How’s Business? August 2021

Welcome to our monthly chat with bike shop owners and managers across Australia and New Zealand. Usually we call a mixture of city and country bike shops, but with Covid lockdowns affecting several of the major cities across Australia, this time we focused upon shops in the capital cities.

The lockdowns also made us feel compelled to make covid the subject of this month’s follow up question, which was, ‘What impact is covid having on your store right now and how do you think the next few months will pan out?’

Brent Traynor from Cycle Science in the northern Wellington suburb of Lower Hutt, New Zealand said:

Business has been good. It has been since covid. We have seen that seasonal change.

The fact that the weather over here has been dreadful for the past month, we have seen a slight slowdown. But overall, stock has been coming through and buyers’ interest has been high.

We’re about 15 minutes outside of Wellington CBD. We’re in a (flat local) terrain that’s suitable for commuting, but with the main terrain being mountainous around Wellington, the predominant bike sales are mountain bikes.

Demand really is in e-mountain bikes.

We stock Specialized, Giant, Santa Cruz and Pivot. We do Norco and Merida as well but the main four brands are Specialized, Giant, Pivot and Santa Cruz.

Definitely Specialized Turbo Levo’s have been in short supply. Same with Giant. Their e-mountain bikes are sold out and not stock coming in the foreseeable future. Our main stock won’t be coming until probably closer to the end of the year. So we might see a sales slow down, but at the moment, we’ve still got bikes to sell.

Current and future impact of covid:

Covid is still driving the business. People’s health and well being is their main drive to get out and bike. The hardest thing will be if the demand is still there in a few months and we can’t get stock, then we will see that slowdown come, quicker than we expect.

Everybody’s telling us (suppliers) that there’s a slowdown. Where they’ve had stock coming through, because there’s still a lot of covid in Malaysia and Asia overall, factories aren’t running at capacity.

The problem is that even if they can run at capacity, because the cost of freight is so high to move bikes, we’re not spending the money to get those bikes here quickly. While other companies (in other industries) might pay the extra container cost because they can spread it over a lot of items, you can only get 120 or 240 bikes in a container (20 or 40 footer respectively). That means we’re definitely starting to see price increases as well.

There have been sharp increases over the past six weeks for bikes.

Specialized are saying they’re having major delays over shipping bikes.

You look at Giant. We’ve known that Giant has been buying Shimano supply… for the last 12 months they’ve been putting big orders in to have stock on hand. Previously everyone works to, ‘we’re going to manufacture the frame and assemble the bike when the parts arrive.’ Now it’s, ‘How much stock holding can we carry? So we can manufacture for the next 12 months.’

‘Just in time’ can only work in an economy that’s not running at full capacity, and now capacity is out the door. Even if you could manufacture three times the bikes, you still couldn’t keep up with it.

At least now the bike industry has been able to hold margin. While previously it hadn’t because the big chains just wanted to discount and drive prices as low as possible. You’re still seeing a bit of that, but it’s only a smaller period of time.

I speak to other IBD’s and generally, right now, the market price holding is really good.

Sue Emery of Georges Bike Shop Willetton, in the southern suburbs of Perth, WA said:

It’s interesting! Repairs are busy. Sales are interesting. They’re good when we can get the stock.

But obviously there are a lot of holes in what we have, as opposed to what we’d like to have. That $900 to $2,000 mountain bike. Even entry level road, flat bar road, would be kind of handy at the moment.

Giant is our main brand, but we do have other brands: GT, Mongoose, Norco, Merida, Malvern Star… we’ve got a few. A lot of them are short of those bikes, but in particular, more Giants would be handy, because that’s what we sell the most of.

Current and future impact of covid:

We’re just trading as normal. I think Christmas will be interesting because there’s going to be a lot of shortfalls, particularly in juvenile stock and we are predominantly a family and mountain bike store. I think it will be interesting for those who don’t get organised early.

Last year we saw the same thing. Certainly there were a lot more lay-by’s earlier in the year, to make sure people got what they wanted. We were very careful how we did things last year.

I didn’t take anyone’s money or guarantee it until I had the stock guaranteed to me.

We took people’s details and we let them know when the stock had arrived or when it was on it’s way and guaranteed to me and that was when we started taking deposits. Because there was just too much anger from people not being able to get stock from other places.

We decided we weren’t going down that road. We had people ringing and abusing us because another shop had cancelled their lay-by!

Lana Pickering of Pedalheads in Brendale, an outer northern suburb of Brisbane, Qld said:

It has been going well thank-you. We do Specialized, Cervélo, Focus and Orbea. They’re the four big brands that we have. We do a mixture of e-bike, e-mountain, e-commuter, road, tri – we sell a lot of those. It has been pretty busy all around really.

Trying to get bikes is the biggest thing at the moment.

We purchased this store from another owner and it was called something different. We purchased and changed the name in 2017. We’ve moved into temporary accommodation but we’re moving into more permanent in the next few months, in the same suburb. The new shop will be about 500 square metres.

Current and future impact of covid:

We’re not in lockdown. We just have to wear masks and be 1.5 metres apart and clean our hands and ask customers to log in. We’ve got to follow the covid rules – when they walk in the store they’ve got to click on the app so they can follow where they’ve been.

When we had a three day lockdown a few months ago, it got really quiet that weekend.

We’ve just been really busy trying to get bikes in and keep it all going.

Trying to find parts I think is the biggest thing now. If they’ve got it, you grab it.

It does change our business model. When there’s a lack of availability of a certain model, especially with Specialized, we’re working with all other dealers around Australia to find what our customers want.

We’re accepting bikes that people have purchased at another store. ‘They’ve sent us here’, and we’ll build it for them.

It’s about getting people on bikes. It works both ways. We accept bikes and we give sales to other areas. It’s working pretty well actually.

It’s the only way you’re going to survive. Because there’s such a limited number of bikes coming in. And customers, because they have to pick up the bike in store, you mightn’t have a customer for that bike at that time. People can’t travel to pick up the bike, so we have to do all that for them. And that’s fine, because it’s about the rider. A lot more work, but it’s about the rider.

I think it’s going to get busier. For us particularly, because we’re renovating a new store, so we’ve got that happening as well.

I think a lot of people have bought cheaper bikes at the start of covid and now they’re like, ‘This is what I like!’ They want to do sport and they’re investing a little bit more.

And there’s different ways to buy bikes now, that makes it a lot easier for people to get on board. Like Studio 19 – you rent bikes for six months, they can hand it back after that. You pay a percentage of the value of the bike… it helps people get on board.

Darren Wilson-Roberts, Treadly Bike Shop in the inner eastern suburbs of Adelaide said:

Business is booming – I guess. We’ve got plenty of custom builds. We’ve still got servicing going on in the workshop. We’re doing a couple of promotions at the moment, just because of the lockdown. We’ve put a whole lot of vintage Campagnolo stuff up for auction.

We’re also doing a some sales on some of our products including Chrome.

I started when we were at Ebenezer Place (in the in the East End of the City of Adelaide). We’ve now been out here for a year and a bit in Mattingly Lane at Norwood south. It has been really good.

Previously we could only have one staff member and one customer in the store (under covid restrictions as the old store was very small), which made it quite impractical.

I was outside doing servicing in the laneway.

But since we’ve moved here, it has been a lot easier. We’ve moved to a much bigger retail space, which allows us to have more product on the floor to show customers. Treadly has a really strong following. It has a good name in Adelaide.

Current and future impact of covid:

Being in South Australia, we’re currently under fairly strict lockdown laws. However any kind of bike mechanic or car mechanic for that matter, is allowed to continue to trade as an essential service, providing a vehicle to people.

We’ve had to close the door, however we’re still accepting servicing with a contactless drop off point and we’re doing some click and collect stuff.

Now stock is the problem. Chasing our tails as far as stock goes and hopefully, keeping the customers happy.

Mocha Ishay of Bike Zone Fitzroy, in Melbourne, Victoria’s inner northern suburbs said:

It’s very good. It’s hard to deal with challenges but it’s very good.

I’ve had the shop 12 years.

Current and future impact of covid:

We’re actually closed to the public but we’re doing lots of online sales. We actually deliver the bikes to close suburbs and even far suburbs, and some of them we can ship, so we ship them all over.

It has been really busy this week.

I think people from Sydney realise they need something so they call me up and I do something for them, as well as Adelaide. Mainly bikes, but some parts.

They’re buying touring bikes, gravel bikes, some basic road bikes. That’s the market today. They don’t spend a lot, but they buy a good mid-range one.

They pay the shipping. We just charge that at cost. We don’t ship all the bikes, because there’s some brands that don’t like us to send them. I don’t know their reason, but in this life, they should understand that we need to be completely open. It’s a free market and it should be like a small village. The virus comes like a small village to all the whole globe, that as well.

I think the next months will be good. There may be a small crisis with inflation. But the bike, from this pandemic, made the best for everyone. This industry is unbelievable. But there are a lot of delays and that will affect many shops. But in general, I think it will be good.

Dave O’Connell of Renegade Cycles in the inner northern Sydney Suburb of Lane Cove, NSW said:

Business is very steady. Plenty of requests for bikes in lockdown. The usual challenges of stock supply, whether that’s bikes, spares or otherwise, but we’re chipping away and working as best we can during lockdown.

Current and future impact of covid:

Obviously I’ve got reduced staff. The shop floor is closed. We’ve got to do non-contact. I’m focusing on services and over the phone sales.

The way forward depends on what happens next Friday, the Friday after that and the Friday after that, doesn’t it? (referring to when the NSW government announces future lockdowns)

We’re not delivering. We’re just doing customer pickup. We do contactless payments, but we haven’t got the resources for delivery at the moment. That may change next week. Who knows… but this week we haven’t.

This is week one of these restrictions. There might be two more weeks. There might be many more weeks, who knows?

Our stock is trickling through. There’s some long waits for some stuff. The stock arriving is all backorders from a long time ago.

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