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<b>France 2008:</b> IBD Gets Popular Again (Part 1)

Sales & Trends

The French bicycle retail channel is quickly changing, taking advantage of the rising popularity of the IBD. With the rising market share of dealers, the popularity of retail organizations is also growing. Next to that retail organizations show a growing interest in

<b>France 2008:</b> IBD Gets Popular Again (Part 1)

PARIS, France – The French bicycle retail channel is quickly changing, taking advantage of the rising popularity of the IBD. With the rising market share of dealers, the popularity of retail organizations is also growing. Next to that retail organizations show a growing interest in the French market resulting, for example, in the take-over of the Veloland format by ZEG last January.

These larger retail networks offer marketing, financial, distribution, technology, and other advantages to current shop owners and prospective ones, who are no longer on their own. For a retailer however, it is not always easy to choose the right business partner. Generally, the retailer’s financial position, ambitions, and geographical position will direct him towards a particular organization. Here’s an overview of the current French retail organizations.

Velo & Oxygen

Run by the bicycle manufacturer Cycleurope, Velo & Oxygen claims a national network of 500 affiliated stores. “This is the only concept directly connected to an OEM.” says Bruno Gazet, director of sales and marketing at Cycleurope. “For some that is a disadvantage, for others an advantage. The close relation with the retail channel makes us very flexible, to the benefit of both. If the retailers are asking for red bikes, we can act immediately.”

Three locations out of the 500 stores are fully owned by Cycleurope – Paris, Lyon and Bordeaux. The others remain independent and are linked to Cycleurope by a three or four year contract. The retailer doesn’t pay an entry fee, only for the services, shop lay-out, and concept design. This sum is repaid in three or four years, depending on the duration of the contract signed.

“Each store benefits from our communication with the annual catalogue, a website dedicated to the network, and commercials on the radio,” says Bruno. “In return, the store must sell the Cycleurope brands; Gitane, Bianchi and Puch as well as Spectra P&A although he is not limited to these brands. The stores of Velo & Oxygen vary in size between one hundred and five hundred square meters and are very different from each other."

"To bring about a more common identity Cycleurope has created a new concept to make Velo & Oxygen ‘classier’. This new concept is currently being installed throughout the country and some fifty shops should be ready by the end of this year.”

Veloland; European Cooperation

Last January the twenty store Veloland retail concept was acquired by the German retail organization ZEG with sixty affiliated members in France already. Denis Küster, co-manager of several Veloland stores in the Savoy region is expecting change and is very clear about the future of the retail organization. “We expect to grow sharply in 2009 and 2010.”

All existing ZEG members with over four hundred square meter stores will become Veloland outlets. The one’s with a smaller shop floor and the retailers located in the city-centers will become Veloland-City. With the integration of ZEG into Veloland the shops also see the introduction of new bike brands, like the ZEG-owned Pegasus and Bulls.”

Denis Küster is very content with these brands. “They offer very good value for money. We can now sell a 100% Shimano Ultegra bike with aluminium frame and carbon fork for less than € 1,000. Thanks to that the general public is discovering that the IBD is also offering excellent bikes for very reasonable prices.” Veloland doesn’t have a subscription fee or a monthly contribution. “You only have to buy a share in the ZEG dealer cooperative which can be sold when leaving the organization,” adds Küster. “Next to that we have a dividend payment at the end of the year, depending on the organization’s profit.”

Veloland members have to spend 0.5% of their turnover in communication, making sure each shop takes advantage of joint efforts in communication, while maintaining their independence. According to Jean-Pierre Lacombe of the Veloland organization, some 69 stores remain under Veloland after the acquisition by ZEG. Both Denis Küster and Jean-Pierre Lacombe are convinced of Veloland’s strength in the market.

“At Veloland the retailer can improve its profitability while offering attractive prices to the consumers. And the profits go into the pockets of members, not elsewhere. The only disadvantage is that the retailer must sell the brand preferred by ZEG and this lack of freedom may displease some retailers” says Jean-Pierre Lacombe.

Culture Velo, Bouticycle and Velostation

Denis Briscadieu manages the central office of franchise organization for the retail concepts Culture Velo (71 shops), Bouticycle (22 shops) and Velostation (8 shops). He says: “Our strength is focused on a high service level in terms of advice, layout, merchandising, IT and communication. We only operate this package, regardless of the turnovers of the affiliated dealer/members. An example of our high IT service level; when the shop owner arrives at the store in the morning and turns on his computer, all updates of for instance prices are already made. Each transaction is recorded throughout the day. This saves him a lot of time and provides him with a lot of information.”

Laure Boulineau and her husband opened up their Culture Velo in Nantes in April 2007. “We discovered that cycling was a sector with double digit growth for years, despite reduced margins. Culture Velo was, in our view, the only organization that matched what we wanted in terms of advice and especially in terms of transparency.”

Originally a Bouticycle store, then independent under the name ‘Cycle Herblay’ Michel Duval now runs a Culture Velo shop in the north of Paris. “I had no reason to return to Bouticycle when I took over this store, this would have not accomplished anything”, explains Michel Duval. “I wanted to start completely fresh with a new team to shift up a gear or two. And Culture Velo was the most logical to me, as they offer all the brands I wanted to sell. Only a few months after we opened we sold forty bikes a month, with a boom of city bikes during sunny days in spring and summer. We also offer a wide range of parts and accessories including the BBB display. This brand is unbeatable value for money and restocking.”

“We choose to start as Bouticycle as there was already a Culture Bicycle in Nancy.” confesses Eric Legay. “And I totally agree with Denis Briscadieu’s philosophy. In recent years the distribution channel has become more professional, but the relationship between the organization and the retailer must remain clear. In other networks, in my opinion, this is not the case. I want to be master in my house and able to choose my product range in the store. For that, Bouticycle offers a good compromise and above all the services offered are essential to me in terms of assistance, design, or communication.”

Mondovélo

The international franchising organization Sport 2000 operates the Mondovélo franchise concept in France. All Mondovélo affiliated stores are shareholders of the central organization and use the central service organization of Sport 2000 in relation to central purchasing, information technology, planning and communication. 15 Mondovélo bike stores are now (a small) part of Sport 2000 France. Most of the other sports stores operating under the Sport 2000 flag in France also sell bikes and bike products. There are 8 Sport 2000 outlets that operate a Mondovélo shop-in-shop format. As bikes and bike products are a growing category at Sport 2000 France this international operating franchising organization is to open more dedicated bike stores in France under the Mondovélo format.

Sport 2000 France operates 201 stores in almost all the French ski resorts, including 62 ski rental shops under the Skiway banner. The number of stores outside the mountains grew to 286, and an additional 14 doors have been added since the beginning of 2009, including 11 corporate stores directly owned by Sport 2000 France. Their number should reach 20 by the end of this year under the business plan worked out through its new institutional shareholder, Activa Capital, which acquired 37.4% of the shares in 2008. Sport 2000 France reported a 3.2% sales increase at retail level to € 598 million in 2008, in spite of a 0.5% decline in the French sporting goods market.

Holland Bikes

Holland Bikes is the exclusive importer for prestige Dutch brands Gazelle, Batavus and Koga. “We study each option for opening a store for about six to twelve months”, says Bart Vos, co-owner of Holland Bikes. “In this period we search for a local business man and draw up a financial plan with him to create a joint venture with Holland Bikes. We take our future business partner to Holland to show them how the bikes he is going to sell are used in daily life. I can’t say anything about the investments as this differs per location.”

Holland Bikes pays a lot of attention on product display. “It is essential for us to present the bike outside, on the sidewalk in front of the shop,” says Vos. “It is not necessary to sell Gazelle, Batavus and Koga only. The retailer is free to choose other brands. However, for the character of the shop the retailer should be aware that he is offering Dutch bicycles for ‘daily use’ and not city bikes, as often wrongly thought in France.” Holland Bikes has ten stores in France at the moment of which only four are fully owned by Holland Bikes.

Cyclable

Started four years ago in Toulouse, Cyclable is a small retail organization run by Boris Wahl. The shops, in Dijon, Lyon, and Paris, among others, operate under their own names – such as Velovia and Velonaute, while the organization supports the independent stores. The main contribution of Cyclable to the affiliated stores consists of shared conditions of purchase. Each store sells at least urban bicycles, child bicycles, folding bikes, and electric bikes, but can choose their own product lines.

Mobicity

The latest addition to the range of retail organizations in France is Mobicity, a store format completely dedicated to e-mobility. “Mobicity is a concept store with an average surface, and a focus on marketing, rental, and maintenance of electric two-wheel vehicles – such as e-Bikes and e-Scooters”, says co-founder Grégory Trebaol. “This concept is a result of a pilot store opened two years ago in Paris. Next to the pilot shop two more locations will be opened before the end of this year.” At the Paris Cycle Show (taking place from 2 – 5 October, 2009) Grégory Trebaol will announce the details about this concept regarding the name, licensing, and franchising.

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