAT CHANGES DO YOU SEE IN THE PRE AND POSTPANDEMIC BUSINESS MODEL? Our business model has always been to place substantial orders and have partnerships across all stages of the supply chain, from the manufacturers right the way through to the end-user.

To play our part, we manage the cash flow, the costs, and keep our organisation as lean as possible. This keeps us agile, and able to react.

Within our company, we leave our egos at the door. The customer is truly at the centre of our business process.

If we create what is best for the customer, it is generally the best thing for us and our suppliers too.

We are self-funded and don’t use pots of private equity, unlike many other large bike retailers. As a result, we have the flexibility to make good business decisions, independent of

any outside influence or constraint.

A major part of a successful business is its relationship with its suppliers. Right from the start, we viewed this as a partnership. We helped them out and they would help us out. Our suppliers were also under a great deal of pressure, and we recognised this and worked with them.

Early on in the pandemic, we could see that supply would be a problem for a few more years so we put in some large orders knowing that they would more than likely end up being reduced. They were drastically reduced. Some of our orders were three times larger than a supplier’s UK allocation, but we wanted to show we meant business.

What we are finding now is a lot of IBDs cancelling orders and because of our relationships, we get offered to buy the bikes that are cancelled elsewhere.

We have kept our costs tight, really tight, in some cases. This has really helped us fund the opening program and take up available stock which is currently all important.

WHAT’S THE ULTIMATE AMBITION FOR THE ELECTRIC BIKE SHOP? To be a national company of local stores. To have consistency of

PROFILE approach and service levels, with the personality, warmth and knowledge of your local IBD. Our ambition is to have an Electric Bike Shop or a Bike Surgery within an hour of everyone in the country. We want to give everyone that buys a bike through our stores or online, the security of knowing that there are real people in stores and on the phones that they can call on if there is a problem. If a customer orders a bike online and it gets delivered when it is supposed to, in one piece, then we have fulfilled our part of the contract. That’s good service, but it’s only what was expected. The real test is when something goes wrong, or a customer wants to ask a question or to be put at ease about their purchase; that is where we want to be the best.

As for international expansion, absolutely, but only if the key stakeholders buy into it and we can offer the same service levels and customer experience everywhere we open our doors. It is our intention to make an ecosystem for the business covering other ventures and taking advantage of our growing national network of stores. www.theelectricbikeshop.co.uk

“AS FOR INTERNATIONAL EXPANSION, ABSOLUTELY, BUT ONLY IF WE CAN OFFER THE SAME LEVELS OF CUSTOMER EXPERIENCE.”

The Electric Bike Shop’s Gloucester branch

cyclingindustry.news 33

34 36 38 41 Carmakers CIN03 2022_ms.qxp 03/05/2022 18:32 Page 1

INDUSTRY Rise of the automotive eBike

WHEN WORLDS COLLIDE

Automotive interest in the bike world is nothing new, in fact some links go all the way back to the very foundation of the cycling market, so should the bike industry shrug off a recent wave of automakers’ interest in electric bikes, in particular?

J

ust 13% of bike shops responding to the question “What threats has the industry to fear from a retail point of view” in CyclingIndustry.News’ annual research said they had concerns about headlines detailing automotive business interest in cycling. While these headlines have almost definitely increased in recent years, it can be reasonably said that the broader mobility discussion were always going to throw two worlds

Porsche has bought into eBike motor maker Fazua with an option for majority control

34 cyclingindustry.news

toward the same path. Evolution of technology and smarter use of space in cities are two themes that have set the collision course.

While bike shops are unmoved, the trend is established enough that one of Germany’s leading motor shows saw fit last year to, for the first time ever, deliver a bike industry element. While in 2021 it was felt to be ‘tacked on’ to IAA Mobility, exhibitor feedback will in 2023 see greater integration. The

show’s organisers are serious about bringing together modern mobility forms in an ever-tighter bond.

Exhibitors on both sides discreetly suggested that perhaps the exhibition may come to be a platform for deals to be done between the isles that brought together bike industry know-how with motor industry resource.

Back in 2016, electric bike industry consultant Ed Benjamin forewarned the industry, having accompanied car industry execs on a tour of bicycle factories, that if the auto trade wished to get serious, they could turn the tap on in an instant. Shortly afterwards electric bikes really took off in Europe and beyond.

So, what’s changed? CI.N returned to Benjamin for insight.

“Car makers have always, in my experience, had an interest in bicycles. But they have not been well equipped to compete in the very cost conscious, very quick moving, bicycle industry. Electric bicycles have changed that. Car companies have

34 36 38 41 Carmakers CIN03 2022_ms.qxp 03/05/2022 18:34 Page 2

INDUSTRY Rise of the automotive eBike

WHEN WORLDS COLLIDE Bike industry folk may previously have shrugged at car badges on bikes.

Nowadays design is sleek and clearly packing smart features

capital, a willingness to invest in engineering and technology, and expectations that they will deliver a level of quality that is not easy for the bike biz to match. The first manifestation of this was the success of Bosch, a tier one auto parts supplier,” he said.

Bosch’s involvement did indeed transform the bike business and at a time when the reinvention of the bicycle and subsequent consumer interest was direly needed following a post road cycling boom lull. That did not necessarily immediately translate into automotive firms taking a greater interest, albeit it’s difficult to say what’s going on behind the scenes, but subsequent policy shifts challenging car dominance in cities certainly have put the pressure on mobility giants.

Then there’s the small matter of the climate crisis, to which transport emissions lend 27% of the UK’s total emissions (2019 data) Could the motor industry therefore view cycles as an insurance policy to electric vehicle barriers; namely continued congestion and infrastructure required for mass adoption?

“They are different tools entirely. An electric car has the same parking problems, traffic congestion problems and cost problems as an ICE car. Two wheelers are shorter range, more versatile, much less expensive, and much more suited to big city travel.

36 cyclingindustry.news

“The thing is, car companies know how to make good products. But they have a culture, in my experience, that regards bicycles and electric bikes as unimportant. The big bosses and strategy teams may understand that micromobility is the future, but the majority of the car company culture is focused on big expensive shiny cars. Thus, they have disappointed, consistently, on bikes and so far electric bikes.”

Does a down-the-nose mentality discount auto firms from having success? With the available financing dwarfing bike industry cash flows, it’s tempting to argue that even a halfhearted approach could be impactful.

Asked about a rising trend of car firms buying into the bike business, or hiring cycling people, Ed is surprised there has not been more momentum already.

“I am surprised it has not happened.

But we could look at PON, a major auto world player, and see that this is exactly what they have been doing,” he says.

Notably Porsche Ventures now has a stake in respected electric bike drive maker Fazua and with an option to become the majority stakeholder. Add to that full ownership of Croatian eBike label Greyp and the subject has gone mainstream. Having been invited to participate in this feature, Porsche declined to go into greater detail than what exists in the public domain.

The list could go on, but found here

SO, WHAT OTHER INVESTMENTS FROM THE FOUR-WHEELER WORLD DO WE KNOW OF? • Harley Davidson has launched its Serial1 electric bike brand (see above) • nPlus Bikes is the Mercedes Benz electric bike brand (according to the site these will be sold and serviced via Mercedes dealers, though the UK’s first instance sits within Selfridges) • BMW has challenged electric bike regulations with the unveiling of its iVision AMBY platform • KwikFit in the Netherlands has launched eBike and EV service centres • US EV maker Rivian has registered electric bike trademarks • D’Ieteren Automotive, the Belgium based car importer, announced an entry into the bicycle retail sector, with the business trading as Lucien

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INDUSTRY Rise of the automotive eBike In the past companies like Ford have prototyped eBikes that stow and charge in the boots of EVs, enabling a multi-modal commute

WHEN WORLDS COLLIDE are just some varied angles from which we are seeing new interest. As for the first on the list, we were able to catch Aaron Frank, Brand Director with Serial1 (Harley Davidson), to learn more about the market approach. He told CI.N that the approach is varied by territory as it currently stands.

“At the current time, Serial 1 eBicycles are exclusively available in the UK at participating Harley-Davidson dealerships (this is also the case across Europe, in fact). In the USA they are available via multiple channels, including participating HarleyDavidson dealerships, independent bicycle dealers, direct-to-consumer eCommerce, and more.”

With Harley’s widely established network, the infrastructure is already long in place to get Serial 1 firing quickly, but of course the indie store has been given a look in within the USA where the brand is arguably best-known and indeed designed and engineered (though Serial1’s product is manufactured in Taiwan).

Cycles of any kind do require specialist knowledge and in particular, servicing knowledge. So, what’s the plan when routine maintenance is due, we ask.

“If your Serial 1 eBicycle requires service, that service should be carried out by a Serial 1 eBicycle dealer or by the dedicated Serial 1

38 cyclingindustry.news

customer service team. A complete dealer-readiness program helps prepare all of our dealers—including our Harley-Davidson motorcycle dealers—to service the Serial 1 product, including online training opportunities supplemented by a detailed dealer playbook,” says Frank.

Can the auto work really service bikes (and does it want to?)

During March, CI.N caught time with a mobile mechanic in the USA that hinted the ducks may not all be in a row just yet with the car businesses’ divergence down new mobility avenues.

Our source told us: “I am a mechanic for Velotooler, a broker for mobile mechanics and this repair popped up and my interest was piqued. It was for a Mercedes-Benz branded e-Bike. These were interested to me because it seemed that at least they put some company engineering effort into the bikes instead of just slapping on a badge. My interest really picked up when I looked up the service address. It was the address for the local Mercedes Benz/Sprinter dealer.”

That, then, suggests the bike industry’s skilled workers may soon face an increase in calls for bikes sold outside our core customer base.

“I called the phone number on the service request, sure enough, it rang through to the dealer. The person I spoke to told me that, while they sold

the Mercedes bikes at their dealership, they did not consider themselves as a dealer. The bike in question was one that they sold and the buyer came back to them when the motor stopped working. I think it could be safely assumed that the buyer considers the MB dealership a dealer for the bikes and, as such, they would be the logical place to get the bike serviced.”

Our contact, who was set to be let in through the side door to handle the repair, at first signed off our chat by pondering what repair cost will then be passed on to the consumer when the bike is handed back. Later they returned to say that the brand was now considering replacing the whole bike, rather than scheduling the repair.

CI.N has since learned that Yamaha is to make stocking of its electric bikes mandatory for its motorbike dealers.

Visitors to the IAA Mobility event in Munich last year will have quickly come to the realisation that the automotive business operates on a different level of professionalism; a very well-funded and extremely welltrained level, to be better express the difference. This is of course no fault of the bike industry, but one could reasonably expect any teething problems in any part of an automotive owned business to be ironed out fast.

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INDUSTRY Rise of the automotive eBike

WHEN WORLDS COLLIDE network. Once more, we reached out to Ducati for insight, but received no reply on the brand’s grander plans for cycles.

OEM partner FSA, however, were able to share a snippet on the brief.

Matteo Palazzo at FSA told CI.N: “The bikes are primarily for an audience that cares about the brand as an icon of design and performance on two wheels, it’s difficult to compare it to other brands of the bike world.”

While limited to being able to speak for Ducati, as an OEM FSA were more candid that this partnership is far from the only interest in its goods from non cycle industry sources.

“We are already working with other brands, both motorcar and motorbike.

FSA has many product categories and is a brand to which many manufacturers look with interest for their projects.

We have already worked with Harley and MV for other components and the goal is to become increasingly competitive even in the eBike motor segment.

We are only at the beginning, there is more and more interest in our sector.”

On the skillsets required to keep such bikes rolling, Palazzo adds: “The technicians of the bikes will remain in the industry, the skills and experiences are different and surely customers will remain tied to the shops and specialised workshops.”

“WE ARE ONLY AT THE BEGINNING, THERE IS MORE AND MORE INTEREST IN OUR SECTOR.”

What’s your take on the bike industry’s role in selling and servicing the electric bikes from the auto industry?

Let us know on our new ‘Forum’ area of the new-look CyclingIndustry.News website coming soon.

cyclingindustry.news 41

42-43 45-46 PROFILE - Extra CIN03 2022_ms.qxp 03/05/2022 20:20 Page 1

INTERVIEW INCREMENTAL GAINS For the past few years Extra UK has been making incremental changes, hiring proven industry experience to manage its operations, carefully handpicking new labels and, just recently, taking on a new majority investor.

CEO Will Fripp gives us behind the scenes insight…

For those who missed it, Extra has a new majority shareholder. Can you tell us about the deal, Storskogen and what the new parent’s backing means for Extra?

It’s an exciting time for all at Extra.

Brian and John started the company in 1995 and have consistently grown the business since then. Looking forward, they want to take a well-deserved gradual step backwards and start to enjoy life a little more. In seeking new investors they wanted to be sure they were passing the baton to the right people in order to ensure the longterm health and prosperity of both the company and its dedicated staff, as well as the Extra’s long-standing distribution partners with whom we have worked so closely over many years.

We have a recently reshaped, enthusiastic and committed management team and Brian and John remain involved as directors and shareholders offering support and guidance so that there is no loss of experience or expertise.

Unlike those involved in many of the deals the industry has seen over recent decades Storskogen are not your typical VC investors. They acquire wellmanaged and profitable businesses with a view to supporting and funding their growth in a decentralised manner, trusting the existing team to do what they know best. I understand that Storskogen now owns over 110 companies internationally, some even within cycling, and to date, have never sold one. Only weeks in the positive influence is already apparent to myself and the team. They are a pleasure to work alongside and they’re there when we need them.

Presumably the investment improves Extra’s hand, but what, if anything, is planned?

42 cyclingindustry.news

Essentially its ‘all change, but no change’ outwardly and inside. The business just has additional support, investment for growth and an even broader pool of experience to build upon.

Customers should experience no change linked to the investment in the medium term – but with ambitious growth plans, Storskogen’s backing and our passionate, experienced and entrepreneurial team at the helm, it’s a case of watch this space for future news.

Extra is of course not alone in suppliers having added fresh financing – has the

“IT’S ‘ALL CHANGE, BUT NO CHANGE’ – CUSTOMERS SHOULD EXPERIENCE NO CHANGE, BUT WE HAVE GROWTH PLANS.”

industry somewhat entered a new era where investment will lead to higher standards, better infrastructure and possibly a narrower field of competition as time goes on?

Change is the only constant right?

Over my career in the industry, the landscape has constantly evolved.

We’ve seen consolidation of supply, outside investment, outside recruitment and increased professionalisation alongside consistent growth in our sport. Cycling and the industry have modernised and grown consistently. Along with its overall resilience, this makes it an interesting investment opportunity; so, I guess that side is inevitable and in general, has had a positive effect.

Environmental concerns are a great trade wind for our sport and for cycling as a means of transport. This remains the case and has even been accelerated by the recent pandemic.

The UK differs from most other international territories too in that it is particularly influential in both commercial trade and consumer media terms globally. We often lead the way in the global marketplace in developing new routes to market and significant or disruptive positive change. Since Brexit we’re an even more complex beast and the value delivered by good UK distributors has never been more important.

Extra has brought on a wealth of experience in the past few years. How have the added skillsets helped develop the company?

We are blessed. We recently celebrated eight of our team’s long service of between ten and 21 years. That’s nearly one-third of our overall team who have been dedicated to Extra for over ten

42-43 45-46 PROFILE - Extra CIN03 2022_ms.qxp 03/05/2022 20:21 Page 2

WILL FRIPP, CEO > EXTRA UK

years - so it’s not all about the new. This foundation keeps us grounded and their experience and service are invaluable.

That said, yes, we are not only growing, but like many businesses experienced some ‘post pandemic’ change within the team. Through this combination and the hard work we put into being a great destination employer we have been very fortunate in welcoming lots of experienced new hands to the Extra family. Since I joined we have welcomed eight new members across the management, brand and sales teams and there have been internal promotions too. We also have two new retail specialists supporting our brands with in-store training, merchandising and more.

A stronger even more experienced team, all passionate cyclists and from within the industry.

Looking more broadly at the industry, what trends do you see becoming more prominent on the business side and how will Extra adapt?

Successful businesses add value, whatever their position within the supply chain. That’s a real focus for us and has been from the start. Successful distribution is more than simply importing, selling and shipping boxes, we want to add real value to our brand partnerships and with our retail customers.

This means investing in our brands, providing user support, building consumer demand, not just B2B, and offering quality feedback for cooperative product development in line with market needs. We’ve been doing this for a long time and it remains a real focus that grows as the market evolves and complicates!

Better use of technology is a real focus for us this year and going forward, with significant investments in our business systems aimed at offering our partners an even smoother and more seamless experience.

Overall, the supply chains in our industry are shortening. Where they are not is where people are not just adapting reactively but where they’re adding value to their service within partnerships that transcend that of customer and supplier into a true partnership. In my opinion Brexit amplifies the need for this also.

When it comes to retail there appears to be a trend of investment on the service side and a refining of bike stocks carried – what other retail trends are you seeing?

The pandemic helped float a lot of ships. The smarter recipients of this benefit have invested in their stores and their teams whilst saving something for rainier days. This hasn’t always been easy as many were forced into forward commitments to stock that has arrived at less than optimal times. But the service side of the industry has remained solid, as has the continued growth of eBike

and eMTB in particular, sparking its own ecosystem of upgrades and related products.

Improving the retail experience, with closer partnerships with fewer suppliers remains a clear goal for a lot of retailers. We are working hard with our partners to deliver on this, supporting them with in-store displays, training and supporting their sell-through.

High-end road and gravel also remain buoyant, yet still fraught with supply issues. Our range of P&A is very closely linked to this premium, enthusiast end of the market.

Will Fripp has been Extra UK’s CEO since November

cyclingindustry.news 43

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WILL FRIPP, CEO > EXTRA UK

“THERE IS A GLUT OF STOCK DEVELOPING THROUGHOUT THE SUPPLY CHAIN, ALTHOUGH NOT ALWAYS THE RIGHT STOCK...”

What themes are you seeing with successful retailers at present?

Every retail style in our market has its place, but it’s clear from consumer feedback that the bricks and mortar bike shop is still incredibly important to consumers; even more so as the eBike and eMTB categories blossom.

There is no substitute for the specialist advice and support a local dealer can deliver. A recent survey I saw on premium bike purchasing decisions places a combination of warranty, support, local availability and retailer recommendation as absolutely paramount, alongside the product’s brand and specification.

The internet and eCommerce remain key channels for all, but the pandemic saw a huge growth in local community and local economies. This was especially true for IBDs who remained open during the lockdowns, rebuilding local relationships so that consumers once again experienced their value. Dealers can continue to nurture and leverage those communities by focusing on retaining customers, keeping new entrants in our sport providing service requirements and following them on their upgrade journeys.

Test riding a bike or even testing an accessory remains a really important part of the consumer’s purchasing process. It’s something that IBDs should consider a key component of their marketing mix, range planning and in-store experience.

How is Extra shaping its brand portfolio around its customers and what brands are key for both in-store experience and bike servicing needs?

Extra already represents a pretty comprehensive and carefully curated list of brand partners in the UK and Ireland. We’re fortunate to work with forward-thinking brands with strong market presence, who are constantly adapting their ranges in line with consumer trends and evolving and with so much potential. So, we are well placed as things stand, but we have range gaps and are working to fill some of these in the near future.

Mainstay products from Topeak and Abus deliver against consumer demand for quality and innovation.

They provide a ready-made in-store solution for so many categories delivering value, innovation, great margin and quality throughout their ranges.

Fi’zi:k and Crankbrothers both deliver diverse and comprehensive category solutions alongside fantastic in-store support both in terms of display solutions, merchandising, training and even staff benefits like significant discounts to access products for personal use. Both brands invest in and believe in our IBD retail partners, as well as incredibly comprehensive marketing plans to build consumer demand and aid product sell-through.

Although not a groupset distributor, Extra has a very strong service portfolio. Our exclusive close partnership with Pirelli has seen that brand grow exponentially in the UK in terms of breadth of range and consumer demand and this will continue with over 16 product launches this year and a new Italian factory providing even more seamless quality and speedier supply.

This year also sees the start of an

even closer partnership with Enduro Bearings, pretty much the centrepiece of our workshop offering and an essential brand for any workshop these days. We’ve seen great growth in this category and recently, through a more direct supply relationship, have been able to reduce SRPs and increase dealer margin across an expanded even more competitive, high-quality range. A bearing is not just a bearing, these guys take their expertise incredibly seriously.

How is stock availability for 2022?

I think the whole industry is aware that there is something of a glut of stock developing throughout the supply chain in the UK, although not always the right stock, delivered at the right times. No doubt inevitable after a period of shortages that has frustrated IBDs and made for a tougher winter for some. I think, however, there is a strong move back toward stability. It’s certainly desired by all with less scrambling around for available parts and a move towards proper range planning and partnerships once more.

Market volatility across freight and raw materials availability, as well as cost increases everywhere are well known to have hit all levels of the supply chain hard. However, in recent range reviews we have numerous brands where we have reduced both SRP’s and increased dealer margin, bucking the current trend.

We are doing all we can to mitigate further increases and frustrating stock-outs and when things do have to go up we ensure they remain competitive and try and to give good warning ahead of time too.

cyclingindustry.news 45

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WILL FRIPP, CEO > EXTRA UK

Our UK suppliers of RRP and Rockstop, for example, both have UK production and have been able to deliver consistently during the pandemic, as well as developing new products at a time when for many of the bigger brands it’s been almost impossible. They also suffer from raw material increases and the complications that Brexit have thrown up but have done a fab job of delivering stability, innovation and constant supply.

so there was plenty to talk about.

COREbike has always been a great opportunity to show new products and we had plenty on show, from Crankbrothers shoes which have been a really big deal for us, through to new brand partnerships like Rockstop, who were even showing some prototype additions to an already new range. I think visiting Extra at COREbike also opened our customer’s eyes to the number of workshop brands that we carry Over the past six months the new leadership team have been hard at work preparing for the new season, making lots of changes in line with dealer feedback received over a long period of dealer visits. Small improvements in how we deliver larger deliveries, documentation, improved statements, new terms and conditions, a move from 30 days from date of invoice to 30 days to the end of the following month to simplify payments and improve credit, lower carriage on Enduro Bearings, a new promotional calendar more closely aligned with dealer needs – the list goes on and will continue to evolve. All of that, on top of the new B2B website, launched this Christmas and our new trade catalogue, now in dealers’ hands.

We have invested into greater stock holding, firmer pricing and are doing all we can to bring back greater stability. We are well-placed with a good balance of stock for the coming season. We’ve been working hard with our suppliers to grab what additional production allocations we can on the key lines that have been harder to keep in stock consistently, as well as committing to purchase orders much further ahead than we have ever done before.

What did COREbike’s visitors tell you after such a long show absence?

‘Welcome back’ seemed like a theme at COREbike for all. It was great to get the industry together once more after such an absence and great to once again be showing the trade all that’s new at Extra. It was only days after the news about our recent investment

46 cyclingindustry.news

“WE HAVE INVESTED INTO GREATER STOCK HOLDING, FIRMER PRICING AND BRINGING BACK STABILITY.”

How can people open an account with Extra, what are the terms and where have you sales rep coverage?

We are fortunate that due to the brands that we distribute, most accounts already deal with Extra or Cyclex, our Irish subsidiary. We have twelve people out on the road, including sales management, our national account managers, seven area sales managers and two retail specialists, so pretty thorough coverage.

Of course, our account base continues to grow, but we work hard to care for and protect all our invested retail partners; so every new account we accept is a considered decision, and individual brand access is a separate decision beyond that. But we do accept workshop accounts supported with open access to much of our workshop portfolio, such as Enduro Bearings, Pirelli Tyres and Tubes, Orange Seal tubeless sealants, tapes and valves, SwissStop pads and rotors, Capgo Cables, Connex Chains and a whole lot more. www.extrauk.co.uk

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49 50 51 Analysis - Marketing CIN03 2022_ms.qxp 03/05/2022 18:45 Page 1

ANALYSIS Raw material extremes

WHAT PRICE COMMODITIES According to a report by the World Bank in late March “both energy and non-energy commodities continued to soar in February, rising 7.7% and 4.2%, respectively. Over the past 12 months, energy commodities have surged 63.4% and non-energy commodities 22.7%.” There can be no doubt that the prices are surging due to a simple lack of availability and sources hampered by global events…

T

“OUR CHALLENGE AT THE MOMENT IS WITH CHIPS AND ELECTRONIC COMPONENTS.” Henry Rivers Fletcher Oxford Products

his unprecedented rise in the cost and accompanying lack of availability of the raw materials and the energy supply needed to manufacture bicycles and accessories follows on from the perfect storm that hit the industry’s supply chain two years ago. A combination of Covid shutdowns, a massive uptick in cycle sales and then the EverGreen container ship grounding all conspired to prevent bikes and parts being available to the trade in the numbers needed following the lockdown related boom in people taking up cycling.

If it felt as though the industry was about to catch a break with Covid restrictions being lifted, but it was short-lived relief as Russia’s invasion of Ukraine has once again set commodity prices spiralling upwards. At the time of writing, Covid’s back with a vengeance too, though with a bit less press.

But just when did this rise start to happen, or perhaps when did it start to be noticed by the cycle industry? For some, the warning signs were there

even before Covid began to make its presence really felt.

“We started noticing a slowdown in development back in 2019. Things were starting to take longer and I had the view that China was probably being disrupted a lot earlier than everyone thinks. That’s what was happening at the time from our perspective,” suggests Gocycle founder Richard Thorpe. “Then it accelerated into a problem with actual raw materials as lockdown started here in the UK. The Chinese lockdown had already started by then too.”

For many, however, it was not until the first UK lockdown began to lift that the first of possible difficulties with supplies of commodities could be seen. As Henry Rivers Fletcher, managing director Oxford Products, notes: “We were pretty quick to get our factories back on-line in early May after the initial lockdown in March 2020, so got a head-start on many of our competitors. As the bounce-back turned into a boom for the two-wheel industry, everyone else’s supply chains

cyclingindustry.news 49

49 50 51 Analysis - Marketing CIN03 2022_ms.qxp 03/05/2022 18:45 Page 2

ANALYSIS Raw material extremes

COMMODITIES A snapshot year-on-year Now for a quick and eyebrowraising summary of some of the commodity prices linked in one way or another to the bike industry, or to keeping our businesses running.

Crude Oil: +59.50% UK Gas: +134% Lithium: +419% Cobalt: 74% Aluminium: +26.4% Steel: -5.4% Copper: -2% Nickel: +91% Rubber: +4% Cotton: +61% Coffee: +51.8% Information based on guidance on 28/04/22 – see tradingeconomics.com/commodities for live data)

50 cyclingindustry.news

burst back into life in June/July and after a lag of about six months we started to feel the resulting effects on the demand on commodities.”

It was not just component and accessory manufacturing operations such as Oxford Products that began to notice the changing environment about this time. Bicycle manufacturers that have longer lead times and who were preparing forward orders began to be impacted as Damian Hackett, country manager UK & Ireland for Orbea, notes: “As we looked to increase our orders for the 2021 range that’s where the first real issues began to bite.”

Would it be considered simplistic to just suggest that manufacturers look to different suppliers to get the materials they need in a timely manner? Well, yes and no. It all depends upon what the business’ needs are and how agile they are in adapting.

“As a global leader in customisation,” says Hackett, “Orbea has a policy of sourcing from several different vendors, in any event, to ensure we have different options for our customers. That has served us well during this time and we have managed to source quite well where alternatives were needed.”

Rather than sourcing from multiple suppliers, one option for bigger businesses is to place ever larger orders that help get them to gain priority delivery. But for some componentry needs that is simply not a viable option, a case in point being the specialist equipment needed for the production of ebikes.

“Our challenge at the moment is with chips and electronic components, everything else is there or thereabouts,” explains Thorpe. This is a sentiment echoed by Rivers Fletcher who says “While products made from metal have been least affected, microchips for our electrical products have been the worst affected.”

An indication of just how bad the electronics situation is comes from Thorpe.

“We’ve had a recent spare parts battery order cancelled because of cells being delayed. Panasonic put out a notice a while ago that they weren’t delivering or putting out any delivery dates for orders.

We had an order with Texas Instruments for some electronic components which was placed in 2020 and about a month ago Texas Instruments sent out a note to all small and medium-sized enterprises saying that they were cancelling all orders for 2022 and only delivering in 2023.”

With there being such volatility in the supply of materials just how are manufacturers coping? Hackett says that for Orbea supply chain difficulties mean “offering our customers an alternative component instead to try to keep production on schedule. Orbea doesn’t batchproduce products but instead operates a ‘Just-In-Time’ manufacturing operation.

Where one set of components has been delayed, that means we produce the next bikes in the queue where we do have the components in stock.”

However, he then goes on to explain that supply is not the only concern for the company. “One of the biggest contributors to production delays, however, is actually transport and logistics. It’s an ever-evolving set of challenges that our logistics teams have to manage.”

This is a concern shared by Rivers Fletcher who says: “The primary challenges since early 2020 have been logistical. Rising costs are a shared challenge which, in the short term, is being offset by strong demand.”

The rising costs brought on by increased demand for both logistics and materials is a point that has also been noted by Ison Distribution’s managing director, Lloyd Townsend. “Our rising costs throughout 2020 and 2021, in all areas – but especially freight – became untenable to continue to absorb, and we had to implement several changes back in the autumn. Many of our suppliers continue to increase their prices and unfortunately, we must pass on some of those this spring, and no doubt more in the summer as pressure on all costs continues.”

With material in short supply and costs constantly rising just how bad is the longterm outlook for the industry? The immediate impact appears to be businesses looking to consolidate production of the ranges they have and a push back on potential new developments. For Gocycle, it’s a case of an amber light rather than a green light on any new product development. Thorpe suggests that he would “bet against any company that has a date for a launch [of a new product] and the ability to supply unless it was all done and dusted a few years ago.”

It’s also a case of adjusting expectations for parts businesses and accessories businesses as Townsend notes: “Product development has taken somewhat of a back seat for a while, as our focus has been on managing stock of existing key lines, as best we can.”

He then goes on to say that while he

49 50 51 Analysis - Marketing CIN03 2022_ms.qxp 03/05/2022 18:47 Page 3

thinks prices will continue to rise as raw materials and fuel to produce products potentially skyrocket that the “one saving grace for the industry could be that bicycles tend to be in higher demand when things get really tough in the wider markets. After all, when a tank of petrol starts to cost £100, then, all of sudden, a new bicycle starts to look like better value than it ever did before. Even if it is a lot more expensive than two years ago.

“I think folks should try to be as confident as possible in our industry’s position and invest in ‘good stock’ when it’s available. I think it’s also of significant benefit to do so before the costs jump up further.”

Rivers Fletcher is more upbeat with his outlook for the future saying that while Oxford Products has been unable to bring through as many new products as he would have liked, simply due to factory capacity. The business has “added a huge chunk of turnover in the last few years” and as a result of that “we have been able to make unprecedented investments in future growth. Specifically, we have massively increased our product development capacity and, as a result, have never had such an impressive pipeline of new products.”

Orbea too has managed to maintain impetus throughout the pandemic, the uncertainties around raw material supply and ever-increasing commodities prices.

“At worst we’ve experienced delays in bringing new products to market,” says Hackett. “But if we take a step back – our core business is innovation - our factories and facilities have been massively developed over the past number of years, and the reality is that one of the most evolved areas is our innovation area. We’re always looking to improve and enhance our product to bring a better experience to our riders. That won’t ever stop.”

It would seem then that price increases are, as ever, an inevitability and simply more severe than anyone could have predicted due to the aftereffects of Covid and the conflict in Ukraine, and while this and the inevitable slowdown in availability of materials may cause a push back in new product development for some operations, the industry remains resilient. There is also the positive opinion that as commodity prices push the cost of living up more people may see the benefit of greener living and the use of bicycles as an alternative form of transport could see another cycling boom.

“ORBEA HAS A POLICY OF SOURCING FROM DIFFERENT VENDORS, THAT HAS SERVED US WELL DURING THIS TIME...”

Damian Hackett Orbea

Shipyards globally have been affected by everything from Covid shutdowns in Shanghai to Brexit paperwork causing vast queues on the M20. The UK now has the world’s slowest container turnaround, according to Container Xchange data

cyclingindustry.news 51

52 54 55 PROFILE - RatRace CIN03 2022_ms.qxp 03/05/2022 18:50 Page 1

RACE TO THE TOP

PROFILE

Pete Owen, Rat Race Cycles’ Founder

52 cyclingindustry.news

RAT RACE CYCLES

Plenty has been said about the workshop only model and its increasing appeal to business owners on the front line of meeting demand in urban areas. CI.N checks in with a fine example, Rat Race Cycles of Peckham, to understand the mechanics of relying on the mechanics for revenue…

“

I have a degree in physiology, but I liked taking stuff apart, maybe my parents wanted me to be a doctor,” starts Peter Owen, the mastermind behind Rat Race Cycles, nowadays a Peckham-based physical repair shop with the odd accessory sale tacked on.

It is a story that will be familiar to many in the bike trade who just sort of land in the business on the back of years of tinkering, riding and steadily becoming embedded in the bike scene. The name Rat Race Cycles is a nod to darting around the city servicing generally fast and enthused customers who are time poor, but bike portfolio rich.

“For four years I was mobile only and used to drive into underground car parks for servicing batches of bikes. It was great really, no mobile reception or distractions. The peace and quiet to get on was great, but it didn’t scale and a lot of planning was needed for actual days working. It’s

also hard to move the range of stock needed for diverse customer base,” says Pete.

His stomping ground was a good portion of South-East London, but since 2012 the customer has been the one travelling to the Evalina Road store, leased first during the Olympic road boom and servicing a diverse community from all walks of life in the local area since.

“I always wanted to set up own and living in East Dulwich, on the edge of Zone 2 my area is a good commuter distance for the inner city. There’s a real mix in Peckham, all kinds of backgrounds ethnicity and wealth,” explains Pete, adding that opening during a boom time for cycling certainly helped establish the store in the performance community.

What that means is that the workshop is kitted out to service everything from immovable seatposts stuck in frames, right through to bikes dripping in wireless shifters and

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52 54 55 PROFILE - RatRace CIN03 2022_ms.qxp 03/05/2022 18:51 Page 3

PROFILE

internal routing. From jobs like these the business has been able to stand on its own two wheels and grow, keeping its rates respectable in view of the shop’s continued investment in training and tooling.

“Each of our six staff are Cytech 2 or above. It’s not essential, but this badge helps people to know the standard at a given workshop. The skills are constantly developing to grapple with industry standards and more than ever, electric bikes,” he says.

Pricing is of course a contentious subject in the trade, more so since the pandemic seeded plenty more upstarts in the world of bicycle mechanics. Some of those skills that flooded into the trade in 2020, Pete says, have since hit immovable walls (namely supply) and have ended up resetting in stores around the city.

When asked about fairly pricing a skilled service, Pete’s not shy in saying if you’ve got the skills, then charge your worth.

“We’re likely more expensive than others, but we’re better! We punch above our weight, but then we’ve built bikes for transcontinental races and all sorts of top-end applications. We can justify the price and we did just put them up to reflect moving goalposts

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RAT RACE CYCLES

and product quirks. A full strip and rebuild on an £8,000 bike now includes handling internal routing, di2 firmware updates, tubeless sealant refills – it’s just more complex than it was before. People who have those bikes trust us to do it right.

Pete continues: “If you put prices up and no one complains then possibly

“BY 2012 IT WAS STANDARD TO SEE SHOWROOMING BEHAVIOUR... IT’S THE MAIN REASON WE STOPPED.”

should have done it sooner. In benchmarking our position we consider hard-earned experience, the location, training, tools and competition locally.

The industry is full of and started by cyclists wanting to help other cyclists and feeling guilty charging other people like them, but labour isn’t a commodity in the way a set of Gatorskins is.”

So, why did Pete opt to go down the workshop only route when the surrounding shops could easily be seen to be enjoying the spoils of a busy road cycling network not too far from prime locations, as well as a commuter trend that has grown steadily with each kilometre of segregated path into the city?

“When I first opened the shop and started selling bikes, I did so just because I thought we should. I had however worked in enough other shops to know it wasn’t the way the industry was going. By 2012 it was standard to see showrooming behaviour with a certain customer type. It’s the main reason we stopped, not being able to sell consistently at full retail, or hold each SKU in stock. It is, sadly, always cheaper online, so the tilt toward servicing, where our reputation was strong, made business sense,” says Pete.

As a long-term sideline to the main business, Pete has specialised in highspec wheel building under the Owen Wheels banner. Once more, skills like this cannot be showroomed and in most cases word gets round that a specialist exists that will offer a service a cut above for performance wheelset builds. This reputation led to a partnership with Karen Hartley, a celebrated London frame builder, with Pete’s

52 54 55 PROFILE - RatRace CIN03 2022_ms.qxp 03/05/2022 19:27 Page 4

wheels shown on her bikes at the Bespoked handmade shows. At his busiest Pete can turn around 20 to 30 wheels a week, so his hand is finely tuned to throwing spokes at hubs in between bike servicing.

There are other speciality services blended into the typical 8am to 6pm day (hours differ Thursday and Saturday). Lately the cargo bike trend in inner London has sparked a new line of customer enquiry and service work.

Rat Race is finding that the fast evolution of this segment is leading to a quickened service schedule on some cargo units, whereby parts are struggling with the required workload and very often need upgrading to cope.

“We have a group of nannies (childminders) who each told all their friends about the cargo bike lifestyle, and it’s caught on. For us, cargo bike Wednesdays is now a thing for our workshop and we educate our cargo customers on parts wear and maintenance schedules. Honestly, I don’t think I saw any in the first four years of shop, but now it’s regular; the motors made them so accessible to so many people. That’s the same generally speaking too, I just got a Brompton Swytch conversion for my wife to return to office, that’s made it more

accessible for her as a regular means of transport.”

Consumer behaviour changes have been well-documented and few trends have been as pronounced as the change to the ways and means people are using to get from A to B. Within Pete’s corner of London, that has meant having an ear to the ground and adapting.

“We saw a massive change during lockdown. Before lockdown, we operated 7am to 7pm, the full commuter hours. This trend is not noticeably returning, so we switched to 8am to 6pm. There wasn’t a front of house role before lockdown, but now there is always someone on hand to greet people.”

The store’s layout is deliberately open plan and if you’re lucky it’s shop Border Collie Poodle cross Bryn that will greet you. People entering see bikes being fixed in two stands as they walk in. “We don’t want that communication breakdown that can happen when mechanics are hidden away,” explains Pete.

Communication has been something that the business has gone a long way to fine tuning, in part in response to Pete’s own business education, but also down to personal experience of meeting uninspiring front of house staff in bike shops elsewhere.

“We keep up an element of sales training to combat any chance of

putting customers off. I have come across surly mechanics who can really alienate customers. My aim is to make 100% of our customers comfortable in our environment. We don’t want anyone looking down the nose at anybody, no matter what they wheel through the door. You get a reputation for that stance and I don’t want it for Rat Race. Our culture is built upon consciously reminding ourselves to put ourselves in the shoes of all customers.”

Written on the wall of the shop is a message that backs up the ethos of always striving for personal development – “own mistakes, own failures, learn from them.” It is encouraged that even if any staffer comes close to a slip up they communicate how it happened in order to help others avoid similar pitfalls. “Near misses are good for best practice learning,” says Pete on striving to help all ships rise at once.

It may soon be more than a pair of mechanics at stands soon greeting customers. Pete’s ambition has been to scale, though for now it’ll be servicing the ample local demand.

“We have planning permission to extend, but there’s no builders around to do it, plus there’s some supply issues with materials; everybody has been extending their houses so we can’t get a look in just now. We’ll add two more stands and more bike storage as a starter,” he says of the near-term plan.

As for Pete’s role in the mix? “My role changed from mechanic to businessperson, so I’ll continue to receive business coaching. Though we’ve been around a while now, I’ve found that very useful and necessary to forge a path ahead, so I’d recommend it to others.” www.ratracecycles.com

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56 59 PROFILE Mavic CIN03 2022_ms.qxp 03/05/2022 18:57 Page 1

PROFILE

MAVIC

WHEELS IN MOTION… Under new French ownership, Mavic has come full circle following a period where it concedes the brand was not at its best. Simon Cox speaks the marketing and product teams about the revival of a cycling icon…

M “WITH 97% OF COMPONENTS CURRENTLY OF EUROPEAN ORIGIN, THE BUSINESS SEES THIS AS CRITICAL TO MANAGING QUALITY AND AVAILABILITY.”

56 cyclingindustry.news

avic is very much back, with the French brand doing what it does best: Innovating.

Two years on from a highly publicised transition of ownership, the famed yellow and black cycling icon, now 100% owned

by French investment group Bourrelier, is a business firmly back on an upward trajectory.

“Mavic will invest over the next three years more than in the last 15 years,” comments Jean-Michel Bourrelier, now Co-President of the brand.

Talking with Brunand Maxime, Head of Product Management, and Anne-Lise Arbez, Marketing Manager for soft goods, there’s a real sense of purpose, direction, and, most importantly, energy – an enthusiasm and excitement for the evolution and revolution which has completely reenergised the business.

Having moved to its new Annecy located, 8,000sq.m, headquarters in January 2022, the brand is keen to point out that this also forms a home for its own ‘special projects’ carbon manufacturing facility, fully integrated into the new HQ location.

This also seems a good point to discuss the drive for EU only manufacturing, across both hard and soft goods. With 97% of components currently of European origin, the business sees this robust and efficient supply chain organisation – with Mavic soon to be only manufacturing in Europe – as critical to managing quality, and availability, of components and

Jean-Michel Bourrelier, co-President at Mavic

finished products. By 2024 the entire soft goods range will be made in Europe with new launches including the Syncro SL Helmet and the Crossmax Elite SL shoe.

By 2024 soft goods will all be EU made

Bold strides meet good common sense for a brand whose heritage plays a significant role in its present-day brand identity and customer appeal. Engineered in France. Handmade in Europe.

Racing and sponsorship still play a significant role in the testing and development of products across cycling disciplines. The KMC Orbea MTB team had World Cup wins last year riding Mavic hoops. With a French Olympics on the horizon collaborations in support of French athletes have medal hopes pinned upon them. This includes a partnership with mountain bike XCO focused Decathlon Rockrider team, riding Mavic Crossmax XL R wheelsets. For UK readers there’s Le Col – Wahoo and Ribble Weldtite sponsorship deals, with both teams providing high visibility and strong fan engagement.

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56 59 PROFILE Mavic CIN03 2022_ms.qxp 03/05/2022 18:58 Page 2

PROFILE

MAVIC Specialised products and technologies are clear points of focus, harking back to early SSC days, when that red and yellow graphic, paired with a single yellow spoke, marked Mavic products as truly innovative, robust, and market leading. Expect to see more of this in the future, writing new history for a brand which is unwilling to trade solely on its famous cycling past.

Innovation is at the heart of writing a new chapter of the story with new technology delivering performance and reliability.

Today’s technical innovations are ones which cyclists, mechanics and retailers will greatly appreciate, with simplicity engineered in at the design stage to ensure the best customer product experiences.

Standardised spoke lengths on drive and non-drive side, paired with one hub design for road, and one for MTB, definitely helps when ordering and in the workshop.

Internal rim widths reflect the trend for lower tyre pressures, and larger volume tyres, be that with road or gravel wheelsets. The launch of an eBike specific wheelset meets new rider needs head on. Wheel assembly and hub manufac-

turing, also carbon rim manufacturing, now takes place in Romanian factories.

No product conversation would be complete without mention of the Cosmic Ultimate wheelset being entirely manufactured at the in-house carbon facility in Annecy.

Retailer and customer support is now significantly streamlined and upgraded.

What will make everyone happy, be they rider or retailer, is the Lifetime Warranty introduced with MY21 carbon wheelsets.

Also established is a strong crash replacement programme, with wheels under two years old offered at 50% off RRP. Discount for three to five-year-old wheels receives 40% off, with 30% off 5–10-year-old wheels.

The business will add more than 50 new staff, across a number of businesscritical departments, building internal capabilities to support and enable delivery of future growth. Mavic reports both sales and order bookings more than 10% up in 2021. To meet current requirement, and future growth targets, Mavic production capacity has grown three-fold since January 2021. It’s this which means UK retail customers will see only a seven working day lead time on product orders.

Supporting international territories, the business now has regional subsidiaries implemented (UK, SpainPortugal, Italy, Germany-AT and Japan), including customer and after-sales services, providing support and services in line with the goals of the business.

Today the business is determined to form closer relationships with its customers, applying a laser-like focus to meeting the needs of retailers and cyclists alike.

In the UK the brand has a team of six, with its office located in Newport Pagnell.

Four in office: Country Manager, Marketing Coordinator, CSR / Export Manager, and UK based Mavic Service Course support team member Two on the road: Area Sales Managers Full retailer support is offered via 01908102064, or by email at gbcustomer.services@mavic.com

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61 62 65 Opinion CIN03 2022_ms.qxp 03/05/2022 19:01 Page 1

OPINION Branding

WHAT BRAND IS YOU? What identity has your business in a world where it’s become all to easy to just blend in? Business Coach Emma Cole writes on why having an in stone mission statement can help guide you, your staff and align customers to your brand…

I

n a world of ever moving parts (pun intended!) do you still believe that opening a bike shop is for you? Well Duncan Moore put himself back in that position in CyclingIndustry.News’ last print edition and went through lots of things that you need to consider, from having a business plan, to thinking about suppliers, USPs, competition, what brands to stock and so on.

The quote “If you don’t know where you’re going, any road will get you there” is very true. Whether you’re thinking of starting up, or whether you’re an established business, your direction forms the key foundation of your business plan and the road that you take. So, I am going to take you back a step and focus on not just a business plan, but something a bit more in depth. This could help you nail down what your business looks and feels like, your team values, your customer service proposition and more, all of which helps to set your business’s direction, who you are, what you and your business stands for and sets the firm foundation of your grand plan.

So, who am I and why do you care! My name is Emma Cole, and I am a business coach. I feel passionately about helping and supporting business owners to find more business success, greater enjoyment and happiness. Not just for them but also for their team, their customers and others that they influence.

I know, no one ever said they needed a business coach! This is true, but most top performers didn’t get there on their own.

Just like sports professionals, all of them have coaches. This is because whilst most sports stars have a good degree of natural capability themselves, they all needed some external help to perform to their full

potential. It’s the same for business owners. Whilst many are great at what they do, it’s also true that most haven’t had much professional training or guidance on how to run or grow a business. Many business owners are fabulous technicians and start their business with many hopes, dreams and aspirations, but it’s a sad fact that many don’t achieve their initial original utopic vision.

My background is retail, so when I started my own retail business, I thought that I was well qualified, and that this business owner malarkey was going to be a piece of cake. Well, I had lots of experience of being a successful employee and business driver, but doing all of that and more as a business owner…that I had to learn. One of my greatest learns was deciding and really nailing what my business direction was.

That included making sure everyone within my business and customers alike, knew who I was, what I did and how they should feel when they dealt with me. This was my starting point for getting my business to work for me and not the other way around.

Now, deciding your business direction isn’t just about writing a plan for banks or investors to get behind. It’s about deciding who you are, what you will stand for, what’s your purpose, what is going to make someone come to you and why.

Do you have a purpose? What is a purpose and why would you need one?

Well purpose or mission is about clearly stating what it is you do and why and who are you doing it for. Are you trying to get more people cycling and enjoying outdoor space, make cities greener, keep people moving, building a more sustainable world, or something else? It’s about really nailing what it is your shop does and how you operate.

“DECIDING YOUR BUSINESS DIRECTION ISN’T JUST ABOUT YOUR BUSINESS PLANS FOR THE BANK. IT’S ABOUT DECIDING WHO YOU ARE, WHAT’S YOUR PURPOSE?”

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61 62 65 Opinion CIN03 2022_ms.qxp 03/05/2022 19:01 Page 2

OPINION Branding

As a rough rule, purpose or vision statements are normally anywhere between one and three sentences and generally not more than 100 words.

When you are creating your purpose avoid the common trap of trying to summarise everything you do as a business in a generic way. For instance, everyone wants to deliver great customer service, that’s just a given and not enough in terms of the essence of what you do and how. It needs to have some personality and feeling, not full of jargon or over used buzz words.

Some examples using the world’s bestknown companies could be: Amazon,

62 cyclingindustry.news

“To be the Earth’s most customercentric company, where customers can find and discover anything they might want to buy online, and endeavours to offer its customer the lowest possible prices.” Nike’s is: “Bring inspiration and innovation to every athlete in the world. * * If you have a body, you are an athlete.” As a consumer you are in no doubt as to what these guys do!

Once you have your purpose, you can get your company culture into place.

This follows the same vein of digging into the feel and experience of being part of your team. This really helps in terms of the team knowing and under-

standing what their part is within your store, how they should treat one another and then how customers will be treated when they visit your shop, use your services online, or when they have a complaint. These are the things that inspire your team to come to work for you, makes it easier to hire new team members that fit within your culture and assures that there’s a higher purpose, other than money alone.

Think about developing a service statement. This highlights to customers what it will feel and look like when they deal with you. It may take the form of, “when you buy from us, we will do…” or

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61 62 65 Opinion CIN03 2022_ms.qxp 03/05/2022 19:02 Page 3

OPINION Branding

“If you’re not happy with your item, we will make it easy for you to return it by…”

Publishing a Service Statement on your website, social media platforms and within the store will help customers really understand you and your business and let them understand what they can expect.

Creating a purpose, a culture for your team and a service statement for your customers helps to cement your business firmly in your their minds.

People love to buy from people that share the same values. By sharing yours, customers and clients get to buy into you, which in turn, helps drive loyalty from them and a sense of community and belonging.

Once you have your direction, feed it into your plan with your financials, SWOT analysis and projections. It will provide you with a far more meaningful, robust and live document that will help move you forward and let your team, customers and financial backers really understand and value what you’re about. Break it down into smaller pieces and create milestones that clearly demonstrate progress.

Have a ‘BHAG’- A Big Hairy Audacious Goal, something great to strive for, but a bit of a stretch, that feels like it means something to you. Once you have nailed your direction everything else you do should hang off that.

You don’t have to be thinking about opening a bike shop, you could be an owner already. The same rules apply, by having a business direction, you’ll help propel your business forward faster or further.

So, my top tips on business direction, culture and why people should choose you...

• Find your purpose and why it’s important beyond taking money alone.

• Get a sense of what your team culture is. What does it feel like to work here? Ask your team why they work for you, it might surprise you.

• Do you know who your customers are? How many different types there are? Who uses all your different services, or buys different types of products from you? Make them all real by making an avatar of them.

• Tell your customers how you will deal with them, how it will feel and why you might go that extra mile.

“CREATING A CULTURE FOR YOUR TEAM AND A SERVICE STATEMENT FOR YOUR CUSTOMERS HELPS CEMENT YOU IN THEIR MINDS.”

• Write a plan. Even if it’s written on the back of an inner tube cardboard box!

• Establish where you are right now and where it is you want to get to. Is it developing what you’ve already got, opening another store or world domination!

You can still have a successful, profitable business without having a business direction, a team culture and a service statement, but by having them and sharing them, I believe you will increase your success level, become even more profitable and hopefully enjoy your business more. This is what it did for me.

I feel so passionate about helping and supporting business owners to find more business success, greater enjoyment and happiness, not just for them, but for their team and for their customers, that I am offering a free 90 minute, no obligation, discovery call to see how I can help you. Contact me at: emmacole@growthcoach.co.uk

t 07769651020, w ec.growthcoach.co.uk Quote: GCCIN1

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66 68 INTERVIEW SRAM CIN03 2022_DB.qxp 03/05/2022 19:07 Page 1

INTERVIEW Michael Zellman > SRAM

T H E L O N G V I E W

As one of the key component and accessory suppliers to the trade and one that has made a string of acquisitions, CI.N thought it timely to catch up with SRAM. Michael Zellmann, Global Road and Corporate Communication Manager shares the latest…

How’s business for SRAM? Overall, our business has seen substantial growth in nearly every area over the past two years.

SRAM has been on an acquisition spree, including the Hammerhead brand, whose product is above

66 cyclingindustry.news

The industry’s struggle for components over the past 18 months was most pronounced in drivetrain goods – how has SRAM caught up with demand and what’s the OEM and aftermarket inventory like now in Europe and the USA? SRAM has more than doubled our production of most drivetrain products, yet current demand is unprecedented, but we are at capacity. Additionally, we have more products in inventory than ever before, and while supply is improving, there remain challenges specific to shipping and some raw materials.

Three months into the pandemic, the surge of orders began, and we ramped up every aspect of our production and, as noted, often more than doubled it.

Additionally, SRAM has continuously invested in all areas of quality infrastructure;

that’s development of our people, working with our supplier partners, rigorous quality systems, and a continuous improvement philosophy in our operations.

These investments have prepared us well to maintain our high-quality standards while adapting to our customer needs in increased production. Our acquisitions have not directly impacted our capacities.

The past few years has been an acquisitive period for SRAM, but with investments widely spread. What’s the long-view goal here in having a diverse range of labels?

SRAM wants to be a complete supplier for all things connected to the bicycle. Additionally, acquisitions and innovative product development are critical to our growth.

There exists a rumour that SRAM will come to market with an electric bike motor. Is testing happening and will anything go to production?

No comment here, I’m afraid!

66 68 INTERVIEW SRAM CIN03 2022_DB.qxp 03/05/2022 19:08 Page 2

INTERVIEW Michael Zellman > SRAM

Trickledown has seen SRAM’s flagship technologies hit ever more accessible price points

“SRAM HAS MORE THAN DOUBLED OUR PRODUCTION OF MOST DRIVETRAIN PRODUCTS, YET CURRENT DEMAND IS UNPRECEDENTED.”

As for other product developments, what will be the focal point for bike shops and their customers 2022 into 2023 in terms of groupsets and other key lines?

First, we want to continue to improve in delivering quality products to the market.

Fundamental to SRAM is expanding the potential of cycling with more products and technologies that will enhance the experience. Also, expanding the range and price points of our componentry, including drivetrain and wheels, is vital to growing our market reach.

With electric bikes so in demand, what have your engineers done to bolster products for higher demands on brakes and drivetrain?

We have ensured that many of our drivetrain families are e-Bike compatible with increased capacity.

Brands like Zipp and Time’s pedal arm give the SRAM Group further high-end appeal

68 cyclingindustry.news

With SRAM’s position as a manufacturer you’ll have a clear view on raw material costs. With turbulence here, what components may be most affected by inevitable price increases?

All the raw materials we buy, as well as processing those materials, has been impacted by price increases. So, this affects our costs across the board, but most likely our top-end componentry, which features an extensive range of the most advanced materials.

Political sentiment toward transport cycling is warming. What role has the bike industry to continue to drive cycling as a force for good?

Developing componentry for bicycles is essential, but it isn't enough, and we have so much more to do in terms of global advocacy. SRAM is committed to more bikes under more people, in more places and is invested in and connected to nearly every international advocacy organisation.

As a result, we have seen consistent and impactful change over the past several decades, and we expect that to continue.

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70 72-73 OPINION - Presca CIN03 2022.qxp 03/05/2022 19:14 Page 1

OPINION Sustainability & the cycling industry

WHAT DOES SUSTAINABILITY MEAN?

Sustainability is a complex conversation. Fraught with unintended consequences, costs and marketing faux paus it’s a minefield for upstarts. Expert Rob Weddon lends us his know-how…

I

f Sustainability is “meeting the needs of the present without compromising the ability of future generations to meet their own needs” we all have some way to go. Since the Rio Earth Summit in 1992, where 178 countries adopted a “global plan for sustainable development to improve human lives and protect the environment” we’ve seen a 60% growth in annual greenhouse gas emissions, 0.6 oC rise in average global temperatures, and increased rate of biodiversity loss and species extinction. It’s not all bad news – most social indicators have significantly improved over this period in pretty much every country.

In 2021 Glasgow hosted the COP26 climate conference. And for perhaps the first time it feels like the supertanker of global government and industry is intent on turning away from the most environmentally

70 cyclingindustry.news

“SUSTAINABILITY HAS BECOME A BUZZWORD IN THE CYCLING AND WIDER SPORTS INDUSTRIES.”

damaging practices. But there is a huge amount of work to do to achieve significant reductions in global Greenhouse Gas (GHG) emissions, pollution, and deforestation, alongside driving increases in biodiversity whilst at the same time continuing to improve global living standards.

Sustainability has become a buzzword in the cycling and wider sports industries, ever since the Blue Planet and other environment-related programmes raised the public profile of the damage humans are inflicting on the natural environment through business as usual. The pandemic has further heightened the awareness of the link between environment and human health, and the current horrors in Ukraine are highlighting wider issues with our reliance on fossil fuels and the regimes that profit from them.

70 72-73 OPINION - Presca CIN03 2022.qxp 03/05/2022 19:15 Page 2

OPINION Sustainability & the cycling industry

WHAT’S THE ISSUE WITH SUSTAINABILITY? It certainly feels like our industry has woken up to the fact that we need to change, but there are a few fundamental problems with “sustainability” as we commonly see it portrayed: • IT’S NOT ENOUGH. Sustainability is the idea of maintaining the status-quo.

In reality we live in a world of significant environmental and biodiversity degradation, alongside pervasive social injustice, so the aim going forwards needs to be improving as opposed to merely sustaining.

Economies of scale can make it difficult for smaller businesses to commit to best practice sustainability methods

“TRUE SUSTAINABILITY WILL REQUIRE A SEISMIC SHIFT IN THE WAY WE DO BUSINESS AT EVERY LEVEL.”

• IT’S TOO AMBIGUOUS and can be interpreted in many different ways, depending on what’s important to you.

In clothing, for example, where you sit on the naturals v synthetics debate will depend on whether climate change, resources, land and water use, or pollution are most important to you. In the hardware side the same applies: An Aluminium frame’s production emits almost four times more greenhouse gas than carbon, on the flip side it’s far more widely recycled and uses 40% less water to produce. So, which is more “sustainable” is very subjective.

• IT’S TOO ONE-DIMENSIONAL. Just packaging, or even making product from recycled/renewable materials doesn’t make it sustainable, but it’s

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While your company may do everything by the book, upstream it’s important to be aware of your supply chain’s practices

often portrayed in these simple terms.

To start with, there is a vast array of processes that goes into making an end product, each of these needs to be optimised for energy, material and chemical use, and waste. And whilst the environment side of sustainability tends to be the go-to consideration, the social side is equally important, but often overlooked. The environmental and social elements of sustainability are inextricably linked. If we sacrifice the environment nobody can enjoy a happy healthy life, similarly if we mistreat and underpay workers they simply can’t afford to look after the environment if it’s a matter of survival.

• IT’S INCREDIBLY DIFFICULT TO DO IT PROPERLY. For smaller companies the added costs of ensuring transparency and responsible practises through the supply chain directly competes for resource against the hard work of simply getting your name out in a crowded market. Coupled with limited buying power to effect change provides a real challenge. But for the incumbents the challenge is far greater, it requires a huge commitment, effort and cost to retrofit sustainability into a traditional business model which is fundamentally at odds with true sustainability. By way of example, Nike has nine tiers of supplier with hundreds of individual companies making up their supply chain.

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Instilling transparency and better practises throughout will require a huge amount of money and time.

• IT DOESN’T ALWAYS WORK. The law of unintended consequences is seen throughout the journey towards sustainability. At Presca we don’t pretend to be perfect in any way and have plenty of horror stories of the times when our best intent led to unsustainable outcomes. For example, in the rush to move away from plastic packaging many companies have chosen paper or card. But this could ultimately lead to more deforestation depending on the source and higher emissions by way of greater processing and transport emissions. Not wanting to take this approach we went the other way and chose compostable bioplastic bags, and are currently in the middle of a complete rethink of our packaging after constructive challenge from a customer who happens to be a waste specialist.

• “SUSTAINABILITY” AS SEEN BY THE CONSUMER CAN BE BOUGHT. It’s too easy to rely on certification of products and audits of factories as a proxy for sustainability. These are no doubt important in the sustainability playbook but should not be relied upon as the complete solution. To embed a genuinely responsible and ethical approach right through the supply chain requires every tier of the supply chain to; treat and pay workers fairly; use recycled/renewable materials to create your products (each of those ethically collected/mined/grown); eliminate toxic chemicals throughout; eliminate waste of water, materials, chemicals and energy at every stage; and, run on renewable energy. As an industry we

are still a long way from being able to call any product truly sustainable.

• IT’S AN OVERUSED PHRASE, AND A MARKETING TOOL in too many instances. Every company is jumping on the bandwagon which makes it harder for the consumer to see what’s best practice and what’s just smoke-andmirrors. This will be addressed through legislation in time and according to the recently published Green Claims Code claims should be clear and unambiguous. But it will take some time before the impacts are felt throughout industry, and until then we’ll continue to see the same noise from numerous companies that suddenly have “sustainability in our DNA”.

• THE BIG ONE: SUSTAINABILITY IS COMPLETELY AT-ODDS WITH THE WAY THE INDUSTRY CURRENTLY OPERATES. “Sustainable” products are still very much part of the problem if they remain embedded in the takemake-waste economy. The assumption of continuous growth runs throughout our industry as with any other, and as a result marketing focusses on churn of product. This ignores the inconvenient facts of a resource constrained world, and the planetary boundaries that we exceed every earth overshoot day. We can argue the toss about which materials for our products are “environmentally preferred”, but the simple fact is that everything we make has an impact, and the more we make the greater the impact. True sustainability will require a seismic shift in the way we do business at every level. As an industry this will mean moving away from the current model based on boxshifting and discounting. It will rely on developing new business models that

move away from linear and lowest cost towards circular and highest value-add for the customer.

Having said all the above, at Presca we still talk about sustainability, although more sparingly than we used to. And perhaps that’s the issue with sustainability. As brands we look to package our marketing in a neat, bitesize offering, and “sustainability” is one that consumers can latch on to as a catch-all for being better than the average. The question for us all within the industry is how to transition towards genuine sustainability, and how to educate customers to distinguish between that and the generic sustainability that is too often a thin veneer with little substance.

The challenge to reshape industry to one that better serves people and planet often feels immense but it’s one that every industry has to take on, if we’re going to avert the worst effects of climate change and biodiversity collapse. And in this pivotal decade how quickly we act will affect the quality of life on this planet for our children and many generations to come. www.prescasportswear.com

Rob is the CEO and head of climate positivity at Presca Sportswear. He trained as an environmental scientist and worked in sustainability for 15 years before founding Presca. He freely admits that he is a generalist in this space and there are many people far more qualified to write at length on the subject, although very few have had the lived experience of putting it into practice and trying to build a brand along these principles.

Further articles in this series will delve into the detail behind “sustainability” in the cycling industry, and how that might apply to your business.

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ASK THE BOSS Merida

BRINGING SEXY BACK? One of the bike industry’s largest bike brands and manufacturers, Merida has face a unique set of challenges and adapted accordingly to keep its supply focused and steady in the face of unprecedented demand. UK Managing Director Chris Carter discusses the bike industry’s sudden appeal to investors and consumers…

“MERIDA PUSHED ON AND IMPLEMENTED SAP, WHICH SHOULD ENABLE BETTER MANAGEMENT OF PRODUCTION GOING FORWARD.”

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How’s business for Merida UK and what’s been the focal point of your work through the past 18 months?

Chris: Business was amazing in 2020 as it was for most distributors and retailers, the only constraint was stock availability during the height of the pandemic. We doubled turnover, and cemented relationships with dealers who perhaps hadn’t valued us before the pandemic.

Trying to support dealers was the main priority, we stopped opening new accounts in May 2020 so we could support the ones that had supported us.

We spent time explaining what we knew of the supply chain woes, briefing the sales team weekly so they could commu-

nicate with dealers and hosting teams calls to try to give dealers a view from the horse’s mouth. Many processes evolved over the pandemic as we went from an instock position to pre-selling.

The back-order process became known as “the queue” and developed a life of its own and extends way into the future.

We can only give dealers availability dates when bikes are in a container, so we developed a way to advise customers what they had coming at a container level.

Dealers were contacted ahead of stock arriving and could choose to take the stock, delay it or cancel it. The aim was to help everyone balance their needs, their cashflow and storage.

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74 77 78 Ask The Boss Merida CIN03 2022_NEW_ms.qxp 03/05/2022 19:23 Page 2

ASK THE BOSS Merida

What’s Merida’s view on the bike retail marketplace’s health at present and what has the brand offered by way of support for accounts stressed by the current trading conditions?

Chris: In 2019, the market was pretty bad, my prediction was 2020 would see a thinning out of dealers, brands, distributors as there was no money being made and no cash.

By mid-2020, the view was, this is the shot in the arm the industry needed, stock was cleansed, margins maintained, cash generated.

By late 2020, supply issues began to bite, demand exceeded supply and brought with it its own pressures.

Now, the market appears to have plenty of what it doesn’t need right now and not enough of what it does need. For example, there is stock of entry-level MTB and hybrid, but not enough carbon road and eBikes.

The imbalance causes issues, there are retailers discounting as they’ve potentially over ordered and suppliers have dumped the stock on them, as bills become due the only thing they can do is convert stock back into cash.

At that point the market goes back to the 2019 model of discounting, no margin and tight cash flow.

The queue management seeks to protect dealers as best we can, there is no benefit to Merida of stuffing a dealer with stock they can’t pay for, that causes unnecessary cashflow risk to the dealer and us and potential brand damage.

We’ve tried to maintain dealer margins and minimise retail price increases. The factory has absorbed some of the cost increase, we have absorbed some and we have tried to keep retail prices realistic, the consumer is being squeezed at every level. A bike can be a good option for saving money commuting, but it must stay a realistic price.

As one of the world’s leading manufacturers how has supply fared and what investments have been made (if any) to get completed bikes out the door?

Chris: There have been highs and lows in production, it certainly hasn’t been plain sailing.

Merida went from being a just in time manufacturer with a slick supply chain to holding stock of components to buffer from the many supply chain uncertainties.

76 cyclingindustry.news

Component stocks increased massively, being fair to suppliers, everything was paid for.

There was a need for multiple additional warehouses to store the components and at the peak of the shipping container shortage to store bikes which were awaiting shipment.

Investment was made in staff, machinery and Merida pushed on and implemented SAP, which whilst giving a hiccup in September, should enable better management of production going forward.

We announced our investment in German manufacturing back in August 2019, that factory is now complete, but whilst we have capacity we have the same component supply chain issues as everyone else.

Merida will have a broader gauge on market trends than most. What, if anything, changed during the pandemic and which bike styles now have greater or less emphasis in production set for the EU/UK? Chris: Contrary to popular belief, Merida only makes for Merida, Specialized and Centurion. I don’t get to know anything of the other two brands, that is confidential.

Given the chaotic nature of 2020 when everything and anything sold,

and then the rush to refill the pipeline with some very ambitious ordering from around the globe it is difficult to gauge trends.

Equally, looking at sales out of the factory is not a lot of help as that is more related to component availability and factory capacity than a reflection of market demand.

The subject of consumer direct trading is suddenly ever-present in the face of margin pressures and consumer habits. But you feel this is not an inevitable path, is that right?

Chris: Correct. One of Ike’s founding principles 50 years ago was that if

Carter says that it has been difficult to trend spot while the sales flows have reflected just what can be finished and shipped

somebody could do something better or cheaper than you, you should work with them. My view is that retailers are better at retailing than we are.

There’s the famous business phrase “stick to the knitting”, our focus is on improving what we do, being profitable through efficiency and helping our dealers do the best they can with our brand.

Consumer buying habits are changing. 2020 saw a massive swing to online as we were all locked up at home, unable to visit shops and bored.

People bought anything and everything available, we had one customer complaint from a chap who couldn’t put his feet flat on the ground whilst seated on the full-sus bike he had bought online.

It doesn’t necessarily mean it is a good thing or that we always want to shop online.

The car trade faces similar issues.

If TV adverts and the trucks on the road are anything to go by, we all now buy cars online from Cazoo and Cinch, but both are significantly loss making businesses. (£103m) and (£17m) in the last financial year.

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The CEO of Sytner was interviewed about the threat of car brands going consumer direct. He argued Sytner offered value, through service and investment in their customer proposition. Sytner is one of the most profitable parts of the Penske Group who reported a $1bn profit.

Whilst independent bike dealers offer good service, expertise and a welcoming retail environment I believe there is a place for them.

That isn’t to say I believe bike retailers are in some magic bubble, they must move with the times and recognise that every customer coming through the door has choices on what and where to buy. If consumers want to buy online, they are able to through a myriad of retailers, who are able to provide the back-up that they need.

We still have a lot of work to do to ensure we provide our partners at retail with the service that they need, but that is easier and cheaper than setting up the infrastructure to support consumers if were to sell direct.

I was surprised to find Canyon UK employed 25 people in FY20. By contrast we employed 14.

Arguably the bike business is entering a different era with sustained outside investments, plus automotive interests making eBikes and e-cargo bikes. We are used to ‘the big three’, or ‘A-team’ dominating the market, but has competition now evolved?

Chris: In my view, the jury is out. One of the advantages or disadvantages of having been around for a while is a lot of experience and a hefty dose of cynicism. There’ve been investments from private equity, growth funds and external investors for a few years, not always successfully.

Evans, bought for £44m by venture capitalists, sold on for £100m to venture capitalists, went bust and sold for £8m to Sports Direct. Rutland Cycling have investment from a growth fund, described as patient venture capital, Rutland haven’t made a profit in the last six filings on companies house and have deferred loans repeatedly.

Ribble are consumer direct, with venture capital backing; they have lost £10m in the last three filing on companies house, with the business supported by significant loans.

The cycle market is seen as this

amazing opportunity due to the Covid boom, with extrapolations of the exceptional demand and lofty ambitions, but the reality has always been the cycle industry is a low margin industry.

I have been approached by many companies trying to sell us businesses, buy our business or offering consultancy work to educate investors. Sticking to the knitting, my view is to stay focused on what we do and keep my knowledge and experience to myself.

Peloton is an example of massive expectation and overvaluation, money poured in, expansion rapid but profits non-existent. Post-pandemic boom demand is returning to a lower level as consumers can go to the gym and do any number of things they couldn’t in lock down.

Back in the 1990s money had flooded in to the bike market, big-hitters from outside the industry were hired to grow businesses and then there were some big bankruptcies as reality hit.

I spoke with a billionaire investor of one of the brands that went bust in 2001 and his rationale for investment was “it looked sexy”. We appear to be in another phase of the bike industry appearing sexy.

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74 77 78 Ask The Boss Merida CIN03 2022_NEW_ms.qxp 03/05/2022 20:24 Page 4

ASK THE BOSS Merida

DID YOU KNOW...

Merida has five area managers spread across the country: • James Scott in Scotland • Andrew Mee covering the North and parts of the Midlands • Neil Moran covering the Midlands and Wales • Rob Harris covering the South • Ricky McKillen covering Ireland

“I SPOKE WITH AN INVESTOR OF A BRAND THAT WENT BUST IN 2001 AND HIS RATIONALE FOR INVESTMENT WAS ‘IT LOOKED SEXY’.

WE APPEAR TO BE IN ANOTHER PHASE OF THE BIKE INDUSTRY APPEARING SEXY.”

Onto electric bikes. Many forecasts have high hopes for CAGR progress. What’s slowing the UK compared to the EU, or has our paced picked up?

Chris: I believe the UK pace has picked up, but we’re still behind the EU with infrastructure and lifestyle.

I remember many years back sitting outside a bar in Friedrichshafen and seeing four teenage girls dressed for an evening out arrive on bikes; the contrast would be in the UK they would have arrived in a Renault Clio. We still have some way to go on culture, acceptance and infrastructure.

Consumer confidence will be low at present, but the bike market can do well in economically hard times. What do you expect from the year ahead?

Chris: It’s going to be a tough year, one of readjustment as the industry gets to grips with the broken supply chain. The results are likely to be stock dependent, as it is likely to come in fits and starts, making planning for everyone very difficult. Cash flows and storage are likely to come under increasing pressure, as bikes flow through the supply chain.

As I mentioned before, we are already seeing discounting of new product and I have fear that is likely to intensify. The

78 cyclingindustry.news

consumer is likely to win out, the trade may be less so.

What are the key lines for 2022/23 from Merida in terms of innovation and would you dare pick a best-seller yet?

Chris: The flippant answer would be whatever we get stock of. Our most innovative ever analogue bike is still under wraps, but should break cover later this year.

The Reacto is still our most searched for bike on the website, so should remain a hot property.

Every other question from dealers at present is when will eOne-Sixty stock be available; there’s still huge demand for that product.

How can retailers become a Merida UK stockist and what terms are in place?

Chris: We have started to look again at new dealers now that the madness has subsided. The key benefits to Merida have always been product quality, value for money, great margins and no strings.

We agree with dealers what they think they can sell and set a margin structure in line with their ambition. We don’t tell the retailer what they should stock, or how much they must buy, that’s their role. www.merida-bikes.com

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