How’s Business – August 2023

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With stock levels and discounting still a frequent topic of conversation in the bike trade, for this month’s follow up question we asked, “How does your current number of bicycles in stock compare with where you’d like it to be right now?”

Steve Bell from Graham Seers Cyclery, in the NSW northern coastal city of Port Macquarie, said:

Business is okay at the moment. We’re doing a few bikes and we’re certainly doing some good service work – the quality of the service work is good too. What I mean by that is that when people bring in, say, a dual suspension MTB, we’re doing cassette, chain, brakes, tyres, sealant, suspension – all on one bike. All the better things on bikes. We’re still doing the K-Mart bikes too, for sure, we won’t kick that out the door.

The highest service cost on a single bike we’ve had is $1,100. One guy’s wheel build, it was a downhill bike and he wanted the absolute best, and it cost him $700 bucks.

Parts could be better. But at the moment we’re pretty much stable, as I bought a fair bit ages ago.

Bikes in general – we’re actually doing quite a lot with Giant online, which is a fantastic system with the weblink Giant offers us. We’ve probably done somewhere between 40 to 50 bikes in the past three months through this. That’s everything from little kids’ 12-inch bikes right through to $10,000 e-bikes. So the web link is doing really well. I changed the way we’re running the business so instead of me buying it, people wanted to use ZipPay and all that sort of stuff. So we’ve just redirected people to the website. The freight is absorbed through Giant and I still get a cut. It’s a good system.

We’re doing a fair few road bikes at the moment too, which is nice. I was a Specialized dealer but now Giant is probably 90% of my business and I’ve got GT bringing up the rear at about 10%.

I’m from a furniture background. I was a retailer of furniture for 34 years in a family business. My mate owned this bike shop before me and I was in and out of here for years. I’m actually a motocrosser – or I was, I’ve retired now. But push bikes and motocross have always been my thing.

I’m just throwing myself into this business and having a crack, and I think we’ve landed really nicely. I’m getting good results from Facebook posts. We’ve also had some good weather up here.

Bike stock?

It’s right where I want it. I have really good stock. I’ve got a nice bit of stock out the back too. Ranging from the 12 and 16-inch bikes right through to $10,000 e-bikes.

The stock is probably the best I’ve had since I bought the shop two years ago. The shop’s looking really good, so is our apparel, spares and everything else around the bikes.

Lee Egan from Lee Egan Cycles, in Victoria’s fruit growing regional headquarters of Shepparton, said:

Business is ordinary. Once Covid finished, down here in Shepparton we got flooded … massive floods which put us out of business for three to six months – just for sales. My shop didn’t get flooded but my house did … it was pretty tough.

The floods stopped about August, September last year, then we had a little bit of a Christmas rush which continued on for a month or so. But then once winter hit this year … winter was ruthless down here! I think it rained for about eight weeks in May/June.

It wasn’t just us, the whole industry was doing the same. Then we just got more bad news. They’ve pulled the Commonwealth Games and we had two events here. The BMX and the road time trial were going to be here. That would have brought money to the community, not just for the Games themselves – countries would have come here to train, so we’re missing out on that as well. It is what it is mate, you just got to be able to keep bopping along.

We’re still here. We’re fine. Mate, I’ve been doing this for 32 years. You think you’re doing it hard but it’s just all standard. You speak to other people who are in the same boat … it doesn’t help you but it gives you reassurance that you’re not on your own.

Bike stock?

We’re fine. I think most shops have been caught out with over-ordering … or had orders they placed (but now don’t need) forced onto them or whatever.

For me, I think Covid killed the new bike market. Because people that weren’t cyclists bought bikes … and then realised they weren’t cyclists and sold good money bikes for half price, which killed the new bike market. That’s what happened. You see bikes that people paid two, three, four thousand dollars for … the put them online for fifteen hundred bucks.

All of a sudden you’ve got the same bike in your shop for $3,500.

Our main brands are Giant, Trek and Merida. Mid-range mountain bikes $500 to $1,000 are probably our best-sellers. And rear hub-drive e-bikes, because they’re reasonably priced. But having said that, most of the mid-mount stuff is now reduced to the same price so it doesn’t matter.

Chris Sharples from Daktari Sport, which sells bikes in three of its four stores and has its main bicycle outlet at Mt Gambier, SA said:

Business has been okay. We’re still doing alright. We seem to be moving bikes. We’ve changed the way we’re doing business this year. We’re looking at middle-priced bikes, that $700 to $2,000 bike, and scaled back a bit on the more expensive bikes.

I do bikes in Hamilton (Victoria) as well as Mt Gambier. Hamilton’s not nearly as big a town but we’ve still been doing alright. The repairs side seems to be ticking over okay.

We do other sports as well, but the bikes have probably been stronger than the other parts of my business.

I spend most of my money with Sheppards, because I do Malvern Star, Avanti and Scott. Trek is a big brand for me and I do quite a bit with PSI, mainly GTs.

Bike stock?

I always carry as much as I can fit into my shops. I’ve got bikes in boxes that if I could fit on the floor, I would. Now with e-bikes, room is always the issue. We have a lot of bikes on the floor in Mt Gambier – 150 to 200 bikes on the floor over there – and we try to keep it at around that mark. We only have about 50 on the floor in Hamilton.

I can’t complain. Both shops have been pretty good. Staff has been a tough thing. But I’m lucky at the moment. I have good staff now. But trying to find good staff earlier this year was a bit hard. I even offered some ex-staff that were living in the city quite a bit of money, but they just didn’t want to go back to the country.

My shop in Warrnambool is a dive shop (scuba diving) but because I’ve tried to package up my shops as one business, I do a few bikes there, probably I keep 20 on the floor. And in Port Fairy, I don’t keep any bikes because the shop is too small and I just don’t have the space, but I do some parts.

[When asked about the origins of the name Daktari Sport …]
I met the members of a band called Toto when I was in America. We were at a bar and I asked them where their name came from and they said, “We just wanted a name that was really recognisable.”

So for me, I came back and I thought of Daktari, which was a television show in the 1970s. People say to me on the phone, “I’ve heard of Daktari before.” And I say, “You must be old!” (laughs).

I’m 65 now. I’m nearly at the end of my business life. I’m from Hamilton.

Henry McKenzie-Bridle from Burkes Cycles in Wellington, NZ said:

It’s not too bad. It has definitely been more quiet than usual. I have been in the bike industry for maybe two and a half years now. It’s definitely quiet during the weekdays. We have a good spike on Saturday. That’s our best day of the week by far.

We’re one of a couple of Specialized dealers in Wellington. We’ve done Specialized for a long time and it’s one of my favourite brands now, from working here for quite a while.

We see a lot of returning customers here. They might have started shopping here from as little as eight years old and they’re still coming back to buy their own kids’ bikes now. This place is definitely an institution. It has been around for over 100 years.

We’re more in the e-bike market at the moment. We’ve got a pretty good workshop. We’re pretty knowledgeable about e-bikes and it’s definitely a thing we try to advertise here.

We try to advertise ourselves as an e-bike centre. We have a few e-bike technicians who are able to solve most problems with most of the brands that we sell and we love to see customers happy on their e-bikes.

Bike stock?

I’d say we’ve got a decent range of stock in store. I wouldn’t say we’re overstocked. But we’ve got a good range of stock so if people come in, we’ve usually got a good solution for most people.

Stock with suppliers is quite good too. So if we need to order any bikes, it’s not like we’ve got to wait two years for a bike like it used to be a couple of years ago. Stock has definitely calmed down, so we can order as we go – we sell a bike, we order another one.

I’d say we’re pretty organised here. We’re not mass buying out of fright.

James Swinbourn from Northern Cycles in Atherton, in far north Queensland, said:

Good. We are probably pretty similar to a lot of other people that you’re calling. We are up to speed with our workshop which is ticking along nicely.

This year has been an eternal wet season but it hasn’t stopped people from coming up here.

Our business is probably a little more highly geared towards the workshop. It makes up a little more of our total income – probably average around 15% to 20% of our sales – plus P&A sales.

We’re renovating our shop. We’ve redone a lot of the business IP (intellectual property). We’ve got a new logo, new corporate colours. We’re re-doing the front of the shop. It was looking pretty dull and ancient. New frontage, new paint, new window displays, new branding. We pretty much threw all of the brands that the shop used to do out the window.

The shop was very low-geared. We knew people were going down to Cairns to get the products and services they needed. It was the equivalent of an Anaconda store – okay, better than department store level but not quite at what would be the mean for all the bike shops.

We’ve put some better brands in, lifted the game of the workshop and that’s been well received.

Once the outside is done, we’ll be going through the inside. New flooring, new fixtures, no stone’s going to be left unturned.

We’ve also recently just undertaken sole distributorship for Foes mountain bikes in Australia. They’ve been out of this region for quite a while. We also have a relatively new suspension fork out of southern California called Wren.

Bike stock?

Our bike sales are a little down, with overstocking situations, but we knew that was coming, so over the past 12 months we’ve purposely gone lean – also so that we could have a relatively empty house for renovations that are happening now.

We’re not in an overstocked situation, especially for lower margin, higher priced bikes like e-bikes and big duallies and things like that. We’re in a pretty healthy stock situation, with healthy cashflow, so we’re not freaking out or anything.

All our brands are doing pretty decent clearance lines so they’re keen to move product on to make back some of those big bills. We’re taking advantage of that.

One of our major brands, Trek, has recently moved online. That’s kind of good for us. I know there are a few dealers that freak out when that happens and they think it’s the end of the world.

We actually went the other way. It let us focus on key models and having size ranges of key models and not try to have almost every model with limited sizes. We just use them as our warehouse and we direct people to the website and help them to narrow their choices down.

We’ve seen a bit of an uplift of people finishing their sale online, ship us the bike and we build it and do all that, so we’ve noticed a bit of a lift there.

Otherwise it’s pretty normal. I know that we’re down off the tail of Covid. But we also had a spike when we exchanged the business. We took over in August 2021. There might have been customers that hadn’t used this business before. They might have had another shop they’d utilised more, and they were interested to see who we are, what we were about, how good we were. So we did have a natural spike for the first six to 12 months after taking over the business. I’d say that’s all settled down now.

We’re the only bike shop for Atherton, but there’s a guy who used to work here before I took over who now works out of his garage, which is a few blocks away. He’s got a couple of basic accounts. And there is a relatively new shop owned by a guy who used to be a mobile mechanic and he’s opened in Malanda, which is about 25km away. He would be more of a competitor for us than anyone else. He’s well known in the area for working in shops in Cairns and up here and has a few brands.

Otherwise, it’s mostly Cairns and that’s the market we’re tapping into. We know that the businesses down there have a pretty long lead time for their workshops, whereas we’ve been knocking stuff out in maybe 48 hours. So we’re getting people who are coming up for the day, coming up for work and leaving us their bike.

Lee Scurlock from Bike Shed in Dunsborough, a WA coastal holiday town south of Perth, said:

Business is thriving. It’s been a real boom the past three years. We’ve seen a huge influx of customers to the south-west of WA, the Margaret River region. That’s brought a huge volume of work to us, whether it has been repairs, retailing, coaching – we’ve seen massive growth over the past three years.

We’re very fortunate. We’re in a small holiday town that has a huge influx of visitors from the Perth region and internationally, Singapore and such. We get a lot of visitors here from south-east Asia and that keeps us busy throughout the year. We’re kind of in the middle of nowhere, but it’s a stunning place.

We’re almost exclusively mountain bike. Largely pedal, rather than e-bike, as we only have a very small amount of elevation – 20 to 50 metres on our local tracks, which means they’re all very accessible to the whole family. Those trails are only about a kilometre or two from here, so a couple of minutes’ ride and you’re on the trails.

We see a large volume of anyone from 16-inch kids’ bikes going up onto the trails through to $25,000 e-bikes and everything in between.

We also have a reasonable volume of road riders come down for Christmas and school holidays from Perth, so we get a fair bit of business from them, but it fluctuates a lot.

We’ve got a 40-bike hire fleet, with about 10 e-bikes in there, both recreational and mountain bike. As soon as the summer school holidays start, they are all booked out for the whole holidays.

Bike stock?

We’re in a more ideal position than we have been in the past. We have more stock than we’d usually have at this time of year pre-Covid. But that’s just a hangover from suppliers getting stock back and being quite proactive about shipping their stock.

So we have a large volume of our most popular bikes, like mid-level dual suspension mountain bikes. But we’re not at all worried about that. We’re a two-man team. We run pretty lean and have minimal overheads. We try to run in the black all the time. Everything we have, we own. We don’t use terms, so everything’s accounted for. It’s not a concern for us.

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