How’s Business? – October 2024
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.
If you read what our participating bike shop owners had to say this month, you’ll see that their answers range from “Worst ever!” to “Best ever!” with the rest mainly towards the lower end of the spectrum between these two points.
For this month’s follow up question I asked, “What is normally your best trading month of the year and has that changed over recent years?”
Once again, you’ll read a highly diverse range of answers.
I think you can draw from this that the bicycle industry in general and bicycle retailers in particular, are highly diverse. Every location and market has its own unique set of variables. Every shop owner has their unique personality. Combine these factors and no two bicycle shops are ever the same.
John Kennedy from The Bicycle Fitting Store in Korumburra a small town 120 km south east of Melbourne, Victoria said:
Business is very ordinary. Probably the quietest it’s ever been since I’ve been here. There were times when I was in business in Melbourne when there was the odd quiet winter months.
But to be quiet in September is unusual and it’s down a fair bit from what it was. It has been good until about six months ago.
Probably these aren’t the views of people in the cycling world, but Australia is slowly being destroyed by decisions in Canberra. That’s the bottom line. We’re the richest country in the world, with everything in the ground and they sell it all for nothing.
No-one’s got any money. They’ve squeezed the lemon and there’s no drops left now. I’m getting more people coming in saying, “I’ll buy that next week when I get my wages.” They’ve got no money left in their account. And it might only be a $20 or $50 item – I’m thinking, “Wow!”
Rich people have still got money. But middle class and lower, don’t have money. They’re paying their mortgage… just to give you an idea, insurance on my shop used to be $2,500 – $3,000 per year. Now it’s $5,000. It adds up.
If you don’t own your shop and you’re paying a lot of rent and you’ve got three, four, five people working for you… not just in the cycling world either, it’s going to be very difficult.
My best tip for bike shop owners, you have to own the shop and be paying yourself the rent.
Cycling’s a tough business, so you’ve got to know what you’re doing and have minimal overheads.
I’m predominantly selling electric bikes. I still do repairs. If someone wants an expensive bike, I’ll get it in. But to have it in the window like everyone else does, and get robbed… I don’t do that.
You can have a dozen fancy bikes in the window that each cost ten grand. If you don’t move them, the wholesaler still wants his money. There’s still the same markup – you might be making 30% on a bike – on a cheaper bike that only retails for $1,200.
The cheapest bike here is $600 and the average one is $1,100 or $1,200 and if someone wants a fancy one, I’ll get it. My electric bikes on the shop floor range from $2,200 to $3,500. I sold one the other day for about $7,500. That’s what they wanted so I’ll get it in.
I’ll survive because I’m a one man band, I own the shop building and it’s a big shop. I’ve noticed a few shops in my area have pulled the pin, so I’ve sort of got it on my own here.
And I notice that some of the shops have trouble getting workers – to get skilled guys that know how to fix a bike. Then if they don’t do a proper job and someone falls off and gets hurt… the insurance and the whole… it’s difficult.
I’m going to start doing electric hire bikes because now we’ve got the rail trail at the back of the shop. (Referring to the Great Southern Rail Trail which is literally across from the back wall of the shop). So that’s going to be another side of the business.
Best trading month?
It used to be October/November or February/March. All I’ll say is that I’ve really noticed a big downturn over the past five or six months. Huge. I’m talking more than 50%. It’s a lot.
I was selling a lot of bikes. It’s dwindled, although I’ve had a few people the past couple of days talking about it. I mean it has been bad weather here, that might be a factor too, but people just don’t have the money.
Bottom line, the petrol went up, the mortgages went up, food’s gone up, but everyone’s still making the same money. Most people aren’t saving money now. They’re eating into their credit cards and they’re on the limit.
I’m not saying I’ve got a dim view on everything, but I can’t see things coming good from here on in. I’ll survive because I’m a one man band. But I certainly wouldn’t survive if I was paying three, four, five grand a month rent and had three or four people working here.
Unfair dismissals, payroll tax. I don’t deal with any of that. It’s too hard!
Gordon McCauley from GMC Cycling located in Silverdale, approximately 36 km north of Auckland, NZ said:
We’re actually having a pretty solid winter. We feel quite blessed that we are. One of our wholesalers, Bevan Cheatley from Trek was saying that what he noticed when I was a good bike rider was when I was riding really well I’d almost switch off the gas a bit and coast.
Then when I’d taken a couple of beatings, I’d go back to training hard.
And I’m a little bit like that in this business as well. We’ve a lot of stores fall by the wayside over the last few months and the harder it gets, the harder I work. So we’ve had a really solid winter.
Trek launched the new Madone and from what I understand we were the only store that really ran with it. We had an evening in the store with a Madone launch. We had all the bikes there. We had the Tour de France bike. We did really well from that.
From what I understand, we’re the top Madone dealer in the country now.
We take a group of customers to race in the Tour of Samoa every year. They have a four day stage race up there. That works really well for us. We have a Tour of Samoa information evening.
We’ve been up there two years in a row now. The first year was just my wife and I. We wanted a winter break after being at home since the start of covid really. It’s only a four hour flight. We loved it so much that we made of thing of it and we had 12 customers go up last year with us. Everybody enjoyed it. This year we’ve already got 12 customers registered already. They only have 50 riders in the tour, because that’s all the roads can handle.
It’s just fun. At the pointy end everyone’s racing. But it’s a rare race where my wife and I can ride together. I can finish the stage and they’re happy for me to roll back down the road and find her and ride back with her. It’s a fun ride tour.
Basically I try to have an evening or something else special every month. Our last one was a bunch etiquette evening. I went out with a couple of local groups and found that they were not pointing out potholes, they were riding all over the road, so we had a bunch etiquette night that went really well.
Our next event will be a Trek Checkpoint demo day. They’ve just launched all the new Checkpoints and Checkmates (gravel bikes). We’ve booked out a local pub that’s right at the entry to the gravel roads near us. So people can come out and ride all the bikes on the gravel.
We’re just trying to be proactive. Not just waiting for people to walk in the door.
When I retired from racing as a pro, I started a coaching business, like every ex-pro does. And it was Gordon McCauley Cycle Coaching. Then we ended up opening a bike shop, because where we moved to, there was not what I considered a good bike shop.
So we started GMC Cycling that incorporated the coaching and the bike shop. Pretty much the bike shop has taken over. I still coach 15 riders, but I cap it at 15 because otherwise I just can’t do those riders justice.
We’re in Silverdale, about an hour north of Auckland. Where we are, in total there’s probably 100,000 people, but we do pull a lot of our customers up from Auckland. We’ve been open for 10 years now.
We’re road and e-bikes. Where we are is quite a big retirement area as well, so you’re mad if you don’t do the e-bikes really. With e-bikes it would be primarily hard tails and step throughs. We do sell the odd full suspension MTB, road and gravel e-bikes as well.
Our main brands are Trek and Sinch (NZ based e-bike brand), that’s it. It’s the “keep it simple stupid!” analogy, isn’t it.
Best trading month?
It’s really interesting. Our normal best month would be February or March, but the past 12 months we’ve actually been pretty consistent. We’re on track for this month, September to be the biggest month we’ve ever had. (not just biggest September but biggest of any month)
A lot of that is just fostering relationships and working with people. Because we’re a two man bike shop… the general public know that the cycling industry is hurting a bit at the moment and we’re not a big corporate. We’re a locally owned two man store, so we do have a lot of loyalty and we really do appreciate that.
Richard Pickering of Pedalheads, in Brendale and Albion, two suburbs of Brisbane, Qld said:
It’s not too bad. Obviously we’ve been a bit affected by the cost of living crisis, as the press are calling it. It’s a little slower than we would like, but we’re still ticking along pretty well.
We sell quite a lot of road, triathlon and time trial bikes. While everything is a little bit lower than we’d really like, we’re still selling quite a good number of TT, road and gravel.
I would say the mountain bike side of things is a little bit flatter. Probably partly because having had a wetter than normal few months around Brisbane. But certainly the funds available for people to spend on bikes has definitely reduced a little.
Mountain bikes are generally flat across the board. E-mountain bikes are clearly an ever increasing proportion of mountain bikes sales and we’re still moving a few of them, but again, perhaps less than expectation based upon the past 12 or 18 months.
It’s only the last three months or so that have been a bit slow. I think we’ve seen a bit more foot traffic and a bit more action instore in the past couple of weeks, which I think probably reflects people starting to think about heading towards warmer weather and people getting out on bikes a bit more.
We still have two locations. (Brendale in the outer northern suburbs and Albion in the inner northern suburbs). The newer location we have, which is Albion, hasn’t been as affected from month to month. It is a little bit lower than some of its high points. But being closer to the city and in a pretty affluent area, I don’t think its quite as affected by interest rates continuing to remain a little high.
We’re hoping and looking forward to the good weather, seeing more people out, either buying or getting servicing.
Best trading month?
I don’t think we have a “normally” best trading month. We’ve been here for seven plus years and I’d be surprised if the biggest month on any year is the same one. It’s just been so varied.
The numbers would tell me. I could look it up and see if my thoughts are true, but from an instinctive point of view, there’s no particular month I’d point to.
Peter Giessauf of International Cycles in the inner eastern suburbs of Adelaide, SA said:
It’s picking up now. August was extremely quiet. I’m about 80% repair shop now. I don’t worry about selling a lot of bikes. If a customer wants a bike, I’ll get it in for them, but it’s mainly repairs now and that’s fairly consistent.
We started Semaphore in 1975 and then I bought this place when it was Manx Cycles in May 1991. It’s a long time, but it doesn’t feel like it. It goes so bloody quick! I still have customers coming in who came in as a kid when it was still Manx Cycles and they say, “Gee, not much has changed in here!” (laughs)
I repair everything. I do a lot of retro bikes… wheelchairs, tandems. You name, it I do it!
I do a lot of custom builds. People lately have been buying steel Colnago Master frames I’ve been getting in for them. And then we’re sourcing old Campagnolo componentry to build these bikes up. So that’s a big part of my business, the retro scene.
Customers will pay up to $15,000 on a bike. For a Colnago Master Arabesque frame you’re looking at just under five grand just for the frame and fork. And then of course they’re wanting to fit the 50th anniversary Campagnolo groupset on and they average about five grand. Then of course on top of that, all the other bits and pieces…
You can actually buy brand new Colnago Master frames. (steel 1980’s style) The last four I’ve done have been made to order. People have also been bringing in their original frames from the late 1970’s to 1980’s. Quite a few times they’ve been putting on new componentry, like Campag Chorus or Record 12 speed rim brake groupsets. They look quite good as well. You’ve got the new with the old.
The ones that want to take them up in the hills, and you know what steel frames are like, they can be a bit heavy… You can fit a 34 on the back and you can have a 34/50 on the front. It just makes it a bit easier to ride the steel bikes back up in the hills.
Best trading month?
It changes with the weather! (laughs) It’s just so weather related. We’ll get busy from about October onwards as people want to get their bikes serviced to start doing training for the Tour Down Under rides. And then they’ve got the Three Peaks Challenge, the Amy Gillett rides and stuff like that.
It can vary. It isn’t like the old days. I think a few years back one of our best months was July and July/August are usually our worst months.
Alister Scotford of Ventoux Cycles, Coffs Harbour on the north coast of NSW said:
We’re going ok, not crazy but not dead. Our numbers are pretty good. We’re turning a few over.
We’re pretty strong in that entry e-bike, entry level mountain. A little bit of BMX. The higher end dual suspension MTB’s are hard work at the moment.
Interesting climate at the moment, with all the discounting going on. It’s always changing. Always challenging.
I think a lot of the major wholesalers have got some pretty heavy discounting going on. If you were holding stock prior to that going on discount, then you’re a bit stuck. Fortunately for us we haven’t got too much prior stock.
It seems to me that everyone was caught with too much stock. But compared to 2019 we’re still ahead. It’s probably about 15% up (not adjusting for inflation). That e-bike up to $4,000 has really kept things going along when everything else is flat. It’s a whole new market that’s opened up.
I’m selling them to all walks of life. Definitely there’s people who are travelling with motorhomes, caravans and that sort of stuff. They’re buying a couple of e-bikes to give them mobility when they pull up somewhere. We’re seeing a fair bit of that.
They’re mostly buying normal e-bikes with a rack to go on the back of their van. With folding e-bikes, there are certain compromises in how they ride compared to a full sized e-bike. So we encourage people to ride everything when they come in and see what they think for themselves.
That type of bike is for sure an old population. But we’re selling e-bikes to younger people too, particularly higher performance off road e-bikes.
Best trading month?
Definitely December still. I don’t think it’s as marked as previous year. But certainly the numbers are bigger in December. November is hard to pick, it can be hero or zero.
January, certainly for us is pretty strong, because we’re a holiday town. February, things start to flatten off a little bit when the Christmas credit card bills start rolling in and the kids go back to school.
I guess our quietest months would be maybe March / April, just prior to Easter.
Greg Stoyles from Mercer Cycles in the heart of the historic port city of Fremantle WA said:
Patchy is the best word to describe it. I just don’t know what’s going to happen from day to day. Repairs are still strong, like I think everyone, right?
We’ve got a good core of bike users so we do lots of tyres, tubes, workshop stuff. But the day to day bike sales and enquiries, you just can’t pic.
Saturday’s busy, Tuesday’s dead – that sort of thing. As I put it, you fling open the doors and you see what you’re going to get.
We mainly sell e-bikes and that continues to be a strong market for us. We do Kalkhoff, DiroDi, NCM, Dyson, Earth… so we’ve got variety of what everyone requires.
As bad as it sounds, the NCM sort of market is what people want here. But we still do alright with Kalkhoff, because I’ve been doing e-bikes for 15 years, so we still do a bit of mid-drive. But I think the economy has hurt that market a bit.
Our workshop is fine. It’s busy. I’m on the tools myself. It’s the only way I do it. I’ve got an online form set up for repairs, so people can book. We’re not a fancy modern shop. We’re an old school shop. But we’ve got a contact form and we get three or four enquiries (per day) about fixing squeaky brakes and changing tubes and doing stuff, so it’s quite good.
It’s really commuter based in the market of what we do. We’re just that old school, everyday family shop that just keeps going along and does quite well with e-bikes.
There’s three of us. There’s the Saturday boy and I’ve got a kid that builds bikes one or two days per week, depending on what’s happening with his uni, and myself.
One thing I don’t say in this climate generally is, “No.” That means if I work until seven or eight o’clock at night or Sundays, that’s the reality.
Best trading month?
It used to always be Christmas in the volume. But I can’t pick that anymore. Like, I had a good August. It’s winter, but I had a couple of weeks selling five or six bikes per week. I could not definitely say September, October, November, December. I couldn’t pick a month.
Obviously in the warmer weather we sell more bikes.