How’s Business – July 2020

Welcome to our monthly survey of six bike shops across Australia and New Zealand where we start by simply asking, ‘How’s Business?’

Our follow up question for this month was, ‘What product categories are currently out of stock both in your shop and with your suppliers?’

Darryn Giles from Chain Reaction Christchurch, New Zealand said:

Business has been pretty solid. We’ve seen some exceptional trading patterns. I’m not sure how long they’ll continue for.

We were shut for the four week lockdown period. Although in the last week we made ourselves an essential business, mainly to help out our very good customers. We were diverting calls to my personal phone, and everyone just wanted tubes!

We’re a Specialized concept store. We’ve been in business 20 years and aligned with Specialized for the past nine years. We’re a mountain bike shop and have solid ebike sales as well. But we appeal to a broad range of people. We sell kids bikes through to S-Works bikes.

Our key focus is to help customers.

We’re in central Christchurch, one kilometre from the very centre of the city on a three lanes each way road, that has the highest number of cars in Christchurch. We’re in a shopping complex that has 12 other retailers from home furniture to a café. The key thing for us is having 200 car parks outside our store.

Our goal in life is to help people achieve their cycling needs, which I think we’re pretty effective at doing.

Stock supplies

I’m well stocked. I made the decision during lock down that we were going to see some significant sales, so I purchased as much as I possibly could, with the expectation that suppliers would run out. Which in most cases, in bikes, they have for sure.

But Specialized have more stock coming.

I’m glad I’m not reliant on a couple of the other major brands who I hear have run out of stock completely. As a retailer, if you don’t have stock on your floor, you’re not really in business, are you?

Jaaron Poad from Giant Brisbane in the CBD of Brisbane, Queensland said:

Great. Like never before, are probably the words to say. We’re pretty lucky, aren’t we!

It’s a good thing that everybody’s worked out that cycling’s the choice, right? That’s the beauty of our industry. Society might actually be more tolerant to cycling than ever before, which would be fantastic.

Even the tradies are buying bikes!

We’ve been pretty similar to everybody else. It went ballistic when the gyms closed. We had a surge before the gyms closed because everybody wanted to get off public transport. That was the commuter.

Then the family thing took off when everybody was stuck at home and they wanted to get out of the house.

Now we get a lot of enquiries because surrounding stores have run out of bikes. We’ve continued to be flat out.

Stock supplies

Every bicycle type sub four grand is pretty much depleted. Road, mountain, city, hybrid… people have pretty much just bought whatever they could buy.

Giant have landed new bikes late last week. It has been good. Giant have been really fair, trying to keep every store happy. I think they’re doing a pretty good job.

We’ve been pretty good on P&A. Shoes are starting to get a bit tight, with Shimano. That’s just the upsurge with so many new people to cycling. I think if you managed your stock levels well you caught it in time.

Indoor trainers were a different story. Going into lockdown I probably had 30 of them in the corner and I thought I was going to die with them… then all of a sudden they sold out in a week and a half. It was like nothing I’ve ever seen before.

We’ve had a couple of shipments since. Tacx managed to land a few but they’re selling straight through. There’s still a decent demand for them considering we haven’t had a real lockdown here and the weather has been fantastic, it’s 25 degrees today. I don’t know why people live in Sydney and Melbourne… I don’t get it! (laughs). I come from New Zealand, that’s why I live here. We have nine months of summer and three months of autumn.

Conor Smith of Ulverstone Bicycles, located on the north coast of Tasmania said:

Business is busy. Yes – certainly things have changed with the lock down. We’ve been flat out in the workshop and with bike sales. It has certainly increased – just struggling to get stock now, is the only thing.

Now with Derby (MTB park) back open since the lockdown and all the national parks, people are back out and about and breaking things (on their bikes).

We’re a Trek retailer and we keep Malvern Star and do a few Apollo’s as well. We’re the only bike shop in town. We mainly do the family range, but we’ve flowed into more high end mountain bike these days.

The local economy is good. With the Job Keeper payments and things like that, I’ve found that people are spending money.

Stock supplies

Our key bikes are around the $500 to $1,000 mark, we just can’t get at all. There are quite a few dual suspension MTB’s now out of stock. Trek pulled a few bikes back from New Zealand so we secured of those, but they’ve now been sold.

We’re waiting on the new models but it looks like we’re not going to see a lot until October.

We still can’t get home trainers. We sold out prior to the lockdown. Most other stuff is not too bad. I was lucky that I had heaps of tubes in stock.

Peter Tregoweth of Bicycle Express in the city centre of Adelaide, South Australia said:

Business is not too bad. Compared to a normal late autumn and winter it’s tracking along pretty well. One man’s meat is another’s poison. We’ve been pretty fortunate.

It could always be better, but our sales have been pretty strong.

We’re certainly selling a lot of $500 to $1,500 bikes. If you’ve got stock you’ll sell it.

Our brands include Trek, Cannondale, Cervélo, Focus and others.

Our workshop has been frantic. I’ve had eight mechanics working. We’ve employed more staff. People have been hauling bikes out of sheds. I’ve seen a lot more people riding bikes.

If you can’t do your gym and normal exercise regime, I guess people are looking at other things they can do.

In the past six months we’ve had three Christmas events. We’ve had Christmas 2019, the Tour Down Under the next month and now the Coronavirus.

Now that it’s winter, customer numbers have dropped a bit, although this last week we’ve had sunny days and it has been very pleasant.

Our last really sensational year was 2014 and I’m certainly not moaning about the years since, but this year will certainly surpass that previous high water mark. All boats will rise higher on the tide – as long as they’ve got stock!

I suspect that there’s a lot of places that don’t have stock right now.

We’ve certainly had some good weeks. But I read that the government assistance programs come to an end in September. Demand could drop off a cliff. Who knows?

Ebikes have also been strong for us. We’ve found that in some cases, if people can’t get a $500 to $1,500 bike they’ll keep on spending more until they can get a bike that we have in stock. So we’ll sell them higher end stuff, in many cases.

It has been a good time for bike shops.

Stock supplies

Suppliers don’t have stock and anecdotally we’ve been told that a lot of bike shops won’t be getting stock until October.

I’m very pleased that in February when we first heard about Coronavirus I made the decision to buy a couple of hundred bikes in that $500 to $1,500 price range and they stood us in good stead, because we can’t buy bikes at the moment.

My read is that the industry has been caught with their pants down a bit, but then who would have thought that you’d be getting significant sales at this time of year?

Hard tail mountain bikes and commuter bikes are short. We’ve got a dribble coming through from Trek. They’ve shifted heaven and earth to get stock. We’ve got nearly 1,000 bikes on order over the next few months.

You can only be a retailer if you’ve got something to sell. If you’ve got nothing to sell, you’re signing your own death warrant.

If you’ve got stock, customer numbers are strong.

We’re carrying huge back orders for indoor trainers. People have paid deposits and are happy to wait for them. We’re told by the end of July there will be more trainers to come. But they’re being sold all the time.

Right now we have a whole bunch of clips with deposit receipts for different suppliers and products that we don’t have stock of.

There’s a thick wad receipts for trainers on that clip. I’d venture to guess 40 to 50 deposit receipts.

Jake Wolki of Cycle Station Albury, on the border of NSW and Victoria said:

Business is fantastic. It’s been a welcome relief following the bushfires, that’s for sure. We’ve got no stock left, like most bike stores. We’re in the position where we’re just taking whatever our main suppliers will give us, as they get it.

But we’re very positive. I’m hoping that it’s a wake up call for the industry, that we don’t need to discount as much as we do. Because obviously, everyone’s been selling through their stock and from what I’ve heard, everyone has been able to get asking price because it’s a sellers’ market.

Albury has been doing fairly well. We have a café as well. For the past two months in the café they’ve been record months, even though we’ve been doing take-away only. We normally have 80 seats in our café, so I think that’s a pretty great result. There have been a few other café’s that closed that have been doing it hard.

For the most part, everyone that stuck in there and had a go is fairly positive.

There’s no problem with travel across the state border between Albury and Woodonga. Most of my staff live in Woodonga. Two months ago there was uncertainty. Were they going to have to get a permit? I heard from one of my friends in the defence force that they were going to shut down the border and all this hyperbole. But nothing’s happened. You wouldn’t even know.

My biggest fear is that in six weeks or when everyone has got stock again, they’re going to drop their pants on price straight away again. But I hope this period has demonstrated that they don’t need to.

Stock supplies

We’ve had no issue sourcing P&A because there are so many suppliers with the same thing. Like, if you want a pump, everyone’s got a pump. But we have been completely out of adult bikes, under $1,000 for about six weeks.

I do feel like the sellers’ market has eased off a bit now, with eased restrictions and the cooler weather coming in, but we could definitely be selling more stock if we had it.

We’re currently getting weekly deliveries from Giant and Advance Traders which are our bike brands that we carry. There’s no stock list to pick from. It’s like, ‘Do you want stock or not?’ and then it turns up.

I’ve heard that there’s not going to be good supply for another six to eight weeks or so.

Robert Atromsky of Life Cycle Bikes  in the Western Australian wine and surfing tourism town of Margaret River, two hours south of Perth said:

Business is booming for me. We suffered from the hire bike side of things. But locals and Perth people who decided to come down and stay here during the lock down… we sold a lot of bikes to.

We just didn’t let them inside the store. They had to come to the back of the store.

I was in a really strong position because I had a lot of stock, which was intended to replace my hire fleet. They were entry to mid level bikes. The stuff I had is all gone now. But I was pretty proactive about getting my orders in quickly.

I also sold my existing hire fleet as used bikes. Not knowing how long we’d be shut down, there was no point having them sitting there not being hired, when people are looking to buy second hand bikes. In the short term, bike hire is one aspect of my business that I can do without. We usually have 12 to 20 hire bikes, depending upon the time of year.

Because I run the business the way I do, I also get early payment discounts for everything that I buy, so I don’t have any payment terms per se, I pay everything within two weeks or so. I would hope that would make a difference to some suppliers when you’re taking forward orders and there’s very short supply, you’d want somebody who’s actually going to pay for the bikes when they get them, rather than people who intend to pay for the bikes when they get them.

Stock supplies

I think the big struggle is bikes that are medium sized in the entry level. Say $500 to $1,000 price point. Those bikes are in very short supply. Baby seats have been a big issue as well. And now we’re seeing entry level helmets in short supply too.

We’re talking to some of the bigger shops that may do a bit of online selling as well. I think they may have hoarded a lot of the products.

My real issue is getting replacement parts from Shimano, just to do ongoing repairs. Not being able to buy a $30 derailleur, or a $40 derailleur, $50 derailleur, $80 derailleur!

It seems like shops are just buying them all up which is a shame because it’s making it harder for everybody. I think that it’s not wise on their part either to buy a year’s worth of repair parts for what might be, I don’t know, a two month period.

In some cases brake pads, hydraulic brakes are also in short supply.

I imagine for Shimano, the parts are being made in China, or Japan, or Malaysia, wherever they’re coming from, I imagine their factories are having issues keeping up as well. So we’re just getting the knock on effect from that.

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