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United Kingdom 2010: Storming Year for the UK Bike Trade

0 1131 Sales & Trends

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LONDON, UK – 2010 was a profitable year for British bike shops, boosted by health concerns and economic realties. Electric bikes failed to take off, but Boris Bikes helped to keep London’s bike boom well and truly mushrooming.

2010 was the year electric bikes failed to excite the British public despite many predictions to the contrary (from electric bike suppliers). 2010 was also the year when London's bike shops benefited from the Barclays-sponsored Cycle Hire scheme. It got new people on bikes and the trickle-down effect was to see new people trickling into dealers, enthused about cycling.

The UK Bike Market 2004 – 2008 (x 1,000 units)

2005
2006
2007
2008
2009
Imports
3,300
3,320
3,500
3,156
3,2680
Production
135
94
80
28
20
Consumption
3,300
3,300
3,400
3,311
3,400

Sources: Eurostat, BAGB

But 2010 was also the year when the new Government abolished Cycling England. It cost just GBP250,000 (€291,000) a year to run and which pump-primed business for English bike shops by promoting cycling via a variety of highly cost-effective programmes.

Money for cycling slashed

While the UK Government lavished GBP300 million (€349 mn) on grants for rich motorists to buy GBP28,000 (€32,600) electric cars, and continued to splash billions on motorway widening schemes, money for cycling was slashed. What was claimed to be the 'greenest UK government ever' turned out to be anything but. However, a slew of pro-bicycle factors countermandered all of the Government negativity and meant UK bike shops had a storming year: until, that is the storms of December which saw record snowfall, especially in the north of the UK.

With the first two months of 2010 being so icy and with December following suit, that, in total, was a full quarter that was a write-off for many bike shops. But even before the snow hit in late 2010, with sales dropping off a cliff, many shops had been hit with declining sales because of redundancies or the fear of redundancies.

Cities with high numbers of public sector employees (such as most of the northern cities, like Sheffield and Newcastle) saw a drop off in Cycle to Work scheme sales. This salary sacrifice initiative has been a mainstay for many UK bike shops for some years. Uncertainty in the scheme followed an August announcement from Her Majesty's Customs and Revenue (HMRC), ie the sales tax department, that a central tenet of the bike-buying scheme - the ‘fair market value’ of the bike at the end of the scheme - would be subject to review.

Shock

The Cycle to Work providers went into shock. Scheme recipients - who had signed up to the scheme to get tax breaks for buying up to GBP1000 (€1,164) worth of bike and commuting kit - worried themselves into a tizzy on online forums, claiming they'd been sold a pup ie the discounts promised would not now materialise. A collection of Cycle to Work scheme providers - and their hired legal teams - spent some months leaning on HMRC and, finally, an agreement was brokered that rescued the bulk of the available discounts on the scheme. But the months of ‘fair market value’ uncertainty damaged the scheme, and reduced the number of bike sales in shops that relied heavily on Cycle to Work business.

In a depressed market, this could have spelled ruin for many bike shops, especially the smaller independent operators, but the pro-bicycle factors mentioned above allowed most bike shops to have a good 2010 despite periods of slack sales (January 2010, for example, was 17 percent down year on year, according to a poll of bike shops by the Association of Cycle Traders). More and more Brits are getting on bikes, especially in cities. Commuting by bike - except when it snows - is on an upward projectory despite the less than favourable riding conditions in most cities.

In fact, cycle commuting is growing against all the odds. There has been no overnight development of protected cycle lanes. People just seem to be riding more. Partly this is to do with health concerns and worries about the planet, and the speed of bikes through towns and cities with cars at a standstill, but mostly it’s to do with pure economics: cycling to work is cheap. And with petrol prices being as high as they’ve ever been; not only due to the crisis in Libya but also due to additional fuel duties and increased sales tax, it’s unlikely that the boom in cycle commuting will slacken off.

And this boom, which started a couple of years ago, has been noticed by the big boys. The overwhelmingly powerful supermarket chain Tescos introduced in-store ‘bike shops’ in seven locations, and later rolled out more in other locations. But by the end of 2010, Tescos didn’t seem to have rolled out enough in-store bike shops to have had a national impact.

Boris Bikes

Yet a bike that looks like an electric bike has done wonders for the bicycle trade in London. In July, London Mayor Boris Johnson cut the ribbon on the first London Cycle Hire Scheme bikes. 315 docking stations were dotted around Central London, stocked with 5000 bikes. By the end of the year, the scheme was expanded with 2000 more bikes and plans were unveiled for 4200 docking points, all due to be place for the 2012 Olympics. Londoners, and visitors to London, loved the bikes from the get-go. Boris Bikes were responsible for getting newbies on bikes. Many hirers were clearly on bikes for the first time in years. Some were so impressed by the speed and ease of cycling, they bought new bikes for themselves, or at least dug out their existing, little used bikes and started to ride them afresh.

Used by business people in suits, tourists, even parents taking their kids to school on a small fleet of Boris Bikes, the distinctive grey bikes became a London icon pretty much overnight. The InterContinental Hotel in Park Lane uses Boris Bikes to offer guests another way around London. Head Concierge Simon Rose said: "Barclays Cycle Hire is great way for our guests to see parts of the city that they would be less likely to uncover travelling by Tube."

More people on bikes in the Capital of the UK, the place where MPs live and work, can only be a good thing. While cycling in the Capital boomed throughout 2010, there wasn’t the same massive uplift in the rest of the UK. UK-wide the boom might have been less pronounced but most other retail sectors were in the doldrums so, in comparison, cycling did rather well.

Electric bikes not yet mainstream category

In April, the American big box electronics retailer Best Buy opened its first UK store, part of a planned roll out of a UK chain. Best Buy stocked the product that had been predicted to do well in the UK in 2010: electric bikes. But the British public were of the same opinion as British bike shops, electric bikes are not yet a mainstream category in the UK. Customers in Best Buy could see electric bikes next to electric scooters, and it was the scooters that were in more demand.

Why have electric bikes not sold in the UK as well as predicted, in nowhere the near the numbers seen in the Netherlands and Germany? Pundits think it’s infrastructure. Electric bikes appeal most to an older demographic but these consumers don’t want to mix it with lots of motorised traffic. At least, not with a relatively underpowered electric bikes. More wattage and speed isn’t the answer: electric bikes will only go mainstream in the UK when there are more segregated, protected cycle lanes.And the UK Government is in no mind to spend anything on cycle infrastructure so while the UK now has its own electric bike magazine (heavily subsidised by Raleigh, the UK’s biggest supporter of electric bikes) there has been negligible uplift in sales of e-bikes.

 

 

by Bike Europe last update:11 Jul 2012

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