How’s Business – May 2020

Welcome to my monthly chat with six bicycle shops during which I simply ask, ‘How’s business?’

There’s almost as much significance in what you’re not reading this month as what you are.

Firstly, you may notice that for the first time this month I am not including a New Zealand bike shop. That’s because New Zealand has gone into a much tighter lockdown, at least until the end of April, with most businesses required to shut, including bicycle shops.

I did try calling a few New Zealand shops but there was no answer.

By contrast, in all my years of making How’s Business calls (including for Bicycling Trade), I can’t remember having to call so many shops to find someone who could spare the time to speak. In the case of Brisbane in particular, the owners of five or six shops, who’ve all participated in the past, quickly said either directly or relayed via a staff member, that they were flat out serving customers or repairing bikes.

This does not automatically mean that total sales are up. Some shops have reduced staff and most are restricting customer access to varying degrees. Also repair work and low end bike sales are usually more labour intensive per dollar of sales than mid to high end sales.

But even allowing for these variations, the notion we suggested last month that the bicycle industry is faring better than many other sectors of the economy, appears to be holding up.

Our follow up question this month was, “What changes are you noticing in your number of customers and your conversion rate into sales?”

Robert Ham from Aspley Bike Shop in the northern suburbs of Brisbane, Qld said:

Two weeks ago we were getting ready to board up the front of the shop and move the valuable stock out of here. But now we haven’t had better trading weeks than the last two weeks. It’s crazy times.

We just can’t get enough stock. I’ve been telling my staff who are all new to the industry that this is what it was like ten plus years ago in bike shop. We haven’t seen this sort of trading for quite a while.

We’ve only been in this new shop for 10 weeks. Week five after we moved in we had a break in when they smashed through the front window and took a few of my high end bikes.

We were expecting to go into shut down and yet the last two weeks have been our biggest in ages.

The old shop was there for 10 years but I took over from the previous owner for the last three years. We were shut for 11 months. We planned be shut for six months, but it took a little longer than I planned.

We have supply shortages around bikes. We’re traditionally at a quieter time of the year when a lot of the suppliers are looking to reduce their stock so that stocktake is a bit easier and also before the start of the new season.

No-one was prepared for this, retailers or wholesalers. All of a sudden demand jumped and we weren’t prepared for it. We sold what we had on the floor on Saturday and (for some models) we could have sold two or three more of the same bike if we had more stock. But that’s not the fault of the supplier. We’re a small shop and we only carry so much. But then trying to re-stock, what was there at the wholesaler a week ago isn’t there any more.

We’re just going to have to be resourceful, try some alternate brands.

Changes in number of customers and conversion rate into sales?

This is not a normal trend, but right now the price is not really the issue. Customers are not arguing over the price. They’re not squabbling over price because there’s limited stock.

It probably tells us a few things that we need to look at as an industry, but I understand that that’s a bigger fish than what we’re playing with at the moment.

We’re seeing a lot more immediate sales. Not just people looking. That’s the circumstances created by this lockdown and the fact that people can’t go to the gym or do other forms of exercise.

So it’s bringing them back to bikes, which is a really good thing. We’re getting a really positive response talking to people about it. If these restrictions stay for a little while it might create new habits in people, good habits for the bicycle industry.

John Ross of Lonsdale St Cyclery, in the city centre of Canberra ACT said:

Business is solid. We’ve got a slightly different business model now. Lonsdale St is usually a pretty busy street where we get a lot of walk in traffic.

We’re not getting that, but we’re getting more people coming in to buy things.

Our sales transaction numbers are down by about a third since the coronavirus has been on. But our numbers are the same in terms of profit. Margins are down a little bit which means we’re selling more (a higher proportion of) bikes.

We’ve changed our staff mix. I’ve got three mechanics on now and just one on sales. Before we used to have two sales and two mechanics. Our workshop is getting pumped. A lot of people are bringing their old bikes out. And we’re building new bikes to get them out.

We’re selling more high end bikes. Ride Shop is across the road from us, and he sells more cheaper bikes than us, so he’s selling a heap of those and we’re selling more high end stuff, which is a bit unusual compared to what I would have anticipated.

Of the high end bikes I’d say we’d be at least 50% ebike and then 50/50 road vs mountain for the rest.

Changes in number of customers and conversion rate into sales?

Probably the number of customers is less and the conversion rate is higher. People are being pretty good in relation to doing the right thing. They’re staying home when they can and only coming out for a reason. People generally only come in for something. Some people are pre-ringing, ‘Do you have …? Can I come and have a look at it?’

So people are being pretty responsible in relation to the coronavirus I think, certainly in Canberra anyway.

Robyn Herrewyn of G&D Cycles in the regional city of Mt Gambier South Australia said:

Business has been up and down. We’ve had major changes with the way we run our business.

It’s a long story but basically the building we were in had black mould and I had to get out, and it was very quick. So we work from home now and have done for the past two years.

It took me a long time to get better and get back on my feet but the last year has been a lot better.

We’re operating out of our garage at home. I’ve got about a quarter of the stock that I used to have because I just don’t have the room. I was very lucky that a lot of the suppliers took back a lot of the stock when we had to move.

Business seems to be picking up. Due to this virus a lot of people are dusting off their old bikes and wanting them serviced and repaired. That side of things has picked up.

Obviously bike sales for us dropped way off because I can’t have a range to show people now. I can still get new bikes.

A lot of people are buying online and we’re happy to build those bikes. That’s a service we’ve been putting out there just so people know the bike is roadworthy and safe for them to ride.

Coming into winter will be challenging. Because we don’t have that shop front, we’re not in people’s faces continually. But I do a lot of stuff on our Facebook page. I know that a lot of people don’t do Facebook. We did try the local paper. That didn’t work very well.

But we just take it day by day.

We’re getting more phone calls, one day is quiet another is flat out.

Changes in number of customers and conversion rate into sales?

Because our situation is completely different now to having a shop front it’s the servicing that has picked up for us more so than buying new bikes.

Dave Marshall of Graham Seers Cyclery in the northern NSW coastal city of Port Macquarie said:

At the moment, business is very good. I can’t complain at all. Everything is busy, ebikes, kid’s bikes, everything is just walking out the door at the moment.

Lower end stuff is selling. Top end stuff – I’ve never been a big seller of anyway. I’m talking five or six grand and above. But anything five grand or below is popular and walking out the door.

Repairs are busy as well.

I’ve been running the same number of staff for a fair while. I’ve got half an eye out looking for another staff member, maybe a junior. I could do with another staff member.

Changes in number of customers and conversion rate into sales?

At the moment, because everyone is meant to be lockdown and shopping properly, the strike rate is probably eight out of 10. If ten people are coming in you’ll probably sell eight bikes where normally it would be 50/50.

Kate McBain of McBain Cycles in the city of Hobart, Tasmania said:

Business is very busy. It’s a solid mix. Recreational bikes have been good. Electric bikes have been good. Children’s bikes… it really is across the board. Servicing also has been very busy.

We did a soft close for a few days to work out where everything stood, until we could decide A. if the government was allowing us to open and B. how we could make the place as safe as possible.

Over that soft close we reduced our staff, but now we’re gradually building back up to what will hopefully be the usual level of staff. But that’s yet to be seen. We just have to wait and feel how long this will roll.

I’m limiting numbers into the store. I’ve found that I’ve actually had to lock the front door and let people in because they’re not taking enough notice of how many people are meant to be in here. So to maintain social distancing I’ve locked the front door and we admit people as we see fit.

I have hand sanitiser at the front door. I’ve cordoned off some areas and I’m not letting people try on helmets at this point in time.

Changes in number of customers and conversion rate into sales?

I don’t feel that it has been much different, to be honest. But we’ve been busy for months, so it doesn’t feel like a great deal has changed.

Damien Cook of Horsham Cyclery in the Western Victorian wheatbelt regional town said:

At this stage it’s flat out. Obviously everyone has got to get out and exercise outside. So bikes are getting dragged out of the sheds and repairs are crazy. Some people are lashing out and buying new bikes too.

It’s a weird time. It’s hard to predict what can happen. We’re the only bike shop in town, so it really helps in that respect. With gyms closed, people still want to get out and do things, so it has been working out really well for us.

We’re getting stuck with supply of a few things now. Most of our suppliers are getting low if not run out already, so that’s where it’s getting tough. Bikes in particular from entry level adult bikes up to $2,000, that’s where the struggle is. That’s what everyone seems to be buying. We’ve just got to go back to companies we used to deal with and see if they’re happy to help us out.

Our workshop is flat out mate. I’m here by myself. I’ve got a couple of kids who come in to change tubes, but I’m doing a lot of late nights doing repairs.

Changes in number of customers and conversion rate into sales?

It seems to be a little bit easier at the minute because customers are realising that there’s a bit of a shortage. So they’re not procrastinating as long as the used to beforehand. If they come in and we’ve got something, they’re pretty much getting it. People don’t want to spend as much time down the street either. They’re planning what they want to do. They’re coming in, ‘We need this, this and this.’ Then bang, out the door they go.

It works really well in that respect.

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