Halfords Notes Big Drop in Number of UK Bike Retailers
REDDITCH, UK – Like in the US as well as in other EU countries also in the UK the rapid growth of online bike sales is “changing the marketplace,” notes Halfords. The country’s biggest chain in motoring and cycling products Halfords reports that it has a destroying effect on the competitiveness of IBDs resulting in their demise.
In its report on the company’s financial year (that ended March 31, 2017) Halfords Group plc notes “Our research has identified that the number of bike shops has declined by nearly 10% over the last year.”
The reason behind the big drop in the number of IBDs in the UK is the same as in other countries; the inability of dealers to compete with price offers that are intensively communicated by online players. Halfords states “The cycling market is highly fragmented; there are over 2,500 bike shops in the UK, the majority of which are independents. The changing marketplace and growth in online is making it increasingly difficult for these independents to be competitive. Our research has identified that the number of bike shops has declined by nearly 10% over the last year.”
Improved cycling sales at Halfords
Whether the drop in the number of IBDs is favoring Halfords is not stated by the company. However, its financial report says that “cycling sales improved by 5.1% on a like for like basis and 18.2% on a total sales basis. We took a significant step forward in consolidating the Group’s market-leading position, growing market share on a like for like basis as well as continuing to grow the Cycle Republic chain, which grew over 20% like-for-like in the year. Tredz and Wheelies also performed strongly in the year, with revenue growing over 20%.”
In the 2016/2017 fiscal year Halfords’ total revenue stood at GBP 1,095 million (€ 1,261 million); up 7.2%, with a like-for-like growth of 2.7%.
Trends for continued growth
In the next years Halfords anticipates further growth of the UK cycling markets. The company counts on an average growth rate of 3-5% per annum over the medium-term. As reasons for this continued growth Halfords identified these trends:
· Participation levels (particularly amongst females) in the UK remain much lower than in many other European countries;
· The health and wellbeing benefits associated with cycling;
· Government infrastructure investment in London and other UK cities;
· The growing e-bike segment, making cycling more accessible to commuters and older generations; and
· Existing participants in the cycling market spending more as they increase the amount they use their bikes.
New year start
Halfords also notes to have started its new financial year with good momentum. “Our trading performance for the 15 weeks to the end of April 2017, which includes the 11 weeks to the end of the financial year and the first 4 weeks of the new year. We consider this period to be more representative of performance because it includes Easter in both the current year and the comparatives. Revenue for this 15-week period was up 3.9% on a like-for-like basis, comprising Motoring +0.9% and Cycling +11.1%.”
Around 70% of Halfords Group sales are generated from products and services that are principally motoring related with the remaining 30% coming from cycling.