Big Bike Selling Retail Chains Redefining Strategies

LONDON, UK - The big bike selling retail chains across Europe are redefining their strategies. Companies like Halfords in the UK as well as Halfords in The Netherlands are facing the changes in consumer behaviour due to the financial crisis while the same goes for Karstadt in Germany.

Halfords in the UK is bringing its stand alone Bikehut and Cycle Republic stores to bed due to the changes consumers are showing nowadays. In a recent trading statement Halfords Group PLC says: “Halfords' pilot stand-alone cycle stores have been impacted by the increasing success of our superstores in the premium market segment and the migration of sales to the web, particularly for accessories.

“Consequently, we no longer believe that the stand-alone concept will deliver the absolute levels of financial return demanded of Halfords' investments. Ranges currently only available in stand-alone stores are therefore being transferred to our superstore chain and Bikehut and Cycle Republic stores are being re-branded, where appropriate, to a full Halfords offer via the Metro format.”
 
Halfords Group sales in the first 2009 quarter decreased by 1.7% over the equivalent period in 2008 with like-for-like sales 3.8% lower than the prior year. For the 52 weeks to 27 March, Group sales decreased by 1.2% with like-for-like sales declining by 3.3%. On Cycling together with Car Maintenance products Halfords Group PLC further states that: “Each continue to deliver like-for-like sales growth, with share increases in each of these fragmented markets.”

Only a few months ago, in November 2008, Halfords Group said that it wanted to open 50 more Bikehut and Cycle Republic stores: “As the economic downturn in the UK is driving millions of commuters on to their bikes.” Apparently these openings didn’t pay off. Halfords has an over 30% share in bike sales in the UK with an annual sales of over one million bikes.

Halfords in Holland which operates completely independent from the UK Halfords Group, recently claimed to have sold much more parts for bikes during the first three months of the year. “As the Dutch are increasingly repairing their own bikes as a result of the crisis, replacement parts sales increased with about 15% while maintenance products like lubricants recorded a 50% sales increase and tyre and tyre repair kits sales showed a plus of over 10%,” says Halfords NL.

In Germany Arcandor AG, owner of the biggest bike selling retail chain Karstadt, announced yesterday a far-reaching restructuring program that requires additional funding of up to 900 million euro over a period of five years. That money will be used to: “Further develop the non-core businesses in a new Management Board division.”

Non-core business is defined as Karstadt and Karstadt Sport department stores that do not perform according to the key profit indicators set by Arcandor. It will result in the ‘further development’ of 12 department stores while Karstadt’s core business will in future consist of 81 Karstadt branches and 27 Karstadt Sports branches.

Arcandor states further: “The department stores will use the potential of its outstanding central city locations to gain customers from the high-profile middle of society even in the crisis. In so doing, Karstadt intends to maintain its position against the competition with its attractive assortment, high customer orientation and an excellent price-performance ratio.”