<b>Spain 2008:</b> Bike Industry Feeling Healthy
With Spain still inside a deep crisis, its bike industry breathes normally and presents a healthy situation compared to other sectors. All the people in Spain talk about the crisis. It seems to be the most affected country in Europe, which is expected to feel the crisis
BARCELONA, Spain – With Spain still inside a deep crisis, its bike industry breathes normally and presents a healthy situation compared to other sectors. All the people in Spain talk about the crisis. It seems to be the most affected country in Europe, which is expected to feel the crisis for years. However, a usually quite pessimistic and conservative industry like the bike business looks with optimism to this global situation.
The majority of companies feel happy with their sales. The bad economic situation is not leading to big disasters. As Pepe del Ramo, Catlike CEO explains, “The bike industry in Spain is one of the few sectors that are surviving the crisis. Catlike is growing in all categories. Our main growth comes from export, but this is due to the balanced situation we have in our home country. It is difficult to grow after 10 years of success, yet we see around 30% increase from last year’s turnover”.
All the players in the business are aware that this is quite an uncommon situation and sooner or later the economy will change for the better. The bike sector has gone through other tough moments in its history but it seems to be vaccinated from the current global economic crisis. Eduardo Roldán, Macario Llorente’s marketing manager, explains,
“It has been a year with some ups and downs. The first part of the year we went through a hesitant beginning, basically due to the bad weather conditions we had in the first trimester and that have been the same for the majority of agents in the market. However, as months went by, the situation consolidated and today we are over the sales from last year in the same date”.
Production and imports
Production and imports remained at the same level as before. This is not new at all. Spain has always had some important brands producing their bikes in-house and selling them in the national market and international scene. However, this is something that has been changing in the last years, with Asia and East European countries meeting the need to produce in cheaper manufacturing countries. Imports last year grew, as did consumption.
This season, Spain is importing fewer bikes both from EU and non-EU manufacturing countries. This does not seem to be anything serious and may be just a deflection in a rising tendency. The European trend confirms that this slight decrease is based on the low-end price sector, which has been the most harmed in the last 12 months.
Clients adjust their modus operandi
Crisis means money staying steady. Companies prefer to run less risk and keep their money safe. This is something that distributors have felt. Dealers aren’t averse to losing their usual discount based on annual pre-orders, in order to have less stock in their shops and more liquidity in exchange. Dealers have also followed this attitude, which we can summarize as the will to reduce risks. As Eduardo Roldán, marketing manager at Macario Llorente states,
“The initial hesitating moments about the business during 2009 have been reflected in the clients’ working procedure. We have seen how there is a higher tendency to reduce risks. This means that people work less on long term forecasts and prefer to base their buys on daily orders of fewer amounts. This situation, in my opinion, has increased the value of distributors like Macario. We have become the warehouses of the clients, mainly on high-end bikes”. So, in the end, turnover both on distributor and dealer stays the same, but products are delivered in more regular basis. On his side, Pepe del Ramo, Catlike CEO, points out, “Dealers tend to focus less on brands and suppliers and become more specialized”.
Staying faithful to companies that dealers trust (normally mid-high volume and with long experience in the business) can be one of the reasons for the reduction in number of distribution companies. As with any crisis, there is some natural selection at work, mainly harming young, small distribution companies. In the past few years, Spain has seen small partnerships established to bring new brands to the Spanish market. The brands’ profiles are quite similar: small volume brands happy to enter a new market and only demanding tiny first orders to their new distributors.
These not-demanding requirements have allowed newcomers to take a shot and try to distribute new brands with low risk. These companies are normally very small and with no economic power. In such a competitive environment, where we find so many different brands, it makes it really tough to survive. The crisis has turned some of these projects to dust.
Festibike, the Spanish national show just held in Madrid in mid-September (see page 16 for a report), has beaten all records of exhibitors, visitors, and brands represented. This is a clear signal that companies are willing to invest in promotion and help money run from hands to hands. Crisis is cleaning the industry: a few have fallen, but the ones getting over it are stronger than before.
Sport stays, commuting bikes grow
Bike commuting in Spain is growing. The costs of petrol, the lack of free parking in big cities, the crisis that makes citizen be more aware of costs has made many drivers decide on a bike for their daily journeys. And if you are not keen on pedalling, an electric bike is your solution. We are rapidly switching from a country with no bike commuting culture, to a country (big cities) that believes in bikes as a solution to decrease costs and pollution.
It is not uncommon to find dealers specialized in bikes designed for city use. And what is even more incredible for Spain, is the arrival of dealers that specialize themselves only in electric bikes. This is something that sales tell us, with an increase in the folding and city bikes sector.
Luis Mayoral, Bike Import Mayoral CEO, manufacturer of Coluer bikes, states that “we are in the same figures than in 2008 approximately. We are not feeling any of the crisis stories we watch on TV. What we have realized is that city and hybrid bikes are in more demand than ever”. Going out, holidays and gyms are expensive. It seems that people are also taking the dust of their bikes and using them as a way of staying healthy at a low cost. The sport sector is more or less stable and consumers looking for medium-high end material are still there. Brands are working in their ranges.
Foldable bikes and city bikes are a must. The urban commuter focus is true for accessories companies like Catlike too, showing at Interbike the aptly named ‘Urban’ helmet with a rear light and a cosmopolitan look. Spain is changing fast.