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Halfords’ Cycling Sales Hold Up Amidst Tough Summer Retail Climate

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Halfords’ Cycling Sales Hold Up Amidst Tough Summer Retail Climate
Halfords are looking to grow bike repair sales. - Photo Richard Peace

REDDITCH, UK – Halfords has released its latest update on its trading performance for the 20-week period to 16th August 2019. It shows retail cycling sales down 1.1 percent like-for-like compared to the same 20 week period in 2018.

Halfords commented that the decline was in line with expectations, given the “exceptionally warm and dry” summer last year being followed by wetter, more unpredictable weather in summer 2019. The group also reported strong growth in electric bikes and childrens cycling offset by weaker big-ticket discretionary mainstream cycling sales, the retailer said.

Cycling sales fared well

When compared to the group’s overall performance cycling sales fared comparatively well. Like-for-like revenue at the group level, which also majors in car parts sales and servicing, declined 3.2 percent over the same the period, with overall retail sales down 3.9 percent.

Group online sales grew strongly at 8.4 percent year-on-year, with 85 percent of Halfords.com orders continuing to be collected in store. B2B sales delivered strong double-digit year-on-year growth.

Trend to quality e-bikes

2019 saw Halfords continue its trend to stock a wider range of good quality e-bikes with the addition of a sporty Fazua-powered e-road range from own brand, exclusive to Halfords, Boardman bikes. The summer also saw them stock the highly regarded Brompton folding bike for the first time at 49 of their stores with the London-manufactured bikes available through click and collect in a further 76.

Communications specialist

This September also saw Halfords partner with communications specialist 8×8 in a bid to improve its communications both within the group and with customers. 8×8, Inc describes itself as ‘a leading Software-as-a-Service provider of voice, video, chat, contact center and enterprise-class API solutions powered by one global cloud communications platform.’

Halfords has 450 stores in the UK and 26 high street style Cycle Republic shops.

Bicycle Association Starts Data Release

2019 also saw the release of the first market stats from the Bicycle Association’s collaboration with Sports Marketing Surveys Inc. Results are drawn from over 650 ‘cycling doors’ across the UK and claim to cover an estimated 35 percent of the market by value (the BA is targeting 70 percent market coverage by the end of the first year).

The BA figures mirror Halfords’ summer update quite closely, confirming the picture of a UK cycling market flatlining at the point of sale. The BA stats show sales for the first 6 months of 2019 down 4.8 percent in volume against 2018 whilst value sales are broadly flat, at 0.5 percent down.

Challenging High Street Climate for Evans

With Halford’s adopting a clear strategy of cycle specialisation in both the brands they stock and further emphasis on bike repair, the direction that one of their nearest competitors, cycle retailer Evans is taking is much less clear. In the wake of their near collapse and buy out by bargain discount specialist Sports Direct in autumn 2018, it was predicted the number of Evans mainly high street shops would be slashed form around 60 to half that number. However, despite buying Evans for only GBP 8 million (8.9m euro) and an immediate move by Sports Direct to cut hundreds of jobs, only 8 store closures were announced by March 2019 and at the time of writing Evans website shows 55 stores still open.

The strategy for Evans does indeed seem hard to discern; new branches in Shirebrook Midlands and Fort Glasgow in spring 2019 have been followed recently by the closure of one of the Evans most longstanding branches at The Cut in central London.

Mike Ashley’s empire

The only thing that seems certain is that the high street empire of Sports Direct owner Mike Ashley continues to grow. The Guardian recently reported “Ashley means business: he has hundreds of millions at his fingertips thanks to strong cash generation by his companies and banking arrangements that let him borrow up to GBP 1bn (1.1bn euro). His Sports Direct group runs 650 stores of its own in the UK and it has interests in a further 500 stores through its shareholdings.The Sports Direct conglomerate accounts for 3p in every pound spent on non-food purchases in the UK, according to GlobalData.”

Short and long term

The short term advantages of Ashley’s multiple high street buy outs are clear from the large number he has conducted, Evans just being one of the more recent ones; stock is bought for next to nothing, any previous pension liabilities there may have been do not apply and the increasing number of high street properties the group owns means ever increasing bargaining power against landlords.

But long term? Will a similar strategy apply to Evans as happened at Sports Direct, which reaped huge rewards from buying sports manufacturers with names familiar to UK shoppers such as Donnay and Slazenger; that is to say will Sports Direct look to acquire cycle manufacturers to complement its Evans stores? Or do wholesale closures still lie ahead with cycle sales becoming just one small piece of a rationalised, Sports Direct owned department store empire?It seems only time will tell.

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