How’s Business – March 2022

Wollongong, NSW

Welcome to our monthly chat with bicycle shop owners and managers from across Australia and New Zealand. One universal theme in their comments is that stock shortages are still impacting their businesses and most feel that the light at the end of the tunnel, whilst visible now, is a long way down the road.

With unemployment rates at all time lows, our follow up question this month was, ‘What impact if any has the current low unemployment environment had on your ability to recruit and retain staff?’

Ken Frank who has four shops across Melbourne, Victoria and is one of the largest bike retailers in Australia said:

Business has been great. I was fortunate enough to have a lot of stock prior to covid beginning. I had stocked up, in the early stages, on as many bikes as I could manage to pay for.

That enabled me to sell for a couple of months, going into covid. Then, as with everybody, it enabled us to clear old stock, dead stock, things that you would normally have trouble selling.

That was great. I paid every bill I could get my hands on and cleared debt. Then we went through quite a lean period where no stock was available. But stock is becoming available again now.

I suspect that would be a relatively short period. I suspect that we will run into problems coming into Christmas again this year. So I’m trying to stock up as much as I’m able to, prior to that and be able to get whatever sales we can.

Currently with all that’s going on in terms of the economy, with the threat of war, people’s fear of Omicron, certainly it has inhibited sales currently. But we’ll pass through that period, so overall it’s been a great time for bike shops.

Now we’re facing the increase in pricing, which appears to be mainly because of freight.

That has a huge effect – initially, you’d allow maybe $15 or $20 to get a bike into Australia – I think you’re looking at triple that now. So it has a major effect on the lower priced bikes. It’s not particularly noticeable on a $2,000 or $3,000 bike, but we can’t get many of them anyway! (laughs)

I have a new store at Hoppers Crossing. We currently have a store north, south, east and west of Melbourne: Giant Hampton, Ivanhoe Cycles Hoppers Crossing, Ivanhoe Cycles Hallam and Ivanhoe Cycles Heidelberg.

Staff recruitment problems?

We’re the same as everybody else. You would dearly love to have another 10 mechanics available to you could handle everyone’s repairs. It’s quite difficult at the moment to get additional staff.

I’ve heard it’s been called ‘The Great Resignation’, where a lot of people have lost their (previous) job and for whatever reason given up work and decided not to go back to their old work.

That’s certainly presenting problems. I don’t think that’s the bicycle industry alone. I think that’s widespread.

Andy Murane of My Ride Woodville and Unley, two suburbs of Adelaide, SA said:

Trade is busy. There’s a lot of people out riding. The workshops are busy with lots of repairs and you physically see people out on the road riding.

As for new bikes, they’re starting to come back into the warehouse so they’re starting to flow through now. Mid to upper range bikes are a little bit awkward still, but it’s looking better than it was six months ago, so I think it’s on the up and up.

With the Tour Down Under, I relate it as similar to the Grand Prix. Everyone was excited about it when it first came to town and now it’s a bit normal. But it has even dipped away further because there were few internationals (due to covid travel restrictions) so the media didn’t get on board and our shops didn’t have that little kick of cycling hitting the mainstream in January.

That’s normally a follow up from Christmas. It just creates that buzz because it’s right in the centre of the city. It gets bums on seats and we normally get that second kick in January, but it hasn’t happened for the past couple of years.

Staff recruitment problems?

Our staff in both of the stores are good. We have quite a stable team, so we haven’t recruited for quite a while. There’s a hole for quality staff, I think, but the crew we’ve got are good workers, very knowledgeable and long term. So it’s all good on that side.

Liam Frejiszyn from The Bike Stable in Sawyers Valley, in the hills about 40 km inland east of Perth, WA said:

It’s a bit tough at the moment, especially in WA. Not a lot of stock got to us in January or February. The floods in South Australia held up the trains. (Editor’s note: The transcontinental railway line was closed for 24 days to repair flood damage, reopening on 15th February.)

We’ve got a few bikes that have come in over the past couple of weeks, so the shop does look a bit better over the past week, but then we’ve got to sell them.

Demand has been a little bit quiet.

We do Specialized and Cannondale, Fox Racing is our main clothing line. We’ve been going three years now. We’re quite a small shop, so our allocation of bikes isn’t that big and we don’t really get to pick what we get sent, so it’s a bit tricky.

We were waiting for a lot of bikes to turn up for Christmas, like kids bikes, that didn’t quite get there and then the small Specialized kids bikes have been recalled because it doesn’t have a back pedal brake and the legislation says it must have a back pedal brake.

Anyway, there’s quite a lot of things that have gone a little bit wrong over the past couple of months. But we’ve still got lots of service work – the workshop’s busy – we just need a few more bike sales.

Staff recruitment problems?

We’ve not really had any trouble. We’ve been lucky there. A few people have been real keen to come on board and that’s going pretty well. Something’s going right!

Peter Marshall from Ride Tumba, in the small NSW town of Tumbarumba said:

We’re just coming up to 12 months at the end of this month, so it’s ok. It has been difficult with the supply issues that everyone’s dealing with. One of the things we’ve found very difficult is getting accounts. Certain big brands have said they won’t take on any new shops until the stock issues are resolved, so that’s been very difficult.

We haven’t been able to get a Shimano account. Equally, SRAM – PSI haven’t given us one. I’d done a little bit of bike shop work when I was going through uni but we’re starting from scratch here and it’s a suck it and see approach.

We had very low expectations, opening a shop in a small town, so we’ve exceeded those but the stock issues have been hard to deal with.

I’m also starting to learn just how conglomerated, I guess, the bike industry is becoming. People don’t just own one shop, they might own five. So when you’re a small shop in Tumba, you’re not that attractive a prospect!

We source our Shimano parts for repairs from Pushys or BikeBug, which I know are now the same. I tried to work with another shop about 70 k’s away, but I felt like I was a pain in the bum for her. So I just do it at cost. (Editor’s note: Referring to buying parts at retail price and not making a margin on those parts, only on the labour.)

Bike hire and service are definitely the significant parts of our business. We’re never going to sell a million bikes. Some days our only income is from service and hire. We wouldn’t be here without the rail trail. That’s definitely been a great boon for the town.

I’ve also been working away at the mountain biking – I’m president of the club and we’ve just received a three million dollar grant to build a mountain bike trail network.

Staff recruitment problems?

It has been difficult. It was difficult to get a cleaner for our accommodation business. For the bike shop it’s just me at the moment. I have employed a couple of teenagers who help me out some afternoons.

Adrian Douglas from Trek Bicycle Southport on the Gold Coast in Queensland said:

Mate’s it’s still steady. The demand hasn’t backed off much. Supply is increasing so things are getting better. But there’s still long waits on certain components, bikes – nothing that people don’t already know.

It’s wide and varied. Sometimes it’s a size issue, sometimes it’s a model issue. Sometimes it’s different components and it changes weekly. You can’t just say ‘It’s high end road bikes.’ Or a particular crank or derailleur. Pink Bike put something out last week saying it was still a 12 month wait on SRAM chains… it’s not any one thing.

Here in Southport we didn’t have a problem with the floods. We’re we full gas all the way through. Our Burleigh store was closed for a day on Monday because most of the staff at Burleigh live down at Palm Beach and they were all flooded in.

There’s been a lot of rain damage to mountain bike trails here. I can’t walk in my back yard because I sink and inch down into the mud. But business wise, it hasn’t really affected us that much. It’s been a bit slower this week because not many people are riding, but that’s just a temporary weather thing. We’ve still got people coming through the door.

Staff recruitment problems?

Retaining is not an issue, but recruitment is. It is difficult to find people at the moment. But there are still people out there looking for work. It’s definitely something that’s on everyone’s radar at the moment.

The retention of staff at Trek has been pretty good over the years. Trek does an awful lot to make Trek a great place to work to keep staff, to keep people happy. Myself – making sure my team is happy and well supported is one of my priorities.

Rob Smail from Bike Culture in the mountain biking centre of  Rotarua, New Zealand said:

Business is good. It’s interesting. It’s challenging. We have to be more creative. Our business is quite custom build focused as far as bike sales go… or it was, when we could get parts.

But we’re making it work with what we’re getting. (Editor’s note: Bike Culture’s main brands are all high end MTB: Santa Cruz, Juliana and Transition.)

It’s definitely down in terms of turnover and number of bikes that we’re getting, but we don’t have big overheads so we’re ok.

Our entry level bike price has gone up considerably. That’s been a challenge also. But the biggest challenge is people who want a certain bike – being able to fulfil that is difficult.

Customers are learning to be more flexible with their choices and their spec, colours or maybe a particular model of bike. We’re getting a lot of people onto bikes, but it is impossible to fulfil everybody’s requirements at the moment. But we’re doing everything we possibly can to get people a bike they’re going to love. It’s difficult, but we anticipate it’s going to be like this for at least another 18 months or two years.

There’s been a massive growth in people wanting to cycle and buy bikes and the industry has not been doing its best to keep up, but it’s impossible with the growth.

But I think inevitably there will be a drop off and our level will go back to a new norm, which will be massively higher than what it was, but production and supply will slowly catch up.

We’re just hanging in, doing the best we can and waiting for that to happen.

Staff recruitment problems?

It’s irrelevant to us. We dabbled with staff once. We learned a lot and it was a valuable experience, but all I’m going to say is we’re not going back there! (laughs)

There’s me and my business partner who own the business. We’re the only two people that work here. We do absolutely everything right through from accounts to sweeping the floor and cleaning the toilet and that’s the way we like it.

We don’t have any aspirations to take on the world. We just want to service our customers. We opened the shop in 2007 so it’s a wee while now. We’ve been through a few changes.

But other than starting the business, which was pretty challenging for the first five or six years, this period has been the most challenging.

The first 12 months of covid was difficult, but it wasn’t as hard as the second 12. You get more of a resilience mindset of making it work for now and looking forward to the future.

I’m sounding abnormally confident and positive! (laughs) We love the job we do and we wouldn’t want to be doing anything else, so we just make it work.

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