How’s Business – April 2022

Welcome to our monthly chat with dealers across Australia and New Zealand. For this month’s follow up question, we returned to the elephant in the room that we’ve deliberately avoided for the past few months of How’s Business columns – stock.

In some ways, it’s hard to believe that we’re now approaching two years since our covid-induced stock shortages began. For the first 18 months, many of our follow up questions related to stock and even if we weren’t prompting for it, stock issues were the first comments coming back from dealers.

For fear of sounding like a broken record, we’ve tried to pivot to other topics in recent months, but through other conversations, we’ve been hearing some pretty mixed messages from a wide range of sources, so we decided it was time to revisit what has been the big challenge for dealers since mid-2020. Therefore, this month’s follow up question was, “How is your supply of complete bike and P&A stock now compared to at the start of the year?”

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Michael Thorpe from RT Cycles in Cleveland, a seaside outer suburb of Brisbane, Qld said:

It’s certainly different. It’s not the buzz that we had during our lockdowns and numerous restrictions that we had. Definitely different.

However, we are a shop that has been lucky when it comes to stock. We do have some levels of decent stock at the moment, which does help.

In normal times before the restrictions in terms of shortages of bikes, we would normally do everything from your 12 inch kids bike right up to your Cervélo S5 $15,000 or $20,000 price tag.

For one reason or another, one of the brands we do that used to produce a lot of kids’ bikes, ladies bikes, leisure bikes, flatbar – all that sort of level of the market, they decided that in the current market they weren’t going to continue. So we’ve had a bit of a hole, for a while. That was Focus bikes with their Raven range, Raven Rookies and that sort of stuff.

We have dabbled in other brands but there’s been nothing consistent that we’ve been able to offer.

At the moment the big forte for our shop is e-bikes. Whether it’s e-MTB, or your cruisy rail trail style e-bike and then road bikes, triathlon and off road mountain bikes.

We try to get as low as we can in terms of offering entry level but it has been a bit tricky for us the get under $2,000 bikes.

So we’ve made a shift about 12 months ago, to concentrate on what we could get stock with. In Cleveland there’s a lot of road cyclists around the area. A lot of triathlons. We have three or four triathlons every year locally. Almost at the bottom of the shop road, we have the Gatorade series three times per year, which is good.

You’ve got Cleveland Point which is a good destination for people to ride to from the city. And people from the Gold Coast ride up here and do the points.

If you can’t find a café in Cleveland you’re doing something wrong… there’s definitely plenty of them.

Bike and P&A supply now compared to start of year?

Right now I’d say it’s about the same. It’s very sporadic. There’s a big clump of bikes that may land in one week and then you get nothing for three months – it’s still very sporadic.

That’s one of the reasons we’ve had to carry more stock that we would normally. Luckily we’ve got space in the shop that we’ve converted into storage which has a fair few bikes we wouldn’t normally carry, just to make sure we have consistent stock.

We had a situation today where they had a couple of Focus Whistlers that we didn’t realise they had and we were able to grab them, but it’s so random still.

I’d hate to walk through some of the warehouses of some of these wholesalers. I’d say they be pretty empty. It seems like as soon as they get them they’re shipping them straight to the stores, because we’ve all been waiting so long for them.

Nathan Fox from Tailwind Cycles in the southern Adelaide suburb of O’Haloran Hill, SA said:

Err… ok. It’s not as busy as it has been. It’s definitely quietened down. Repairs are very busy. We’ve got heaps of workshop, but retail has definitely quietened down in the past month to six weeks.

We’re finding a pick up on commuter e-bikes. For the past month that’s been getting better for us. We’ve just started doing TEBCO and they seem to be going well and we’re pleased with them because we do Giant and Trek and we deal with Advance Traders, but we can’t really get e-bikes off any of those guys at the moment.

Retail has definitely slowed down in South Australia. I think the price of petrol and the cost of living… we have had an election and people always say it goes quiet before an election. I personally don’t understand – nothing really changed when the government changed.

Bike and P&A supply now compared to start of year?

It’s probably worse. We’ve got probably 300 bikes on back order with Trek which we should have seen from September last year. The dates just keep going back. We’re probably going to start seeing bikes in May 2022 that we should have seen in September 2021.

Everything we expected for Christmas, we didn’t get. The back orders just seem to keep bumping back and back.

We do Giant as well. Giant have been good. We get allocated bikes off Giant each week and Giant have been doing well recently. We’re getting a reasonable amount. I’m glad we do more than one brand because Giant have saved us.

John Ross from Lonsdale St Cyclery, Braddon, an inner suburb of Canberra, ACT said:

It’s pretty good. We can’t complain – not as good as it has been. I think everything’s come off a fair bit.

We’re in Canberra and given that there’s a (federal) election coming up, people are a little bit hesitant. Obviously they want to know what will happen in the next two months, where their jobs are, who’s going the be the boss. Generally Canberra does drift off with elections coming up. Then there’s the European situation and supply in general.

We’re solid without being great would be the best way to put it.

Bike and P&A supply now compared to start of year?

With Specialized we’ve got a reasonable amount of bikes on back order and those dates are drifting out. The supply dates are becoming more opaque, so that’s an issue.

We do Cannondale and Bianchi as well. Bianchi has got limited stock. Cannondale have some coming to the floor. Given that Trek has purchased a few shops in Melbourne, we’re hoping there may be a few Cannondales coming around. (Referring to Trek’s purchase of the seven store Cycles Galleria group, that previously also sold Cannondale).

Generally, it’s going to be a challenge. I think it’s going to be another 12 to 18 months until supply becomes back to whatever the new normal is going to be.

But the new normal is going to be different. Specialized is going consumer direct online, that’s going to wash through in next 12, 24, 36 months as to how that will play out in the marketplace. Trek’s doing the same thing. Canyon’s doing well. We’ve lost customers recently to Canyon, because they had bikes. My belief, but I have no knowledge of this, is that they’ll run out of stock soon too, then the market will go somewhere else that has supply.

I think the whole industry is changing. We’re going to have to put pre-orders in rather than buy as we need it from Specialized. All of the bikes are still on allocation – there’s just nothing around – not from our suppliers anyway.

China has just locked down again. The only possible positive out of Europe is that we might get some bikes sent here instead. No one really knows that one. Russia would be a big market and obviously they’re not going to get any bikes, so where those bikes will go now, who knows.

But we’re going into winter, Europe and America are going into summer, so maybe they’ll allocate those bikes there.

Alan McClelland from Steel City Cycles in Thirroul. located on the coast north of Wollongong, NSW said:

Very quiet. Retail is terrible at the moment – supply issues. Everything seems to have gone quiet for the past two months.

The weather has had a lot to do with it too. (Referring to the record floods in the area since Christmas.) We’re mainly a mountain biking area here, but you just can’t go up the mountain and ride – it’s that wet. You can only get out every fortnight. I’m over going out in the wet, I don’t do that anymore! (laughs)

Bike and P&A supply now compared to start of year?

Terrible! Most of the bikes are late. They’ve been pushed back a month or two. We do high end bikes – Santa Cruz, Pivot, the dearer e-bikes are hard to get. We mainly do Merida e-mountain.

We’re just going without. We’ve got to wait until June / July for them. And then they’re in limited supply. And then for our next drop we’ll have to wait until next year.

P&A is not too bad. Tyres are a bit scarce – there must be a shortage of rubber in the world! Some tyres we’re waiting until May or June for the next drop – Maxxis, Continental. We’ve got a good stock of Maxxis but there’s a lot that we haven’t got that we have to wait until May or June for.

Glen Ogle from The Crank House Bicycle Studio in Hornby, a suburb of Christchurch, New Zealand said:

Pumping! Can’t get enough e-bikes. BMX season is just about over but it was a really good season for BMX as well. Our repairs and workshop is up about 60% on last year due to covid restrictions being lessened, I guess.

We have a couple of big players a couple of hundred metres down the road (including 99 Bikes and Evo Cycles), but we’re the family-orientated bike store. We just want to put people’s bums on bikes and get them out there to enjoy the ride.

Our main brands are Haro, Avanti and Wattwheels, which is a Christchurch based e-bike company. They do commuter bikes with Darfu motors and Samsung batteries. They have become more popular over the past 18 months. They were doing the 20 inch foldable bikes with four inch tyres. They’ve expanded to go to 27 and 29 inch Darfu mid-drive commuter bikes which are really popular. They retail for NZ$3,999. They do a hubdrive version as well with a Bafang hub for NZ$2,899 but I tend to stay away from hub drive stuff because it comes back…

Bike and P&A supply now compared to start of year?

Bikes have started to trickle in. Mainly low end hard tails. I’m still waiting on full suspension MTB’s and road bikes to turn up. BMXers are still in good supply.

P&A is getting a bit patchy in places. Mainly with lights and things. With the change of seasons and daylight savings ending, everybody wants to buy up on lights. I think it’s more the delay between the orders arriving and getting here.  

Gabe Sullens of Urban Pedaler in the south east Melbourne suburb of Bentleigh, Vic said:

It’s interesting times. You have a rhythm for many years and get used to little changes from year to year, but covid has thrown us not just one or two curve balls, but is always throwing us new curve balls. If you’re able to look around and realise what are the things you can do well that are going to keep the business moving forward during these times, you pivot, and you’ve got to do it quickly.

You don’t always have access to the products that you need, when you need them, so you’ve got to make the best of what’s available during the times when there’s a little bit of a dip in business.

November (2021) going into Christmas, it felt like a very different year. Because the year before, kid’s bikes, hybrids and hardtails went absolutely bonkers. I think a lot of the suppliers said, ‘This boom is going to be great!’ so they all got in their order for kids bikes, hybrids and hardtails leading up to this past Christmas and I think a lot of dealers also took on stock in anticipation of the same thing happening again. We stocked up pretty well on 26 and 24 inch kids bikes, a little more than normal. Since we can’t rely on the suppliers having them just in time for us, we stocked up ahead of time and put them in our storage units… then it was a dud!

I think there’s probably a few dealers sitting on stocks of kids bikes. And it feels weird to put bikes on sale during a time when just a year ago we couldn’t get enough, but now we’ve got kids bikes on discount.

That’s an interesting change, but because we can’t get road bikes, gravel bikes and dual suspensions, those feel like they’re almost completely dead. E-bikes – can’t get ‘em.

So we’ve had to look at what we do well which is bike servicing. The categories that are well stocked which includes hardtails under $1,500, some of the hybrids and kids bikes. And for us, bike fitting is a big one. We support the indoor training and car rack markets really well.

We’ve just had to pivot and concentrate on what we do well. That pivot has at least kept us afloat while we’re dealing with a pretty bad lack of high end product.

We deal with the PSI brands primarily – Cannondale and GT. Then we’ve got Groupe Sportif’s Kona as a backup brand.

Bike and P&A supply now compared to start of year?

The stock number is probably about the same. I’ve slowly sold down on the kids bikes, but I’ve taken delivery of some bikes that I wouldn’t normally take delivery of, just in hopes of having it when I need it.

We’ve taken a couple of big deliveries of tyres, knowing that it’s three to four months between big deliveries of Maxxis tyres. We’ve taken big deliveries of car racks, knowing that when you place an order and can’t get delivery for a month, you lose sales, so when you can get eight at one time, you take them.

I’d say the product mix has changed a little bit but the overall volume of product is the same for us.