Welcome to How’s Business, brought to you by Knog – Australian designed and lighting up the world.
I’ve recently been hearing about multiple stores, spread across three different States and Territories, where senior bicycle mechanics or workshop managers are being offered or already being paid salaries in the vicinity of $90,000.
This is higher than anything I’d heard of in past years, so for this month’s follow-up question I asked “Over the past two years, how much increase have you seen in the salaries you need to pay to recruit and retain workshop and sales staff?”
I probably made a mistake in mainly calling smaller shops this month, somewhat impeding a thorough examination of this topic, because a number of the featured businesses employed few, if any, staff. However, they still made some interesting comments.
A final point to note is that all six of the store owners this month talked about e-bikes. I didn’t ask any direct question or give any other prompt at all in this direction. As we recently reported here, based upon import data, e-bike sales have been growing at 40% year on year for the past six years and when adding wholesale and retail margins onto the now about $280 million total import value data, then at retail, e-bike sales are now approaching half a billion dollars per year in Australia.
Although we don’t have any firm data to prove it, anecdotally at least it appears independent bicycle dealers are taking a larger slice of the e-bike sales pie compared to their share of conventional bike sales, where mass merchants, big box retailers and online retailers take most of the volume.
Warren Key, from Melbourne Bicycle Centre, in the inner north-east Melbourne suburb of Clifton Hill said:
It’s been a good year up until the past four, five, six weeks, when it has tapered off a bit.
It has been a comeback year after a relatively poor Christmas last year – thank goodness, because we all needed it. It’s a new world because obviously this oversupply of bikes has meant everything’s been discounted; so we’ve had to give away margin, but cashflow has been ok and sales volume has been quite good.
In Victoria, the usual sign of the bicycle market picking up is the end of the footy season, but it’s been unnervingly quieter than I expected.
There’s definitely a pick-up in electric bikes. That has been almost doubling every year. It helps a lot that there has been some heavy discounting by suppliers to lure the marginal customers into the shop.
We don’t deal much with top-end recreational e-MTBs. For us it’s been that $5,000 down to $1,500 category but the sweet spot has been in the $2,000s.
It all depends on what we can get on special. We had the Momentums from Giant, which is a bloody good commuter bike that we made margin on, courtesy of the discount from Giant. We’ve even been doing $999 Shogun e-bikes. Ok, we got squashed on margin, but it created a lot of interest in store and a lot of them bought the next level up or the one above that.
In less than five years, our store will be 50% e-bikes in terms of number of bikes on the floor. The dollar value will be greater. The margins will be smaller but it’s a whole new world of customers, and bike shops are the place they’re going to, not the alternatives.
At the other end of the range, there’s an oversupply of that $500 to $1,000 mountain bike category, which is flat, post-Covid. They’re utilitarian bikes that are used for everything.
Our store is primarily in the commuting world, so we haven’t been too badly hurt by that. The workers are going back to work in their city offices, so we’re maybe part of their plan for commuting. That’s specific to our location, so not a general industry thing. (Warren’s store is about 3km from the CBD and within a local government area with one of the highest percentages of commuter cycling in Australia.)
Staff salaries increasing?
We’ve kept our staff. We have a very slow turnover of staff. I can see how retaining could be a problem, but we’ve had no problems.
Wages are going up, that’s for sure. Whatever awards go up, we go up with it and we always stay just above that.
We’re getting into stuff that needs more expertise that we didn’t grow up with, with e-bikes.
Jeremy Forlong from Off the Chain in Dunedin, the second largest city in the South Island of New Zealand, said:
Business is ok. We’re starting to ramp up for summer with our repairs and servicing; so, as a whole, we’re not doing too badly – it’s more that it’s not crazy like it was at times over Covid. It’s just more steady.
We predominantly do servicing and repairs. That’s about 70% to 75% of our business. We cover repairs from your very basic through to e-bikes, suspension servicing, wheel building – a lot of custom wheel building – and then just selling bikes and a wee bit of P&A.
We do P&A with the likes of Leatt and a few other brands. We like to deal with brands that we’ve tried and know it works and is good quality. I like to support local brands, so we deal with a cleaning product called Angry Bear, which is a New Zealand-based company.
We do a wee bit with a bike brand I really like, which is Moustache e-bikes. I’m quite a fan because they’re very well made and assembled bikes and we see stuff-all problems with them.
I like things that work and we don’t have unnecessary problems. On the non-e push bike front, we do a wee bit with Santa Cruz. I do a lot of MTB racing and work with a few race guys.
Staff salaries increasing?
We’ve definitely had to go through that, for sure. I couldn’t tell you an exact percentage, but we had to do that at the start of this year. It’s definitely been a conversation.
Nathan Brown from Central Coast Cycles in Killarney Vale, NSW – about 100km north of Sydney – said:
It’s going good. Repairs are still going pretty good. I think people have been hit pretty hard with rent and cost of living, but we still seem to be going pretty good.
E-bikes are still selling regularly. We’re in a nice position pretty near the lake (Tuggerah Lake, which has extensive lakefront bike paths) so we’ve got regular customers.
We’ve got a fair few laybys for Christmas.
We’re primarily a family bike business. We mainly do family bikes in the $600 to $1,200 range. We also have commuter and mountain e-bikes. We also do XDS retro bikes that women seem to love.
Loss of margin from discounting is not too bad at the moment because a lot of importers are overstocked, so everyone’s got sales on. It’s not impacting us too much to have them on sale when we get a discount from the supplier and the customer gets a discount.
You still get people coming in trying to beat you down on full-price bikes, but because everyone has discounts, we’re able to help out the customers (selling them the discounted bikes) and get a pretty good price for ourselves as well.
Staff salaries increasing?
We’re a pretty small business. We’ve had the same staff for ages. I’ve been here 10 years and there’s only three of us in here. We haven’t found it to be too hard, I suppose.
Dave Phillips from Pedal Power Plus in the Queensland city of Gympie, 170km north of Brisbane, said:
Business is reasonable. Lots of repairs. I’m probably the only fully qualified bicycle mechanic for miles around and I’ve been doing this for a long time, so I think that helps.
I’ve sold a few women’s bikes in the past couple of weeks, which I feel is a good sign, because the women hold the purse strings! And they don’t really need a new bike, a lot of the time, so when they loosen the purse strings, I think that’s a good sign.
I’m Canadian. I came initially on a bicycle tour. I didn’t realise quite how big Australia actually was. I had a few interesting times. I came from a big shop in Canada that also manufactured bicycles. They built frames, they imported parts, so I worked in that part of it as well. It was a comprehensive education.
I met a chap in Brisbane who had a bicycle shop and we worked together for a couple of years. It was the early 1980s and there was a bit of a bicycle boom. Then I got a job selling Giant Bicycles in Queensland, the Northern Rivers of NSW and the Northern Territory. I pushed their barrow for 12 years and used to come to Gympie.
It was a lovely day in the winter. I parked up by the park. It seemed like an interesting spot. I thought that I’d go retail, for some crazy reason. I bought an existing shop. It was probably the worst business decision I ever made in my life but, I don’t know, money only gets you so much. This is my 16th year. It’s been interesting. It’s a mining town. It’s a bit daggy. But there’s a lot to recommend it as well.
I sell Giant bikes, so I’m lucky to have that. Except for e-bikes, I haven’t been stocking anything over $1,000. I have tried all that and it hasn’t worked for me because you just get stuck with stuff. If you’ve got a blue one in medium, they want a large in red. It never seemed to work out and there’s too many other bike shops around; so I just find that $1,000 and under seems to do pretty well for me. And I don’t do too badly with e-bikes. I don’t sell a lot but I sell a few, because they’re easy to ride and the people that buy them are my peers.
I’m an older sort of guy now. I find them easy to sell. They’re a whole lot of fun. I do a lot of repairs. I take my time and do the best job that I possibly can and everything goes out the door sparkling clean.
Staff salaries increasing?
I don’t have any staff. I have to do it all myself. My wages have remained static! (laughs) Sometimes I take home an extra oily rag.
Nick Garland from South Perth Cycles, which is in an affluent area with high rise apartments and is located directly across the Swan River from the CBD of Perth, WA, said:
At the moment, it’s very good. As you would be aware, for the past seven weeks, Specialized has had a big sale on, the biggest one for a decade and a half, I guess. That’s been a really big kickstart to summer. We’re getting a lot of new customers through that. It’s been excellent, probably not for other brands, but for us.
The good thing is we’ve still been selling a lot of stuff that’s not on sale. It wasn’t a blanket sale, especially Turbo e-bikes. Day-to-day foot flow into the shop is not anything fantastic, but the bikes we do sell tend to be reasonably big-ticket items, and big chunky repairs as well.
For example, just now we have someone wanting to spend $550 on an old bike with sentimental value. If you sell it, it’s not worth that much, but you can’t put a value on memories.
We do other brands apart from Specialized. We were doing Trek but we stopped for different reasons. We do Greenspeed recumbent trikes. We’ve done a few of those in the past two weeks, which is nice. We did one again yesterday. We don’t display those. We just get them in to order, then spend a day building the bloody things!
But we’re mostly Specialized. I’m not really on the lookout for another brand at the moment. I’m reluctant to start doing a $1,500 to $2,000 e-bike range. I just don’t like the idea of trouble down the line, you know?
Within Specialized, the e-road and e-hybrids would be best for us. We do a lot of Vados and Comos – the SL versions, so the lighter-weight versions. In the sale, we sold nearly a dozen of the full power Levos, which is not something we sell a lot of normally.
Even out of the sale, we sell a lot of their Creo road bikes.
I hear from reps that a lot of stores are quiet. It was a bit of a tight winter, but I think with our new lower overheads … and for us it’s good because there’s another huge building with 400 or 500 dwellings going in 50 metres away from us.
We moved to a smaller shop just over a year ago. I should have gone smaller in the first place, but someone persuaded me not to. I knew in the first six months of that lease that it wasn’t working properly. Our new shop is literally half the size, but rarely do my customers say “It’s only half the size”. They say “It looks a bit smaller”.
But I’m paying just over half the rent, which is much better.
Staff salaries increasing?
I don’t know because at the moment we’re running really lean. Just me and my son. We haven’t looked for staff. For the past couple of years, it has been dreadful for stock availability so I’ve kept it lean and worked big hours, 60 – 70 hours per week. Now I’m doing 60 hours and it feels like a short week, but my girlfriend doesn’t think so! (laughs)
John Bishop from Bicycles Victor Harbor, in a popular South Australian beachside tourist town that is 80km south of Adelaide and has a very large number of retirees, said:
Business is steady. It was steady through winter and it’s still remaining steady, without a boost at this stage.
‘God’s waiting room’, they’re very good customers! Our e-bike sales are going quite well for that older demographic. We have an ocean front bike path that runs from Victor Harbor through several seaside towns and finishes at Goolwa. It’s a good distance (about 18km) and we run a hire bike fleet as well, mainly e-bikes. We do good business with that.
We sell all sorts of bikes here, but it differs from my previous shop in Mount Barker, which was mainly mountain bikes. Down here it’s a cross section of all sorts of bikes. We do quite well with single-speed SE Bikes and with general middle-of-the-range mountain bikes. Dual-suspension mountain bikes and downhill bikes have been quite slow down here, being a beachside town, and we’ve got a good range of e-bikes.
We started this shop from scratch about three and a half years ago. We were setting this one up as we were selling the other one at Mt Barker.
Staff salaries increasing?
That’s a good point, and it’s one that I’ve recently had to consider, because competition for staff is a little high. You’ve got to pay the right wages or you lose them, so I’ve recently given one of our guys a 17.5% pay rise.
Things like that have to be pretty well on the top of your agenda.