Bicycle Wholesalers Share Their Thoughts on Current Situation

In addition to surveying 25 retailers for this month’s newsletter, we sent emails to CEO’s of 12 of the largest bicycle wholesalers in Australia. We focused upon companies who mainly import complete bicycles, as opposed to P&A. Next month we’ll contact some P&A specialist wholesalers for their opinions.

Thanks very much to all those who responded this month.

We asked for comment on three specific issues:  

1. Current wholesale stock availability within Australia.

2. Supply chain outlook for the short to medium term future, taking into consideration factory and logistical disruptions.

3. How much longer will this current cycling surge in cycling activity, with its flow on effects upon sales, last?

Darren Rutherford CEO of Giant Bicycles Australia said:

“As the restrictions amped up initially, we saw an uptake of families reconnecting with cycling. Families thought, ‘Let’s dust off the bikes in the shed!’

“Then they may have needed to get repairs or add another bike or two to have a full set of bikes for the family to ride together.

“Early on it was still daylight savings so they could get an hour evening ride in during the week, but now it’s mainly weekends. Also with more people working from home, all sport cancelled and gyms closed, they had more time to ride.

“People are enjoying the connection with their families and they’re getting outdoors. One of the consequences of the virus is that there’s less traffic on the roads and people riding bikes are feeling safer.

“Looking at the longer term, I think that commuters will be slow to get back into public transport because it’s harder to maintain social distancing on a train, bus or tram. So there could be an uptake in the commuter bike market.

“I think we really need to normalise cycling for shorter distance trips, including not just commuting, but things like parents taking their kids to sport and even doing the shopping, which people tend to do more frequently these days.

“Not only do you feel better when you ride to the supermarket or the sports field, you’re going to get the best parking spot when you get there!”

Jason Pye, CEO of Trek Bicycles Australia said:

“All is well at Trek. Thanks for reaching out.

“What a fantastic time for the bike industry. Seeing so many people purchasing bikes for transport and health is exactly what we are in the industry for. I have taken much pleasure in watching families riding around Lake Burley Griffin during these extraordinary times.

“I can’t comment on the stock position of other businesses, so I won’t make any sweeping statements regarding availability across the industry as per your question number one.

“What I can say is that we saw a surge in demand as April rolled on, and we have reacted accordingly. Trek is in a strong position to meet the demand, with our entire range of bicycle categories proving very popular. Bike associated purchases of equipment like helmets, tubes, cages etc, have also seen great growth.

“We have a fantastic retail network that have been serving the community and providing us with feedback to ensure we can continue to meet demand as the weeks roll by. I have no idea how long the current surge will continue. However, we do know that there are many new entrants to the market. Right now, Trek’s main goal is to serve our customers with supply and service as quickly as possible. We want our retailers to build long lasting relationships with their communities to ensure that the tide remains high for the foreseeable future.

“The bicycle plays a big role in helping solve some complex societal problems relating to traffic congestion, pollution and health. Getting more people on bikes and now keeping them on bikes continues to be Trek’s overall focus. We have a slogan that we want to people to remember; ‘Go By Bike’.

“I hope we can all continue to Go By Bike and enjoy the ride!”

Tony Smith, CEO of Specialized Australia said:

“Thanks for reaching out. Whilst you are looking to find out this information for the purpose of keeping bike retailers informed, please note that we are working with and keeping Specialized Retail Partners very well informed to ensure they have all the necessary information at hand to make the right decisions to get through these times.

“We are keeping them updated weekly. So don’t feel we need to comment on your queries as per below to the rest of the industry.

“Wishing you all the best and stay safe and healthy.”

Steve Paraskevas, Managing Director of Sheppard Cycles said:

“I hope you are keeping safe and healthy. I will pass on this opportunity to comment the environment is way too fluid to be making statements or answers on the below.”

George Nisbet CEO of SOLA Sport said:

Regarding stock availability:

“Our stock availability is good. We not cancelled any orders over the Q1 trading period and backed ourselves to continue business as usual. This is not intended to sound over confident, we have clear strategies to insure ourselves during times like these:

• Firstly, we believe that our single biggest and most important asset is stock – if we don’t have it, we can’t trade and our customers are unhappy / if we have too much of it we have to discount and clear it and that also makes our customers unhappy. We have strong sales forecasting and stock ordering plans.
• Our second biggest asset is our customers (debtors). Our relationship with our customers is strong and so we back ourselves to buy stock on the back of their commitments, this reduces risk for both parties.
• We have some delays and postponements of certain brands that is not decided by us but rather from countries that have delayed their own launches due to the Covid-19 impact.

Regarding supply chain:

‘We have had some disruption to the business in quite a few of the brands.

• Shipments from China and Taiwan have been moved from air freight to sea freight which has extended lead times by over two to three weeks.
• Getting capacity on vessels has been difficult and we have had sea freight shipments from Asia that have taken six weeks, a month longer than we are used to.
• We have had difficulty with air freights out of Europe due to factory delays
• Overall logistics seems to have become more expensive in this time as well, maybe due to the supply and demand curves being out of sync.
• The supply chain outlook in the short term will be the same, we are not banking on it returning to the way it was in the next 3 to 6 months.

Regarding cycling activity:

‘It’s important to note that the ‘surge’ in cycling activity is driven by certain categories like commuter bikes, kids bikes, hardtail MTB, service, P&A etc and is not a blanket surge in all categories, particularly at the top end. There are a lot of theories on whether the surge will continue.

• With schools returning to normal by mid Term Two (NSW) there is a general feeling that kids bikes will go back into their sheds and the go back to the way it was.
• Public transport will be slow to recover as people are wary of trains and busses and so commuter bike usage and servicing could continue to be strong.
• MTB will continue to be strong as the category now has a strong base and is the obvious style of cycling that is safest in the current environment, i.e. off busy roads away from cars and traffic and, not like road cycling, where there are bunch rides and more contact with others etc
• The last and most obvious point is the long economic recovery, for sure the government stimulus in the next six months is masking the pain, but beyond September will be the real test. The time it will take for the economic recovery is not measurable as the stats tell us that 1.5 million Australians have lost their jobs. The top end of town law firms and accounting firms have their staff on 80% salary. Office space is under attack as lessee’s realise that staff can work from home and be accountable and why would they continue with expensive CBD offices when they can downsize floor space etc? Our customer base is included in all these scenario’s and so discretionary spend will be tight, that won’t be good for cycling at the top end long term.
• Australian’s feel wealthy when they have equity in their homes, we are an asset rich nation in this respect. If this Covid-19 dilemma impacts on house prices, as is suggested in the latest bank forecasts, then for sure consumers will tighten their wallets.
• On the bright side, with team sports like rugby, soccer and basketball being in shutdown, and gyms and swimming pools likely to take an even longer time to return to normal, cycling has been the big winner as a substitute during this time and we still have some time to go with this advantage”.

Guy Thompson, Director of Groupe Sportif said:

Regarding stock availability:

“I think that for most retailers it’s not too bad because we’re going into winter which is usually the quiet season. So the shortage of stock will have less effect than if it was happening in October / November / December.

“When the virus first hit, no shops were ordering. They were wondering if they’d even be allowed to stay open. But once Jobkeeper and rent reductions started, they helped.

“Trade has been better than Christmas for a lot of shops, especially for low end sales and repairs.

“We’ve seen good sales. I’ve even signed a couple of new Kona dealers, which I wouldn’t usually be expecting to do at this time of year. That’s partly because we had good supply of bikes. We had a Kona commuter bike container land early April. That was the last 2020 model year shipment for us. We’re now waiting on the 2021 stock.

“With the weaker dollar, we’ll see price rises for next year’s models. There’s definitely been less discounting. It looked like a bleak picture six or seven weeks ago. There could have been a massive bad debt problem, but now retailers are flush with cash.”

Regarding supply chain:

“This will vary between brands. Kona are saying two months behind. I think most bikes will see one to three months’ delay.

“Enve Wheels are still running their factory in Utah. We have more product this month. But the Stages factory, which is Boulder Colorado, is shut down and no reopening date has yet been set.

“Usually we would air freight but the rates initially quadrupled. They’re a bike better now, but sea freight rates have gone up too. They’re now 20% dearer than air freight used to be”.

Regarding cycling activity:

“You’d think the surge will lull soon. I think the current surge has two months to run, maximum. As winter sets in there will be less cycling, particularly in the southern states.

“As more people start going back to work they’ll also have less time.

“But we will have picked up new customers that we’ve never had before. Some of them will say, ‘I want to keep doing this!’”

Guy McCausland from BikeBox said:

Regarding stock availability:

“Our stock availability is good. We haven’t noticed an interruption in supply. But we’ve seen an enormous spike in demand. And we run 2 ½ to four months between placing an order and getting delivery of stock.

“The strong demand for cheaper bikes has given us the opportunity to move some slower selling stock.

“We’re also selling out of 26 inch tyres.

“We have been working on a split shift but we’re going back to normal now”.

Regarding supply chain:

“Orbea will be delaying the release of their new models. They’re almost happy about Eurobike’s delay, giving them more time to work on product development.

“Our only supplier that has been slow is one from Italy.

“I have to compliment our suppliers on their level of communication”.

Regarding cycling activity:

“I’ve been inspired by the sight of fathers and their kids out on bikes. Hopefully the kids will pester them to keep going after this situation is over.

“Winter will be a deal buster. People will be keen to jump back into their cars for short distances.

“I wonder what will happen for birthdays and Christmas. Has everyone already got their presents early? Or are people going to upgrade their bikes then?

“The longer lockdowns stay in place the more people will keep riding bikes”.