How’s Business – December 2020

Reports of stock shortages are certainly sounding like a broken record in our monthly ‘How’s Business?’ column. But that’s what was top of mind for every retailer we spoke to this month.

With Christmas looming our follow up question for this month was, ‘How do you think this Christmas season will compare to previous years?’

Ian Bryant from Fraser’s Cycles in the southern suburbs of Sydney NSW said:

Busy! It has steadied off to what it was. Earlier in the year when all the craziness was starting it went pretty nuts. It’s steadier now, but then we’ve got Christmas coming.

We’ve got lots of bikes to build and lots of repairs to do still.

I reckon road has got a bit stronger lately. Road died off and mountain bike took over, but road has definitely picked up again. We’re selling a lot more road. Still selling plenty of mountain bike.

High end has been going good all year, but then you’ve still got kids at Christmas.

Stock is the other problem. Getting enough stock. The biggest shortfall’s we’ve found… definitely hybrids, kids’ 24 inch and then any bread and butter stuff… $1,200 and under and ladies bikes.

At the moment, after the weekend there’s a few gaps on our floor, but we’ll get onto that and get new bikes built up.

In the high end stuff, our main brands are Cannondale, Trek and Scott. Scott is going really well. We still do Malvern Star, GT, Mongoose, Avanti – all of the Sheppards stuff. They’ve been going pretty well with supply.

The biggest thing is you put an order in but they’re sharing it out. You might put an order in for 20 bikes but you might get five of them, for example. That’s the hard part.

Trek has been pretty much first in first get. So you know what you’re getting and you generally know you dates. But I think they’re struggling on stock – appear to be.

How will Christmas compare?

It’s going to be at least the same, or better. It’s not going to be any worse for us, I don’t think. Everyone was wondering if everyone had bought bikes earlier on and it’s not going to happen at Christmas. But at the moment, we’re going flat out.

We do a lot a layby’s at Christmas because we’ve got a bit of storage space. But that’s already pretty full. Our laybys are definitely up. We might have to stop because of the storage problem. We’ll see how we go. We’re just reacting on the run, like the whole of this year has been. You have to adapt.

Karl Murray, universally known as ‘Stretch’, from Rouleur Cycles in Auckland New Zealand said:

Covid has meant that our business has been booming. It’s evident with the amount of supplies that are hard to get hold of, that everyone is doing quite well.

It’s been amazing for business, unlike a nightclub, say.

We’ve just passed the five year mark as a bike shop. I started prior to that as a bike fit studio then morphed into a bike store with a shop and workshop. We mainly sell brands beginning with C. Cannondale, Cervélo, Colnago… we do a little bit of Focus and 3T and GT, but mostly the C brands.

A lot of people have been spending up pretty large due to not being able to travel. And some people have been avoiding public transport so they’ve been getting onto bikes.

It’s not just bikes we’re short of. We’re short of parts. There’s such a wide range of parts needed. Tubes for example have been selling out, and they’ve never done that before.

One of the big issues has been Shimano parts like rotors and brake pads.

Also kids bikes and entry level hard tail mountain bikes.

It’s hard to tell trends because you’ve got growing areas like gravel bikes, so it’s hard to tell how many people would be buying them anyway if it weren’t for Covid.

There are a lot of new people to cycling who are happy to spend decent money. They come into it quite naïve and they’re like, ‘I’m used to buying the best stuff in everything I do, so in this case I want one of the best bikes.’ Much like if they took up golf they’d buy the best golf clubs, just because they can afford it.

So a lot of people are buying high end bikes, even though they’ve never stepped on a bike before. We’re in working class suburb, but we’re in between the CBD and the Airport and we don’t have any competing shops nearby. Whereas on the North Shore, over the Auckland Harbour Bridge, there’s one street called Barrys Point Road where there are four major players right next to each other.

Because of my bike fitting background we do a lot of bike fits for people buying bikes from other places. We do a lot of customisation and we’ve created a good following for that.

How will Christmas compare?

Turnover wise, I don’t think it will be that different. It might be slightly up, partly due to being able to get hold of stock.

Shane Wolki co-owner of Pushys whose largest store is in Fyshwick ACT, but also with stores in Adelaide and Sydney said:

Business is fantastic. We’re selling heaps of bikes, heaps of everything, but it’s not easy business. It’s fatiguing and taking its toll on everyone. Our staff are working really hard, long hours, they’re putting in a great effort to try to source particular bikes for certain people.

We’ve got three stores so we do move bikes between stores as well. But this week hasn’t been the best because the Adelaide store is closed down for business for at least six days.

All three stores are trading well. Thornleigh (in Sydney’s northern suburbs) has only just been trading for a year. It’s had amazing growth. It has been an incredible store for us, much better than we expected at this point. Adelaide has had a lot of growth since we took it over. (It is located in the CBD and was originally Giant Adelaide).

The Canberra store isn’t trading a huge amount up on last year. It’s up a bit, but we couldn’t do the last two Car Park Sales that we usually do, because of Covid. But we’re still up, even though we haven’t done those two big events.

If we could buy all the bikes we wanted, we’d definitely have sold more. But the business is in a very good position at the moment, because obviously we’re not overstocked, so we’ve got a lot of cash in the bank.

We’ve got enough business. We don’t really need more – of course we always want more, but if supply was big and everyone could have had all the bikes they wanted, then maybe we wouldn’t have been as busy either, because I think we’ve had more bikes than most people, so I’m pretty happy.

Discounting pressure has sort of disappeared. We’re maintaining margins. We could probably afford to sell 20% fewer bikes because we’re not giving away any discounts. It’s been really good.

How will Christmas compare?

That’s a really good question and I’m really concerned about December. I think our December figures are going to be lower than last year because I know we’re not going to have the supply of Christmas type bikes, being kids bikes and family bikes, like we have in other years.

I think our floors will be empty a week or so before Christmas. I think we’ll have no stock. Unless I’m pleasantly surprised and we get a whole lot more deliveries. We are getting deliveries all the time, but definitely not enough to meet demand.

At the moment we’re still ok with the high end. We’ve got a fair bit of the high end and ebikes. We always stock a lot and we do have a lot, but definitely the sub $1,200 bikes are going to be a problem.

Jason Jaffrey of My Bike Shop in the north-western suburbs of Brisbane, Qld said:

It’s good mate! We’ve still been pushing fairly strong. Probably the past two months from a turnover perspective hasn’t been as good as I’d like but that’s only because we haven’t got a lot of bikes.

We’ve got a lot of bikes on layby (customer advance orders for stock not yet arrived). As soon as they turn up, we’ll have great months.

But it’s still going well. In a good way it’s not quite as hectic as it was. Early covid was very hectic, borderline a bit too busy, but it’s a nice steady busy now.

But as everyone knows we just can’t get enough bikes quick enough.

If I took in my layby’s I think our (past two months) would be comparable to last year or maybe 5% better.

I think the next couple of months will be good because bikes will turn up, but they’re bikes that have been sold over the past few months.

As a general rule, particularly for this time of year, we would have something in the vicinity of 150 bikes in stock. I’ve probably got, bikes that aren’t sold, one, two… 10 or 15 bikes.

Most of those are electric bikes or high end bikes, definitely over $2,000.

We just do Trek and Electra.

Three weeks ago we had 80 bikes turn up. 76 were pre-sold. The other four sold within a day or two.

From what I understand talking to other retailers, everyone’s having the same kind of issues.

Most other brands, that I’d be willing to sell anyway, are definitely having the same issues.

Put it this way, we’ve done this before. A couple of years ago there was a big shortage of kids bikes and Trek ended up selling out of kids bikes. I did do some (other brands) then, which I regretted. That was the closest I’ve come to looking at other brands.

But next year could be a different circumstance.

We’re definitely increasing our holdings on parts and accessories to peg back a bit in other products that we haven’t normally stocked, to counteract bike sales.

And we’re ramping up our workshop. At the worst case we were probably booked eight weeks out. The past few months it’s been booked about three weeks ahead. So we’re definitely ramping that up to try to peg back some of those bike sales in other areas.

How will Christmas compare?

I think it is not going to be as good as previous years. Even based on what we’ve seen this month. People don’t like the idea, particularly with Christmas coming up, that there’s no bikes in stock.

We’ve just had bikes that have gone from coming in early December… the date is now 21^st December. That’s too close. Too risky. I don’t think people are going to be willing to risk it for Christmas. They’re happy to wait if it’s for a birthday, but Christmas comes on a certain day. Let alone that what we’ve penned for our Christmas stock is what we’ve been selling for the past couple of months, so come Christmas, if we keep pumping, we’re just going to run out of bikes.

I’m more worried about after Christmas because we’re going to sell most of our bikes before Christmas, but next year gets horrific. I reckon next year’s going to be worse than this year unless other shops start cancelling bikes so they start showing up again.

David Tannard of Bicycle Centre, Ballarat in western Victoria said:

Business is good. It’s up on last year. Repairs are good. Sales are good – obviously how we get product has totally changed now. It’s a bit hard to get your head around.

But you’ve got to take the good with the bad and obviously we’ve got some good for bike shops. The fact that we can’t get stock is just one of those things. You explain it to customers and they seem to be pretty happy most of the time.

I’ve probably got half a shop full of stock at the moment. One of this and one of that. No great quantities of anything.

Plenty of lists of bikes that people want, particularly kids bikes at this time of year. We’ve ordered more bikes than we’ve ever ordered before but it’s what we’re actually getting that’s always a problem. You might order 40 bikes, but you might not get those 40, it might be 20.

So you’ve then got to work out, ‘Who was the first one that actually wanted one?’ and ring them and say, ‘Hey look you can have it.’ And then the last one that ordered it you ring and say, ‘Sorry you can’t have one.’

How will Christmas compare?

It’s totally different from any year we’ve had. We’ve hardly got a Christmas layby whereas previously we’ve had stock rooms full of layby’s. You couldn’t move for layby’s.

They’ve certainly been asking for them. There’s a massive inject of people wanting bikes. More people come in and ask for a bike than have in the past 15 years. But how that actually turns into sales is going to be interesting.

I think Christmas (sales numbers) will be about normal because we won’t have the stock to fulfil demand.

I just had somebody in the shop today who said, ‘Can I have a kid’s 24 inch bike?’ and I said, ‘Nup. I just can’t. I’ve got orders for bikes exceeding the stock I’m going to have.’

It’s terrible! It’s the first time in 15 years that I’ve had to say to somebody, ‘I cannot help you.’ And knowing that the rest of the trade is like that. Knowing that they’re not going to be able to get that bike gift for their child… since I was a kid, kids, bike and Christmas have been synonymous. This crazy virus has changed everything.

But I also look on the bright side and say that the cycling industry has fared very well and there’s a lot of other people who are really hurting out there.

So it’s tough to tell someone they can’t have something, but then we’re not doing too badly. We’re actually employing people and we’ve got our shops open.

Leighton Thomas of Geraldton Bikes just over 400 kilometres north of Perth, WA said:

It’s good. It’s different. We’ve adapted to the new normal. Pre-selling lots of bikes so a lot more paperwork involved.

We’re still selling a similar amount of bikes to what we normally would – on paper – but just waiting for the bikes to arrive.

I suppose there are different ways to approach this bike shortage. Some stores may have got bikes in stock. Some are just waiting until they arrive to sell them.

But we chose to tackle the paperwork. Take the risk, communicate well with our customers, ‘Pre order a bike, leave a $50 deposit. We’ll put you in the queue for the next available bike and let you know when the bike arrives.’

But with the understanding that these bikes may be delayed by one, two or three months.

So far, all is going well. No customers spitting it.

They all know that their bikes may arrive just after Christmas. But they’re all ok with that. They’re obviously communicating that with their kids and so on.

But I can’t wait to get some bikes in!

Although we’re in little old Geraldton, we’ve probably been well positioned in this whole bike shortage thing by being able to work with five big brands.

We’ve always done good business with the five brands. We’ve never used any of them just to plug gaps for the sake of it. Always paying on time. Always having a good relationship, has allowed us to cover quite a few bases with the bike drops coming in at different times from all the brands.

I supposed compared to shops with just one or two main brands we’ve been in a better position. It’s been quite a luxury having a few brands to choose from.

It depends how you weigh it up. Is it who gets the bikes in first? Or who’s going to have the larger volume of bikes? Or who’s going to have the most consistent drop of bikes over the next six months?

They all have the same problems. None of them can bring in the volume of bikes to satisfy the whole market. We need more bikes than we can get. None of the brands really have a big point of difference for the volume of bikes that are coming in or at what month.

We use Apollo mostly for the Neo kids bikes. They’ve just told us they’re probably not going to get any more bikes between now and Christmas.

Avanti and Trek are our go-to brands for recreational bikes. Trek has given us delivery dates since covid started. Those dates have obviously changed over the past few months but having dates has given us the confidence to pre-sell bikes and work with customers. ‘You’re bike’s due early November at this moment.’ Then there’s a delay so we inform them of the delay. But at least having some kind of date to work with which is good for the staff and the customers.

Some brands are little bit vague on when bikes will turn up, so we didn’t have the confidence to pre-sell their bikes.

But definitely a lot more challenging just trying to manage a busier store in general. Having more repairs, selling more parts and accessories. A lot more stock control, a lot more ordering as well.

I probably do an hour of paperwork every day to juggle all the pre-sold bikes and keep on top of those.

Money in the till is probably the same or better. I mean it’s been a fantastic year. It’s levelled out a little bit now. But the back end work… I’ve never seen anything like it. So I’m looking forward to it settling down one day and just getting to sell bikes off the floor.

How will Christmas compare?

That’s a bloody good question isn’t it. I think the volume of sales will be similar. I don’t think it’s going to be any less, if you extend Christmas to the end of December, because we’ve got a pile of bikes coming that week after Christmas.