Netherlands 2011: Weather Conditions Slow Down Dutch Market
In 2011 some 1,171,000 bicycles were sold in the Netherlands, a decline of 3.6% compared with 2010 when total market volume still accounted for 1,215,000 units. This trend of a slow decrease in volume has been going on since 2008, after a record year in 2007 when 1.4 million bicycles were sold. The total market value of bicycles also went down by 1.3% to €872,971,000. Nevertheless the overall feeling about the condition of the market is mildly positive, caused by the success of the e-bike.
AMSTERDAM, the Netherlands – In 2011 some 1,171,000 bicycles were sold in the Netherlands, a decline of 3.6% compared with 2010 when total market volume still accounted for 1,215,000 units. This trend of a slow decrease in volume has been going on since 2008, after a record year in 2007 when 1.4 million bicycles were sold. The total market value of bicycles also went down by 1.3% to €872,971,000. Nevertheless the overall feeling about the condition of the market is mildly positive, caused by the success of the e-bike.
The Dutch IBDs are happy to have such a high-priced product to compensate for the declining of the number of standard bikes sold in their shops. Last year the e-bike accounted for over 15% or 178,000 units of the market; an increase of 7% compared with 2010. The ongoing growth in the sale of e-bikes is also pushing up the average retail price of bicycles by 4.3% to €960. The average purchase price of an e-bike declined a little bit, by 1.3% to €1,827 mainly as a result of a growing number of imported brands who are all trying to get their share of the attractive Dutch market.
E-bikes are the icing on the cake at the moment
Not only for the suppliers, but also for retail – e-bikes are the icing on the cake at the moment. In 2011 the share of e-bikes in the total turnover for bicycles at IBD’s grew a huge 44%! A 2% rise in the average retail price for an e-bike, to a record breaking €2,138 contributed to the 44% turnover jump. After a period of declining sales of city, touring and trekking bikes, under pressure from the e-bike trend, the Dutch market is again showing a growing interest in such models. This picture was already clear in spring and at the end of the year the market share of city, touring and trekking bikes increased from 50% in 2010 to 55% in 2011.
The e-bike has become an important means for IBDs to get customers to their shop. Thanks to their high service level the e-bike market is nearly an exclusive dealer product. This does not automatically mean that the dealer’s overall market share is growing. To the contrary. In 2011 the IBD’s market share declined by 5% in volume to 69%. It is not clear what caused this decline, as their market share had been stable since 2007.
However the bad news came in early August. The worst summer in history, with weeks in a row of daily rain showers caused a double digit dip in sales. Compared to June, the July sales of complete bikes suffered badly. According to the statistics of market researcher Gfk Retail and Technology Benelux BV, total turnover dropped by 20% in July 2011 compared to the same month in 2010. This figure represents the complete market including online and department store sales.
Despite the rainy and cold weather the regular seasonal trend took place at dealer level with sales in July improving by 12% in units and 15% in revenue compared to June 2011. That month showed to be particularly bad, with sales dropping 26% compared to June 2010. In fact the decreases at department and DIY stores as well as web-shops were even bigger. Their e-bike sales dropped by 30% in July 2011 and at dealers by 20% compared to the same month in 2010. Even though sales recovered afterwards, the huge losses of the summer could not be compensated. Normally June and July are together with May the best selling months in the bicycles industry. But even the nice weather in fall could not help the market to regain the 2010 volumes.
Pon’s return to the bicycle industry
The Dutch bicycle industry news was dominated last year by the acquisition of bicycle manufacturer Koninklijke Gazelle N.V. by the family company Pon Holdings B.V. which made a fortune in the automobile industry. For several years speculation had been going on about the future and viability of Gazelle, in combination with the fact that major shareholder Gilde Buy Out Partners openly wanted to divest itself of Gazelle. This news of the acquisition put an end to the speculation.
In a statement Pon Holdings made clear that it was convinced of the growth potential of Koninklijke Gazelle, in both the Dutch market and the new geographical areas. Pon also thinks it can profit from the rise of the electric bicycle as a result of the preservation of and growing interest in wider mobility solutions. After several years of uncertainty, the future of the brand Gazelle looks positive again.
The Dutch were angling for the big fishes
Pon is not unknown in the bicycle industry – as the company started as a bicycle shop. Pon even ran its own bicycle factory but ceased this operation in the mid-80s. In 2011 Pon Holdings soon made clear that the integration of Gazelle in their portfolio was not a stand-alone action. The Dutch were angling for the big fishes and in mid September they announced the signature of a Business Combination Agreement with Derby Cycle AG. Pon Holdings committed itself to make a voluntary public offer to all shareholders in Derby Cycle AG.
The agreement provoked a response from the Accell Group who rapidly increased its share holding in Derby Cycle AG to 22%, but Derby Cycle was not happy with that. Derby Cycle CEO Matthias Seidler regarded Accell’s reaction as hostile and aimed at an undesirable attempt to take over his company. In the end Accell Group refrained from making a final offer. It appeared to be a short term speculation only, as Pon Holding’s offer meant that the value of Accell Group’s holdings increased by more than €17 million.
Pon Holdings established a strong foothold in the international bicycle industry
Following this achievement Pon Holdings started looking for more big names. Last January they announced the take-over of the Canadian high-end brand Cervélo. With Cervélo they acquired a global road racing brand active in the Tour de France as well as many other Pro races. In just seven months, with three acquisitions, Pon Holdings established a strong foothold in the international bicycle industry after an absence of 25 years.