How’s Business? – May 2024

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Welcome to How’s Business, brought to you by our sponsor Dirt Works Australia, where right now, you can get Sunringle wheelsets for HALF PRICE.

As always, we spoke to a wide range of dealers across Australia and New Zealand, with a mix of city and country locations and a wide range of store types.

With the weather getting colder, for this month’s follow up question we asked, “What do you think the upcoming winter season will be like for your store and are you planning any winter promotions?”

Andrew Treloar, from Wagga Cycle Centre in the southern NSW regional city of Wagga Wagga said:

At the moment, things are really positive. We’ve had a very busy school holiday period with lots of sales in all categories. Good autumn weather has also helped that – and a very busy workshop.

That’s our current state of affairs, but it’s certainly a change on our previous couple of months where our numbers were definitely sliding, compared to previous years. Even forgetting covid, our numbers were definitely sliding for the first couple of months of this year. But then a really surprising, aggressive bounce back. We hope this will feed into the quieter winter months.

It started exactly a week before the school holidays started. A very noticeable flick of the switch. We’ve had beautiful autumn weather in southern NSW. I think the broader economic landscape has definitely affected sales heavily during February and March, but we’ve been able to bounce back.

We’re about a 1,000 square metre store, with 600 metres of showroom and 400 metres of workshop and storage. Our major brands are Giant, we’re a very strong Norco dealer, Scott, Velectrix e-bikes and associated smaller brands through BMX and the various niches.

We have six and a half staff. The half is my dad John who’s been doing it for forty-something years. He’s in his 70’s and still comes in and helps with a bit of paperwork and cleaning and likes to cast an eye over the place and make sure it hasn’t burned down! (laughs)

Winter predictions and winter promotions?

I have been thinking about this a bit. My forecast for the winter months is definitely that things will be on the quieter side. I’m planning for a quieter than average winter period.

I’ve been doing that through careful stock management, being careful not to over-order. And even planning staff holidays around when we’ll be busy and not busy. But the general consensus is quieter than average.

Regarding promotions, we like to think that giving people a shot of something special to walk into – promoting storewide discounts at the start of the winter months, but also after tax time as well.

The start of winter and tax time feel like the two important times when we’ve really got to be on our feet and capture the market.

Marcel Govers from Bikeline Toowoomba, which is 125 km due west of Brisbane, Queensland said:

We’ve recently opened a second store and that’s actually doing quite well. It took a little while to take off.

The Toowoomba store, that’s been here for over 30 years, we’ve had some record months in the past half year, but we’ve been pushing really hard. I think that if you’re making noise in the market you can do quite well.

We hear a lot of stories that people are not doing as much and that they’re seeing their numbers go down.

But for us last month was better than the year before and we did our best ever December and January. It’s more on the high end side. Your entry level bikes, everything under $1,000 is hardly moving at all. It’s mostly the over $5,000 bikes that are still doing well, and actually, better than ever before, to be honest.

We’re making a lot of noise in the market from an advertising point of view. We’ve been on radio, we’ve been on TV in the past six months. We’re on radio almost every day, TV for six months in a row.

Our online store is doing quite well with online promotions. We’re selling bikes throughout the whole country. Bikes that we’ve got in surplus, advertising them in a smart way and showing them to the whole country, means that we get people from Tasmania buying a certain bike from us because we’re the only ones in the country that still have it. Then we ship them there.

It helps put us in front of possible buyers in different states as well. Just our own website – we’re not on BikeExchange.

We’ve seen a lot of bikes that we’ve sat on for a bit too long because the local market didn’t want it, but then at a slightly sharper price we see that we can move it online. It frees up liquidity and we can put new, fresh stock in store.

Our new shop is Bikeline Ipswich, on the edge of Brisbane. We opened in October 2023. It’s trading well. We set up quite a big store and put a lot of stock into it.

I bought Bikeline Toowoomba from the previous owners right at the start of covid – March 2020. Then we had the crazy covid boost so I had never really experienced the market how it was in the past, until now.

I call it the economical downturn. The economy is just in a squeeze. A lot of people that would normally still buy bikes aren’t buying bikes that you sell in a bike shop. They would go for Kmart or really low end ones. Under $1,000, that market has disappeared almost.

Winter predictions and winter promotions?

Winter is typically the time that people ride more in our area because the weather cools down a bit. I’ve done a lot of rentals in Ipswich, which we were trying to develop in Toowoomba, but it never really worked.

Ipswich is on the Brisbane Valley Rail Trail (one of the longest and most popular rail tails in Australia) so that’s done quite well.

Our winter period will see a lot of delivering rental bikes to people on the rail trail.

Promotions wise, we’re mostly following our bigger brands. We stock multiple big brands. We’re mainly a Specialized dealer plus we do some Bianchi, Focus, Scott and Avanti.
And then a whole bunch of entry level e-bikes.

We definitely follow the bigger brands when they’re doing promotions. Specialized at the moment and Scott is also still having a current promotion. I am expecting that some other brands might still follow.

It’s a buyers’ market at the moment. If you want a bike at a good deal, just wait for the promotion on that brand.

Kevin Lee of Papanui Cycles in Christchurch, the largest city in the South Island of New Zealand said:

Business is good. You know we had a pretty good summer, and coming into autumn it has been ok. It’s certainly down a little bit compared to last year but repairs have been up and that’s helped.

We cater for a unique market – an e-bike everyday market. Those people have still got disposable income, so we’re not too bad.

Papanui Cycles has been around since 1938. We’re the oldest bike shop in Christchurch. We have a 300 square metre store with a mezzanine and a separate workshop.

Our main brands we carry are Merida, Hybrid (a brand in NZ), Wattwheels, Kalkhoff, Velectrix and Hiko. They’re our main e-bike brands and then we do Avanti and some Haro bikes.

Winter predictions and winter promotions?

I haven’t got any promotions planned internally. But our suppliers will do promotions to the public via they’re websites and that’s all that we’ll really do.

I would expect winter to be quieter than last winter. I would say that post covid we’ve gone back to what it was prior to covid, so we’re not expecting anything amazing.

For New Zealand, everybody will be quieter, just because of the sheer fact of where the economy is in New Zealand. Just the sheer fact that there’s been a lot of discounting last year. Now we’re starting to see shortages of some bikes.

People won’t have as many bikes on their floor. Stores will say, “This is all we can get and this is the price…” Whoopee! Maybe we’ll be back to normal retailing again!

We’re seeing saying main suppliers bringing in less bikes. I think you’ll find this winter suppliers will be keeping their inventories quite tight. The minimum order quantities might decrease.

Marcus Walker from Walkers Wheels in Montmorency in the leafy outer north-eastern suburbs of Melbourne, Victoria said:

Let’s just call it challenging! (laughs). I’ve really scaled it back, almost into quasi retirement. But I always say that there’s two groups who won’t let me retire. One is my customers and the other is a group called the Commonwealth Bank… neither of them have my best interests at heart! (laughs)

I’m doing a lot less bicycle retail and concentrating on doing repairs. That’s the thing I love doing.

I’m still in the same premises. The shop is littered with repairs. I’m slowly selling stock out.
I turned it into an appointment based thing where people would ring me and I scaled my hours back a bit. That’s not as profitable as being open all the time.

When there was a shortage of bikes and everything was top dollar, I stepped away from that fray for a while. But now I’ve noticed that there’s specials and suppliers that didn’t want to talk to me a while ago are starting to ring me.

But I’m enjoying the less stress of doing repairs. I was always grumpy previously but now I’m old and grumpy!

It’s just me now. I got rid of staff. Suddenly, when you stop selling bikes, all of these other expenses disappear, getting rid of cardboard, the staff to build them etc.

Doing the work myself, I can make mistakes for free! It was annoying me paying people to make mistakes in my behalf. (laughs)

Winter predictions and winter promotions?

Everyone I speak to, not just in the bike trade, is whingeing. So I think it’s going to be a rather bleak winter. We should be carrying some fat into the winter – making sure the hay loft is full.

Prior to covid, winter was the reconstruction period where you’d tear the place to bits and rebuild everything, because there was nothing else to do. Rather than trying to keep your cashflow by banging your head against the wall with lower prices.

My intention is rather than to chase sales, to clean out.

Geoff Appleton from Giant Perth and Giant Canning Vale, which is about 23 km south east form the Perth CBD said:

I guess it depends on what quarter we’re talking about. My stores, Perth and Canning Vale were pretty strong in the October to December quarter. We were pretty happy about that. It felt earlier that it wasn’t going to be good, but it ended up very good.

Then the last quarter, January to March, definitely a significant decrease in the CBD which we’ve seen over the past year or so since the covid craziness settled down. We’ve certainly struggled to think about renewing the lease there.

But the Canning Vale store is quite the opposite. It’s just busy all the time here. We’ve got repairs, and all kinds of different bikes going out the door. So very happy with the performance of the suburbs.

We bought Canning Vale in July 2022.

I’ve been working with the landlord in the CBD, trying to renegotiate. Also looking at other premises in the CBD area, because we’ve had Giant Perth for coming up to 11 years, and it will be sad to see it go.

But the reality is it’s a lot of risk and work to consider sticking with it. I couldn’t find a premises with value in my opinion. So it was a pretty easy choice and part of the reason in buying this store (Canning Vale) was the potential for something here as well as income for my family.

I’ve got a very good manager and staff in the Perth store at the moment, so I haven’t had to do much in the day to day running of that store. The guys have been great, but there’s just more people working from home. There’s just not enough happening in the CBD and the landlord won’t reduce the rent. So we’ll be closing Giant Perth at the end of June this year, because that’s when my lease is up.

If we didn’t make this move my wife and I would have probably been working hard in Perth without any staff. Now I’m really close to home so we’re really happy with this move.

We’ll just move all of the stock to Canning Vale and just run one store, with no plans to do anything more than that.

At Canning Vale we’re still 100% focused on the Giant brands. Over the past couple of years there were a few dealers that I spoke to who were thinking about going with Giant and then didn’t because they thought that might not have been the future. I think that is our strength in the market. I’m happy with their support.

Winter predictions and winter promotions?

I have gone a bit lighter on winter gear this year. Also some of my suppliers, including Giant, aren’t doing much with winter programs. So definitely I’ve prepared myself for maybe selling a bit less in winter clothing.

We’ll probably be pushing some end of financial year promos on bikes and gear in general.

We’re busy enough with repairs, that keeps us pretty happy.

There’s a few shops that have closed nearby. That’s also keeping us a little more busy because those customers are finding their way here as well.

At the moment I’ve got, including myself, I’m on the tools a lot myself these days, there’s two full time and one casual mechanic plus a casual for building, a few days per week. Then when I close in Perth, one of the mechanics, Callum, will come across. Then we’ll be able to amp up and take a bit more on, because we’re usually three to four weeks out from the next available service booking.

It would be good from July onwards, we’ll be able to take on a bit more work, which is definitely there.

Troy Reilly from Sprung MTB located in the CBD of Launceston, Tasmania said:

Yeah mate, it’s been good! It’s obviously a new world these days that we’ve all had to learn.
Down hear we’ve got a pretty good network of trails and lots of people are out doing it still.

We’re still wholly and solely a mountain bike shop. We do sales, but we’re focused on service.

We sell Rocky Mountain, Yeti and Santa Cruz. We’re also doing Forbidden. We’re still a full store, but I focus harder on keeping a huge range of spares to keep everybody going.

We have the suspension centre as well. It’s nice to be able to keep things rolling as people send us suspension work from all around Australia.

We work with Fox a lot. Sometimes if there’s warranty issues with people travelling, we do that in house. But we’re independent.

Other bike shops also send us work. Very similar to your Cyclinic and NSD set up. Interstate shops also send us work, more and more, which is nice. But I would say that 75% of work we do comes from within Tasmania.

Currently we’re only booked a week and a half out. We’ve just come off being three weeks out. We only run two mechanics, plus myself, but I don’t do a great deal (on the tools) these days, which is disappointing. I’m on the computer, replying to things, ordering stock and all that sort of stuff.

Winter predictions and winter promotions?

Winter always quietens off down here. It just gets a bit cold and dismal. But winter should be good. We’ve got a few things in the pipeline that we’ll launch end of May. We’re hoping to run some training courses.

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