The trend for closer integration between Australia’s and New Zealand’s bicycle industries is about to continue with a major acquisition by the Queensland based Pedal Group, the entitity includes Advance Traders and 99 Bikes.
“We take over five shops on 1st July and we also buy the Bikes International wholesale stock on 1st July,” said 99 Bikes co-founder Matt Turner.
Bikes International’s website shows that the company, which was founded in 2004, wholesales 36 brands including Australian brands, Apollo, JetBlack Cycling, M20, Knog and Velectrix. Some of their better known international brands include Innova, KMC, Kona, Lapierre, Limar, Marin, Mavic, Merida, Minoura, On Guard, Redline and Serfas.
“We’ve been thinking about New Zealand for a while”
Meanwhile their retail business, Bike Barn, dates back 25 years and their website currently shows 16 stores plus a webstore. This makes them the second largest chain after Evo Cycles, who currently show 17 stores with an 18th about to open, with half of the Evo Cycles stores having been added within the past two years. We have not yet confirmed if Evo Cycles are buying any of the Bike Barn sites.
Meanwhile 99 Bikes currently has 47 Australian stores and Advance Traders is already the Australian distributor for Bikes International’s biggest agency in New Zealand, Merida.
“We’ve got Merida’s agreement that we’ll be taking over the Merida distribution for New Zealand,” Matt confirmed. “The other brands are a still in discussion.
“We’ll try and replicate what we do here (in Australia through their Advance Traders wholesale division) and sell through IBD’s. Because we’ll only have five shops, the majority of our New Zealand wholesale business will be selling through other shops and not our own.
“We’ve been thinking about New Zealand for a while,” revealed Matt. “Over the past calendar year we’ve gradually worked things through with the current distributor. I’m not sure who approached who first about this deal. I think it was more us approaching them, but we’ve always had a relationship with them through Merida.”
The five Bike Barn stores that are included in this acquisition are at Takapuna – Auckland,
Manukau – Auckland, Wellington, Homebase – Christchurch and Hornby – Christchurch.
They range in floor space from just under 500 square metres to over 1,000 square metres. All will be rebranded from Bike Barn to 99 Bikes.
“There was a lot of merit in sticking with the known Bike Barn brand, but I think we’re just too in love with the 99 Bikes brand to consider it for too long,” reflected Matt. “It was an easy decision emotionally. I don’t think we were ever going to do anything else.”
“We’re going to fill most of the roles from existing Bike Barn or 99 Bikes staff, but there might be the odd exception with some head office roles that we’ll be advertising on Seek.
“Because some of the Bike Barn stores are closing, there are quite a few people looking for roles and there are also 99 Bikes staff in Australia who are keen to move over to New Zealand.
“I know they’ve been successful in selling some of their other stores and are planning to close others.”
“Bikes International are a well-funded family owned company. I think the family just decided that they wanted to get out of bikes and this is their best avenue to do that. Their main business interests are outside of bikes.”
Matt said that they only chose locations which fit the 99 Bikes’ formula which includes good exposure to a main road and a floor space of about 500 square metres.
“I’d like to say, ‘and the rent wasn’t too high!’, but most of the rents in New Zealand appear to be higher.” Matt continued. “I’m not sure that we know enough yet about the market to know that the overall retail rents are definitely more expensive. I know these rents are, but I think we’ve got better in Australia at negotiating better leases, so hopefully we can improve the New Zealand rents over time. Labour is a bit cheaper in New Zealand.
“We’re working closely with Bikes International to make it a good transition. So far so good. It’s a challenging transition and that good relationship is important for everyone involve. But the handover will still be logistically challenging.”
In 2017 Bike Barn were fined NZ$800,000 by the NZ Commerce Commission after pleading guilty to 18 charges of misleading customers about discounts available on discounts and the duration of the discounts. At the time it was one of the largest fines ever handed down under the NZ Fair Trading Act.