Letter to the Editor – The Pedal Group Are Damaging Our Industry’s Profitability

Bentleigh, Vic

Dear Sir,

From my seat, it looks like Advanced Traders/99 Bikes continued their bullish ordering and were not reading the tea leaves when the pandemic was coming to a close. They filled their warehouses to the rafters when most other suppliers were carefully cancelling or trimming some orders and taking close note of the market’s downward trend.

Their slow response to changing order/cancel windows, and changing delivery schedules are evident the recent stock prices and the last quarterly loss. They are dumping large volumes of product across almost all categories of bikes and soaking up the market’s open-to-buy, but with little to show for it in margin. The companies for which they import would not be happy, either, to see their products being dumped at 40% off and their brands being dragged through the mud.

Their dumping of bikes at a loss, for their stores and the importer, leads customers to think we’re all making too much margin. “If they can discount this much, then they must make 50% on all these bikes & equipment.” This has the potential to make it harder to sell at RRP (recommended retail price) for bike retailers in the future after this depth of discounting, marketing, and advertising ends.

We’re close to a 99 Bikes and I’ve had several conversations with customers where we’ve been up against bikes at 40-50% off in similar spec from one of the Pedal Group’s brands down the street, even when we have aggressive clearance going on with some of our suppliers.

“…there are so many careers, jobs, families that rely on this industry and a lot is at stake.”

Agreed, most suppliers are overstocked in some categories and could not cancel orders, or decided to keep orders at play even when long delays meant they would get the product well after the peak of demand. Even with all the challenges, the sales and discounts have seemed fairly well organized and not systemic across all categories and all brands.

It’s going to take a long time for our margins to climb back to pre-pandemic levels and be able to sustain a healthy bike industry, and I sincerely hope the management at the Pedal Group feel the gravity of the damage they’ve done to the industry. It’s irresponsible at best.

I’d really like to see the wider industry hold them to account and not stay quiet about this, there are so many careers, jobs, families that rely on this industry and a lot is at stake. It shows a lack of vision, poor awareness and reaction times, relentless pursuit of shareholder profits, and a lack of respect for the industry in which they play.

Yours sincerely,
Gabe Sullens
Owner, Uban Pedaler
Nepean Hwy, Bentleigh, Vic

Editor’s Note: Given the content of this letter, we wrote to the Pedal Group to give them the opportunity to respond and received the following letter:

Thanks for sharing the letter.

Covid created widespread disruption to our supply chain, Pedal Group placed large orders and didn’t reduce orders early enough. Our Advance Traders stores have benefited with great deals for their customers from this over-stock over the last few years.

Post Covid stock challenges are throughout the supply chain globally, including brands, that both need strong wholesale & retail distribution. Brands have appreciated the support of Advance Traders dealers, especially independent dealers, that continue to be a really important part of our business direction.

In dollar terms, our key brands of Merida, Norco and Cube saw growth of between 50% and 300% in 2023, vs pre-covid, and our brand partners are thrilled to be continuing to gain significant market share through their partnership with Pedal Group.

From an employment perspective, we are proud that Pedal Group is the biggest bicycle industry employer in Australia. Adding some numbers for context, in Australia alone, the number of full time equivalent employees across the Pedal Group has nearly doubled to 660 from pre Covid level, providing careers, opportunities & supporting many more families.

Regards,
Andrew Garnsworthy
Pedal Group CEO