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<b>United Kingdom 2009: </b>Better than Average Year Before

Sales & Trends

LONDON, UK – 2009 ended with a cold-snap but, for most of the rest of the year, it was unseasonably warm. Fair weather in the UK means bumper ice-cream sales, and bicycle shortages.

<b>United Kingdom 2009: </b>Better than Average Year Before

LONDON, UK – 2009 ended with a cold-snap but, for most of the rest of the year, it was unseasonably warm. Fair weather in the UK means bumper ice-cream sales, and bicycle shortages.

The UK Bike Market (x 1,000 units) 

 
2004
2005
2006
2007
2008
Imports
3,500
3,300
3,200
3,500
3,156
Production
250
135
94
80
28
Consumption
3,500
3,300
3,300
3,400
3,311

Sources: Eurostat, BAGB

Many suppliers couldn’t meet demand, for bikes and kit. Key SKUs were on the water when they could have been making bike shops money. Making money? In a recession? Many mass media outlets reported about the UK’s ‘bike boom’ but failed to understand that shortages weren’t just about demand suddenly going through the roof it was also about previous years of lacklustre trading making for less cash to spend on ‘what if’ scenarios. UK bike suppliers tend to order what they sold the previous year: anything more than this and shortages happen. It’s classic feast- and-famine. The weakness of the pound didn’t help.

Taking notice of cycling

The continued reshaping of UK bike retail was clearly evident in 2009. 
A number of factors were at play, including the UK Government’s Cycle to Work scheme becoming an important lifeline for Britain’s independent bicycle dealers (IBDs); with Halfords increasing sales but dumping its IBD-apeing retail formats; with supermarkets muscling in, at both the low-end and the top-end; and with ever increasing numbers of commuter cyclists, an urban renaissance that the bike trade is benefiting from but, largely, not shaping.

2009 was also a year of high-ups taking notice of cycling. Lord Adonis, the transport secretary, reportedly got on his bike to tour cycle parking facilities at train stations. Stick-thin Adonis likes cycling. In 2009 he said: “Cycling can keep you healthy, save money and help reduce congestion, as well as often being the quickest way to get around. If more people were to travel short distances by bike instead of car, the quality of life across our communities could be considerably enhanced.”

This bodes well for 2010. Whichever party wins the General Election – which must take place before 3rd June – cycling will be a small but growing blip on the political radar. Spending on bike facilities can have economic benefits outside of the bike trade, too. Asutely, Cycling England has an economics impact report on cycling. This report, produced by SQW consultants, estimates that every new cyclist saves the nation GBP 382 (€ 423) a year in costs related to health, pollution and congestion. Spending one euro on cycling brings in four euros of benefits.

‘Year of the Bike’

Right from the start, the Independent newspaper said 2009 would be ‘the year of the bike.’ “Biking is booming. In London alone there has been a 91% increase in the number of cycle journeys since 2000, with more than 500,000 trips a day,” reported the newspaper. The bike industry certainly had a better than average year in 2009, despite the recession, perhaps even because of the recession, but it wasn’t the ‘bumper year’ that the Independent predicted. Bike shops were not, in the vernacular, ‘printing money’. Partly this was due to competition: there are still an awful lot of bike shops. Probably too many. Too many, that is, for the majority of them to be highly profitable.

The UK is now dominated by four large independents. Evans and Edinburgh Bicycle dominate in the bricks-and-mortar world, while online Wiggle and Chain Reaction rule the roost. Evans Cycles opened its 35th store in October 2009. Retail director Mark Smith said: “The fact that we’re growing in a time of economic upheaval is testament to the health of the cycling industry.”

Cycle to Work scheme

The UK Government’s Cycle to Work scheme had a successful 2009. It’s a salary sacrifice scheme which nets employees up to a 40% discount on bicycles and commute-to-work equipment such as lights and locks.

Because the paperwork is onerous, most businesses use third party facilitators to do the Human Resources part. These facilitators generally work for free, making their money from taking a cut from bike shops. The most successful third party facilitator by far is Cyclescheme, set up by two bike shop owners, Richard Grigsby and Gary Cooper. At the end of 2009 this business was named as the fastest growing business in the UK by the Sunday Times, the first bicycle business ever to appear on the FastTrack 100 list.

Its growth in 2009 was spectacular: 350% year on year. In September, Cyclescheme announced it had sold GBP 1.16 million (€ 1.29 mn)  worth of bikes to Rolls Royce via its IBD partners, delivering 1,659 bike packages at a GBP 700 (€ 775) average sale. One IBD alone – Samways Cycles – sold GBP 148,000 (€ 164,000) worth of bikes to Rolls Royce.

Cyclescheme turnover stands currently at nearly GBP 25 million (€ 27.7 mn) a year.
Richard Grigsby said: “Our statistics show us that we’re getting a lot of people out of cars and on to bikes, many for the first time. We’re helping with modal shift, a key objective. Cycling to work presses all the right buttons: health, preventing congestion, pumping out less carbon dioxide.”

Halfords

Halfords sold more than one million bicycles in the financial year ending March 2009 but this success didn’t stop it from axeing its Bikehut and Cycle Republic retail sub-brands. Halfords CEO David Wild said: “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.”

The Association of Cycle Traders, which represents the UK’s bicycle independents, welcomed the Halfords news: “I think specialist cycle retailers will win more business as a result of the rebranding of Bikehut and Cycle Republic,” the ACT’s Mark Brown said. “Halfords has not been able to mimic a specialist independent retail offering, which suggests local bike shops can maintain and grow their local market share as a result. I do not believe customers who are seeking a higher value retail offering will want to enter a Halfords Metro or Superstore to buy their mid to high-end bikes and accessories. I am curious to see what happens to brands who supported Bikehut and Cycle Republic.

Will they be happy to see their products stocked in a standard Halfords superstore?”
Halfords estimates that the UK cycle market was worth approximately GBP 350 million (€ 388 mn) in 2009. Market research firm Mintel believes the value of the cycle market was GBP 282 million (€ 312 mn). The Association of Cycle Traders believes both are wrong. “We place the retail value of the market between GBP 750 million (€ 831 mn) and GBP 1 billion (€ 1.108 bn). Approximately three million to three and a half million bikes are sold each year,” said the ACT’s Mark Brown.

e-Bikes in the UK

At present, very, very few UK motorcycle and scooter dealers sell pedelecs, but that could change. In particular because their sales of powered two wheelers dropped more than 20% in 2009. Since all-electric scooters and motorcycles are becoming more common it makes much more sense for motorcycle dealers to educate themselves about all forms of electrically-powered two wheelers, so that they can offer a complete range of machinery which starts with a 25kph pedelec moving on to an 80kph electric scooter, right up to a 200kph electric motorcycle such as the new KTM RC8-based Mavizen TTX02.  

And while e-Bikes are restricted to 250 Watts and 25kph in the UK like anywhere else in the EU, they have the distinct sales advantage over mopeds that they require neither registration, nor insurance, nor any kind of test or licence, nor the wearing of a crash helmet. Furthermore, they can be sold to a 14 year-old, whereas moped buyers must be at least 16 in Britain. However, since registration is not required, it is much harder to keep track of e-Bike sales; the Bicycle Association of Great Britain estimates that e-Bike sales were still fewer than 10,000 in 2009, while the new British Electric Bike Association (BEBA) estimates that 15,000 were sold.  

Sachs e-Bikes have also just become available in the UK. Richard Davies, Managing Director of Sachs importers Three Cross has recently ‘seen the light’ where pedelecs are concerned. He had two Sachs e-Bikes on display at the recent Trade Expo in Birmingham, the Eagle and the EMO2. He said: “I used to think that e-Bikes were too expensive for their performance, until I discovered that GBP 2,000 (€ 2,218) pedelecs are as popular as ones that cost only a quarter to half the price. A lot of people start by buying a cheap e-Bike to see if they like the concept, then, having discovered that they do, are happy to pay a lot more for a higher quality machine. E-Bikes appeal to a completely different sort of customer from scooters and while GBP 2,000 now seems very expensive for a 45kph moped scooter, it is not regarded as expensive for a good quality e-Bike.” 

Meanwhile, Powabyke UK report that they are struggling to keep pace with demand for their new X-bike range of MTB-based pedelecs, even though their classic range of heavier e-Bikes remain available for little more than half the price. Powabyke claim to have sold some 35,000 ebikes in the UK in the past decade and at the time of writing neither they nor Three Cross had joined the new BEBA.

 

 

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