How’s Business? Stock Supply Special! October 2021

Welcome to our monthly chat with bicycle shop owners and managers across Australia and New Zealand where we simply ask ‘How’s Business?’

In keeping with our stock supply theme for this month, our follow up question was, ‘How much bike stock do you have now and how confident are you that you’ll have enough for this summer season?’

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Dan Mikkelsen from Bicycle Junction in central Wellington, the capital of New Zealand said:

It’s good. We’ve just come out of a lockdown. Everyone seems to have jumped back into action and we’re trading again as we were before the lockdown. It’s also the time of year when people are really beginning to consider their summer purchases and of course they’ve had a bit of time to think about that over lockdown.

We’re getting a lot of people now enquiring about bikes for their summer adventures. Parents taking the plunge on cargo bikes and everyone bringing in their repairs following a few weeks of car free riding.

By bike shop standards we have a very small floor. One third is café, one third is back of house and one third is the shop, which gives us just around a 40 square metre sales floor, which is very tight, but we manage very well out of that.

Stock supply?

I have way more stock than I ordinarily think would be sufficient. It’s necessary, at the moment it seems, to buy in bulk from most of our suppliers to ensure that we have what people need when they need it. Gone are the days, for the next 18 months at least, of ordering from a supplier and having it delivered in a couple of days.

We’ve had to ensure that we have good stocks of our core lines. That’s been at time incredibly tough on cashflow. Particularly at this time when you’ve come through the quieter months and you’re stocking up for the summer season. I’m sure a lot of people are feeling that. But it’s something that’s not going to go away for quite some time. It’s just the new normal for a while I believe.

I do think it will be enough to get us through the summer. We certainly have plenty on order. The difficulty will be in seeing whether the freight issues mean that bikes don’t arrive until the end of summer. That would be my main concern. I know we certainly have enough bikes on order, but will they actually arrive?

Matt Blackman, of Blackman Bicycles which has three locations: Parramatta, Blacktown and Penrith in western Sydney, NSW said:

Business is very good actually. It’s very busy. I see a whole new demographic of bike rider coming through. People can’t do much else, other than walk, and they want to ride a bike.

We’re coping with lockdown by having call, click and collect. A lot of people call up and we’re getting parts and accessories ready near the front of the shop, with their name on it and we do the transaction at the front door. We’ve got a doorbell set up on top of a table in front of the shop which is to block people from coming in. That notifies the staff in the shop that they’re outside waiting to be served.

We wheel the bikes outside to size them up and give them the correct size while observing social distancing.

Stock supply?

We’re finding that stock really isn’t there. It’s still very sporadic. Shimano in Malaysia was shut for three or four weeks wasn’t it – that slowed down production overseas.

I still can’t see us having enough stock for summer. You hear about all these tentative deliveries that are coming, you get rough ETA’s (estimated time of arrival), but because of shipping, it’s all very sporadic.

I’m playing it week to week, month to month. We’re a business that’s based around Giant, GT, Mongoose… Blackmans is also well renowned for having a good range of BMX bikes which we buy through BMX International, PSI and Triple Six. But it’s still very sporadic.

And realistically, to find all your tyres, all your tubes, all your parts and accessories, instead of taking three steps it’s taking six to nine steps. Because you have to make so many more phone calls and log onto so many different b2b’s to find out who’s actually got stock.

So it’s really hard to keep that continuous line of product that you’re used to and what you’ve worked so hard to retain. We’ll see how we go once we get through this next stage of lockdown, how we plan and move forward from there.

We moved our Parramatta store about 12 months ago. They took the light rail right through there and it shut down the main drag through Parramatta. Parking got reduced even more, so we made the leap further down Victoria Road to part of a semi-industrial area where we’ve got 10 on site parking spaces and on the weekend because all the industrial units shut down, there’s more parking in the area.

It’s smaller than what we had, but smaller shops these days aren’t a bad thing, especially with the amount of stock you can get!

It’s different. It’s non-stop at the moment. The phone doesn’t stop ringing with people making enquiries. All the wholesalers are doing what they can, I believe. It wouldn’t be an easy job at the moment.

Then so many people are bringing bikes out of the shed for repairs. At the moment I’ve got a two week wait in my workshop. You have to balance it with building bikes. A lot of the time you have to say, ‘no’ because some of the bikes are so far beyond help. When the repair of the bike outweighs the value of the bike three times…

Jimmy Acomb from Bikeology, in the south western suburbs of Brisbane, Queensland said:

It’s good. It’s busy – repairs are very busy. We’ve got the usual lack of stock with suppliers. It’s always a challenge, but the bikes are still coming and going.

Scott Bikes is our main brain brand. We also do some Felt and Willier.

I’ve always been repair based. My turnaround time depends upon what’s wrong with the bike and when the parts are available. Shimano is a big problem: shifters, cranksets, chainrings… SRAM’s in the same basket as well. That problem has been around for a while.

Tyres depend upon the supplier and brand. Maxxis has got big lead times. But there’s always problems, we just have to solve them and get around them. That’s just the nature of any business. Even when things are running smoothly there could be a problem because there’s not enough business!

I’m a great believer in kids’ bikes. Regardless of whether you’re a high end or low end shop, I think everyone should be selling kids’ bikes. I understand they’ve got a business to run and need to make money.

It’s an obligation. I need to do kids’ bikes to get kids onto bicycles. If you watch cycling on TV, all those professionals were kids at one point. They all grew up and went through the ranks.

iPhones and those industries suck kids into a vortex. You have to try to counteract that by getting them on bikes and getting them healthy. If you don’t do them, if every bike shop stopped doing kids bikes it would eventually fizzle out.

Another problem with kids bikes is that you see parents try to put their kids on bikes that are way too big. They’re trying to get 15,000 years out of them! Inevitably what happens is that they stop riding it because it doesn’t feel as comfortable, or they’re not confident on it, because it’s the wrong size, or it’s too heavy. So they’re not enjoying it as much and they go back to their iPhone.

If you catch them at an early age you can help them all the way through. That’s the goal. It’s a long term investment.

Stock supply?

The bikes are starting to trickle in now. I’ve got bikes on allocation that are coming in. I’m confident that there’s going to be bikes.

Ben Weir, from Wild Ride Cycles, in the northern Tasmanian town of Latrobe said:

It’s going pretty well considering you can’t get most of the bikes. It could be worse. We’re going alright. The workshop is starting to pick up again after the winter. It’s steady.

I’m actually from Brisbane and moved down at the start of the year, so never really had a winter affect the workshop or anything, but the first winter down here, it definitely slowed up a bit. For a few weeks, it was pouring rain.

We’re a more mountain bike focused store here. A small family run one. We’ve got a trail network close by. We do road as well. Our main brands are Norco, Mondraker and BMC. Mondraker is a new brand from Advance Traders.

Stock supply?

We did some pretty big back orders around this time last year. So I think we’ve got pretty decent stock in comparison to some other shops. But I’m not very confident it will last the summer. We’ve got two e-bikes until the end of the year. They’re both size large enduro bikes that we do a lot of. We can’t get them either. We’ve got one of each model in a size, but I don’t think that will be enough to get through to Christmas.

We’ll get through, but we wouldn’t like to have to turn away that many people. With the ETA’s, we’ll get a stock sheet every two weeks but every time bikes have been removed.

It’s pretty hard to take a deposit and being confident to say to the customer that their bike will be here by the end of the year. What can you do, really?

Stuart Passmore of Passmore Cycles in the large regional town of Albany on the south coast of WA said:

Business is very good.

Stock supply?

We’re actually pretty good on stock at the moment. We don’t have every single bike in every single colour in every single size and there’s definitely holes on the floor with models and stuff like that, but all in all, we’re actually going pretty good.

Confidence wise – that’s a tough one. Every month is play it by ear. But for us, we get a pretty good supply of e-bikes and as long as we keep selling those, everything else becomes a bit of a non-issue or a bonus. For example, there’s no doubt we’ll run out of kids bikes sometime between now and Christmas and there’s no doubt we’ll run out of mountain bikes between now and Christmas but as long as we keep a supply of e-bikes, we’ll be fine.

We sell all the e-bike models, e-mountain, urban, a little bit of gravel when we can get stock, the odd e-road bike. Road bikes have been dead for a while anyway. Urban and mountain for sure. Anything up to seven grand in an e-bike is fairly common for us to sell.

We’re technically a Giant Store (GS), even though we’re called Passmore Cycles, and have been a GS for a while. That’s another reason we get good stock. We just do Giant.

I think there are very few bike shops that will survive without aligning with a brand. Just because of the stock supply situation. But we sell the most, or equal to the most, e-bikes for Giant in Western Australia. We get a constant supply, just because of that… and we pay our bill. That’s the other thing – you’ve got to pay your bills (on time).

We went from being absolutely nothing in e-bikes to 30% to 40% of our volume and 50% to 60% of our value, our total dollar sales. I don’t really track that. I don’t sit there with spreadsheets and MYOB. But if you come into our shop, maybe 40% of our floor space is dedicated to e-bikes.

The average spend is probably around $3,000 on an e-bike. We don’t sell cheap e-bike brands because of return rates and warranty. We’re a regional town about 400 k’s south of Perth. We’re right at the bottom of the state (geographically, on the south coast). The next stop’s Antarctica. The town and surrounding area have a population of approximately 40,000 to 45,000 people so we’re not a suburban area. It’s an ageing population and there are three bike shops here. But I made a decision a few years ago to push e-bikes pretty hard and change the way we did our business.

Rather than just try to sell people bikes off the floor, we take people out on bikes. As soon as you take a person on an e-bike that doesn’t usually ride a bike, it opens up for scope for people that don’t ride five kilometres to suddenly ride 40 k’s. In a town like here, particularly when we’ve had all the covid restrictions, people will spend $3,000 and get out and ride with their kids or ride in Denmark which is 50k’s away and is a tourist town.

We’ve swapped road bikes for e-bikes. We used to be a ‘road bike shop’. We still are a road bike shop but we’ve put our stock into e-bikes rather than road bikes.

John Kennedy, from The Bicycle Fitting Store, in Korumburra, in country Victoria about two hours’ drive south-east of Melbourne said:

It’s been really good… when it’s open. When they had the five km radius (covid restriction) here, everyone was afraid to travel. Even though we’re classified as an essential shop, you can travel past the five km radius, but the government didn’t explain to people. Where I am in the country if someone’s 20 or 30 km away, there’s no other shop around doing what I do.

It’s brought in a whole new crowd of people and I’m selling a lot of electric bikes. The whole thing has shifted. The road thing seems to be dying. A lot of people just want to ride on rail trails. There seems to be a lot of market for normal bikes $700 to $1,500 and that was never me. I never sold those bikes in my life and now it sort of carries my business.

But what’s really carried my business… I started off the first year, I might have sold maybe 10 electric bikes five years ago. In the last 12 months, probably 150 or more. It’s been really good.

In the past, a normal bike shop in this area would go broke. And they have. Every bike shop that’s ever been in this area has gone broke.

I drag a lot of people from everywhere. I get people from Melbourne, Sydney, I had one from Western Australia, South Australia. I’ve just been lucky that I’ve been a point of difference in my business ever since I started in the 1990’s. They come for the bike fits but at the same time a lot of people have had bikes and they’re not happy.

I spend an extra lot of time with everyone. If I do a bike sale, nobody leaves here without getting fitted. I’m a Trek dealer so I might sell a $700 Trek flat bar – every bike I sell I spend a minimum of half an hour setting them up. I might change the head stem or get them a different seat. I’m very fussy. If they’re happy, they’ll tell someone else.

It’s taken five years. The first year this shop struggled. I making an income but not a lot. The second year increased. This wasn’t a cycling town. I can stand in the street even to this day and I don’t see bikes riding past, yet I’m busy.

The fitting has been the biggest thing for me to go forward and be a successful bike shop. I couldn’t have been successful without that. People want real answers.

Stock supply?

I bought 70 or so Dyson electric bikes about a month ago and I’ve got 36 left. Trek, I’ve got a lot of stock on the floor. I realised six months ago that we were going to have a problem. I’ve got probably 70 to 80 flat bars from say $70 to $1,500. So I’ve got plenty of stock but there’s not much coming. I rang up Trek the other day about an electric mountain bike and it’s not coming until 2022.

I think all the shops are going to hit the wall, probably November. If you own your shop (building), you’ve got half a chance, but if you’re paying $5,000-$10,000 per month in rent and you’ve got three or four people working for you, you’re in trouble.

I think I’m going to be ok because I own the building. But no one thought the stock was going to run out. That’s what’s going to separate the men from the boys. Who can get what? Parts will be ok, but you’ve still got to get a $3,000 bike and sell it and make a grand out of it or whatever.