How’s Business? – November 2020

Welcome to our monthly conversation with bicycle shop owners across Australia and New Zealand.

It would be lovely to have a break from talking about the Covid-19 impact upon the bicycle industry, not only for the relatively trivial reason of editorial variety, but because, as the pandemic drags on, it’s really starting to put a strain upon bicycle shop owners, managers and team members.

Increased demand continues, which is potentially great for cashflow and profits, but supply chain issues are still causing significant stress for many dealers.

With this in mind, this month’s follow up question was, “How much more time, if any, are you having to spend sourcing stock for your store, both bicycles and P&A?”

Vince Attree from St Kilda Cycles in the bayside suburbs of (then) locked down Melbourne said:

We decided to stay open. I know that some shops have closed fully or closed for certain days or limited trading hours. But given our location (in St Kilda, one of Melbourne’s most popular areas for cycling), we decided to soldier on, with click and collect sales. Yes, the workshop’s open for critical repairs. Online sales tick along as well.

Our biggest worry if we were going to shut up shop or restrict our trading hours is you lose that momentum. The lockdown is not going to last forever.

It is going to open up here… hopefully in the next two weeks.

We could have put everyone on JobKeeper and had a holiday but I think the places that do stay open… as soon as a customer goes somewhere else, if they have a reasonably good experience, they’re going to keep going there.

Since lockdown stage four came into effect, we’ve seen a definite reduction in sales. Mostly centred around bikes and big purchases. Our turnover isn’t there compared to what it was before lockdown, which everyone knows was going gangbusters.

That will return. We’re going into a good part of the year and bike sales are set to explode once people can come through our doors, test ride bikes and all the rest of it.

As an example, I sold two bikes, click and collect today. But the ability to fit people properly, on-sell P&A, that’s what can make the difference between an $800 sale and a $1,000 sale.

Click and collect is very time consuming. You’re walking back and forth from the phone to the door all day long. You’re doing a 10k walk every day… it’s keeping us fit!

We’re certainly holding our own and it’s given us the opportunity to fix the place up before summer.

We’ve put a sliding door on and other things. And we just look forward to better days.

As retailers we like people coming in, walking around, having a chat. We run a sale through,  wish them well and off they go until they come back. Now it’s become an impersonal thing. It’s more of a numbers game. It’s not great.

I’m glad we moved around the corner (to a smaller shop) when we did.

I’ve driven by a couple of other shops… whether they missed the boat (on ordering) or whether their brands don’t have anything, there’s nothing in the store! The whole front of the store is empty. But I’ve got a lot of stock, I’m hoping it all sells, because it’s a number you’ve got to eventually pay for as well. It’s been a bit of a tightrope…

Re time spent sourcing stock:

That’s actually a great question. The boom has caught people out. We all know about the shortage of bikes for everyone from Giant downwards.

We’re having to make do, but people are willing to wait on bikes, or perhaps step sideways and maybe buy a bike that’s not exactly what they wanted.

But what’s becoming increasingly difficult is some of the parts and accessories, like Shimano, out of stock. Workshop can be a really important revenue generator. We’re definitely falling into that category.

When we were really rocking along leading up to Stage Four lockdown, we ordered a lot of stuff. We did a big forward order with Shimano parts, tubes, tyres, lights, helmets…

It has paid off. You’ve got to store it somewhere and you’re tripping over it and have got to keep it organised, but having that stock at hand has been a benefit, because suppliers have been running out of stuff.

With our online sales, quite a bit of the stuff that we sell, we’ve got here in stock, but you really start walking a thin line because some of the stuff we’ve have to order in from suppliers who are running short of stuff. So you’re back and forth with suppliers and that takes time.

Every sales takes a little bit longer and you’re problem solving more than just selling.

Russell Tucker of Tuckers Cycle Inn located in Rockhampton almost 700 km north of Brisbane, Queensland said:

Business has been steady, but unfortunately like everyone, we’re struggling for stock. I gather that when the stocks do come into Australia the big boys down south who need more stock than us to survive are getting the bulk of it.

We get dribs and drabs. I’m hearing noises of next March or April, even June or July until we get some sort of normality back.

It’s the $500 to $600 family bike that’s the shortage and what people are still wanting. To ride to school or for mum and dad to take their kids for a ride.

The Brisbane rail trail has been brilliant. It has created so much interest, even up this way. People are asking for a bike to ride on that. It’s 700 kilometres away from here, but people go for a holiday. I believe that people have reopened old pubs and shops along the route because there’s so much action. (The Brisbane Valley Rail Trail at 161 kilometers is the longest rail trail in Australia and was officially completed in August 2018).

Locally there’s the old rail trail from Yeppoon to Rockhampton. People are always trying to lobby the Council but they’re not interested. (So far only 4.5 kilometres has been opened at the Yeppoon end of its potential 53 kilometer length to Rockhampton.).

If we could get that done, I’m sure we’d see a lot of people commuting to work on ebikes. Ebikes are going through the roof here. They’re going to be the future. Tony Morgan from The Electric Bicycle Company is doing an exceptional job of getting me stock. He’s a trooper, that guy, getting shipments through. That’s been a godsend to us. I’ve got a few of them back ordered, which has been good.

We can get ebikes but we can’t get normal bikes. The northern hemisphere has taken so much of the stock. We have a minimal percentage of the world’s bike sales.

I’ve been lucky enough to get into mowers. So I’m now bikes and mowers. There was an old guy in his 70’s, Jacko, who had built his mower business for 35 years but had no-one to hand it to. He’s an old bike rider and he used to come in here and say, “How about selling mowers?”

I’m a motor mechanic by trade, so eventually he said to me, “How many houses have bikes?” And I said, “I don’t know, maybe every other one.” And he said, “Well how many houses have a mower?”

It’s been good. It’s worked for me. It’s interesting when people walk in with a bike and a mower for repairs.

He comes in the afternoons. I do bikes in the morning and mowers in the arv’s.

It’s been interesting to learn from him, enjoyable.

You’re always looking to add something to your business.

You know when someone buys a bike online and asks you to put it together, what are you charging them? You’re not making money out of it really, are you?

The internet has certainly changed the way bike shops operate, especially in the country areas.

But I’m still doing a few top end bike custom builds. I just built a beautiful DeRosa. It’s just out of control nice… Campag EPS electronic. It was an $18,000 build. I’ve been getting a few of them, a couple of Ridleys, so that’s been good.

You can pay $19,000 for a Specialized out of the box now. That’s Peter Sagan and Julian Alaphilippe’s pay packet. (Specialized sponsored pro riders) They’re paying for them… that’s fair enough.

But you can do a custom build for the same money… that’s nice.

Re time spent sourcing stock:

It’s interesting when lockdown ended because the old school 26 inch tyres and tubes ran out. Everyone took their old school 26 inch mountain bikes out of their sheds and then the country’s out of 26 inch tyres and tubes. But they’ve pretty well caught up the stock now.

I believe Shimano world-wide are struggling to supply stock for bikes to build.

Nathan Morris of Bicycle Centre Mitcham an established foothills suburb of Adelaide, SA said:

It’s been really good. Last month we were really starting to struggle with stock. That’s definitely picked up in the past week or so and things have been tracking really well.

Overall, we’re up by a long way. We’ve been lucky here in South Australia. We only had a very short lockdown period and then it just about seemed like normal here.

Even with stock being an issue, we’re still quite a bit up on this time last year.

Re time spent sourcing stock:

Hours a day! I’ve nearly got our main reps on speed dial. We spend at least a couple of hours every day trying to find stuff. It’s really time consuming.

It’s sort of worthwhile. We have to chase up and find out what bikes are being allocated to us.

Bikes mainly but also some clothing, certain brands like Fox are running very low. There’s other brands too. Spring releases we were hoping to see a couple of weeks ago have either been delayed or are just not coming at all.

Brent Love, from Missing Link Cycles in Whangarei, New Zealand’s northernmost major town 158 km north of Auckland said:

It’s crazy. In more ways than one. It’s super busy in the workshop and enquiries, but I can’t fulfill all the enquiries because I can’t get stock.

We’re a small store. Our market is mainly the $800 to $1,500 mountain bikes. We also do a lot of touring fit ups, so we do Surly as well. We do a lot of touring bags, and the workshop is our main business.

Re time spent sourcing stock:

I’m normally the main mechanic and the owner/manager as well. Sourcing stock time has probably doubled at least. Even today, I was trying to source brake pads. I must have spent 15 minutes just trying to find a customer’s brake pads, and then failed – not due until February next year!

So I went through all my other wholesalers to try and find something that’s sitting around or a different brand to what I normally stock. In this case I looked at some compatibility charts and found a competitors’ brake pad from BBB that will work.

Luckily for this customer I can get them, but they’re not due for another two weeks and his current brake pads are toast.

It’s across the board. It can be gear outers, Shimano chains, I say Shimano as a broad thing, brake pads tubes, tyres. We’re having to search three or four different wholesalers and place a small order with each one, because we can’t get everything from a single wholesaler like we normally would.

CST (Cheng Shing Tyres) is a classic. One wholesaler will have some stock, some stuff, (certain sizes) and another wholesaler will have other stock.

Craig Gibson of Sunrise Cycles in Ballina and Byron Bay in northern coastal NSW said:

Business is very good, we can’t complain at all. Obviously it’s been difficult sometimes getting enough stock, but we’ve got plenty of stock rolling through now and basically we can’t keep up with demand.

I’ve hired extra staff. We’ve got an extra three, not full time. They’re doing sales, and bike building and secretarial work.

We’re not getting a lot of tourist trade. We closed our other shop in Byron Bay for about six weeks from about the first week in April because it relies on backpackers, tourists, the whole holiday trade and the town died.

But Ballina seems to have boomed.

When the gyms closed down here and all that sort of stuff, bike shops went mad.

If you’re a smart operator and you’ve got your orders in very early I think you’ll be right. I think we’re going to have a strong Christmas. I’ve got plenty of stock floating in ready for it.

My main brands are Giant, Merida and Stock and we do a lot of XDS, always have for years.

Re time spent sourcing stock:

Probably an extra 20% to 30% in chasing the stock and allocating it. One of the girls we put on, the secretary, 50% of her time is trying to chase stock and when it comes in allocating it to customers. Back orders, stock comes in… right, I’ve got that order for Bill Brown and allocating it… there is a fair bit involved. You never know when you’re getting stock. They say you’re getting it next week and then it doesn’t come for two weeks.

Daniel Fieldhouse from Morley Cycles in the suburbs of Perth, WA said:

It’s actually regular, like any Christmas build up at the moment. We did have a bit of a boost around the lockdown period, however stock is a bit of an issue. We’re probably getting 30% of the stock that we usually would but it’s selling quicker than usual.

So looking at the numbers it levels out to about a usual year.

If we could get the stock, it would be well up, but we just can’t supply the demand at the moment on specific bikes. Pretty much anything over $2,000 we can’t get. Anything under is ok. Everything over, that probably makes up about 10% of our overall sales, it adds up.

It depends upon the brand. We only sell Giant here. Giant have landed a lot of the cheaper stuff but they have no high end. Whereas Merida and Specialized, they only have high end and no low end, so it is brand variant.

Re time spent sourcing stock:

I’d say 30% more time. Small items like kickstands for example. If the wholesaler we usually buy them from runs out, we have to source them elsewhere. We’re changing distributors for lots of small products, so it takes a bit of time.

I assume all the wholesalers place their orders at different times so everyone’s receiving everything at different times. So it’s whoever’s got what, is where we go.