Slovenia 2011: More Effort for Less Profit
LJUBLJANA/Slovenia – Cyclists are seen on every corner of every street, in the countryside, and even on the mountains. But this is not a real reflection of the Slovenian cycling market. Everything negative connected with the global economic crisis hit this small country with a delay. This is clearly shown in the statistics on the bicycle sales.
A year ago we reported on the decline of bike sales in Slovenia, now we are reporting on a huge drop mainly connected with the general economic trend in the country. Unemployment rose, the new government launched a major plan to cut budgets, reducing the salaries in the public sector, while the private sector is under big pressure as well.
People not only think twice before they buy a new bike, they are thinking again and again about every big purchase. What the sales statistic show is not a surprise. It happens every time a negative economic trend steps into action. Less fortunate people have even less to spend and IBDs actually report that the sales of entry-level bikes showed the biggest decline. mid-priced and high-end bikes are still selling well, so despite the big drop in quantity from 2010 to 2011 the actual value of the market has grown.
Imports to Slovenia
|Value in €||14,144,776||14,669,547|
|Average price in €||153||191|
Big drop in quantity
In the past years market consumption was around 80-90 thousand bikes and this number dropped however to around 60-65 thousand in 2011. The number of imported bikes is higher, but approximately 15 thousand of those bikes were re-exported to other countries in the region. Lower quantity and a huge growth in the average price (24%) confirms the low-end market is in big trouble. However, the total value of the market has also grown.
The bad news is that these statistics don’t reflect the real situation. Margins are lower and “discount wars” are cutting profits. Many of the smaller dealers can’t pay for their stock (credit options are very tight) and bigger distributors are moving towards a larger number of self-owned and franchise stores. The most common report from them is that the sales are OK, but they have to invest much more effort in every sale and profits are down.
By now we also have figures for the first half of 2012 and these show the situation is about the same as it was in 2011, or slightly worse. The real picture will be clearer after the end of the season, but the main actors on the market are full of worries. Many of them are trying to boost sales with better offers of gear and by concentrating on better selling brands.
No big changes at the source
Taiwan and Italy were the main suppliers to the market in the past years and this has not changed. Together these two countries supply over 45 % of the bicycle market. Other important partners include nearby countries such as Germany, Austria and Hungary, but Belgium and Vietnam also play a significant role in the supply chain. With harsh competition from inside and outside the country and a negative atmosphere in general, it is not easy for anyone in the market, however many of the trends are positive.
Slovenians are very sportive and cycling is one of the most popular activities. This is not directly reflected in sales, but it helps. The same goes for a better cycling infrastructure and people’s understanding that cycling is a great mean of transportation. Hopefully this will help to turn around the negative trend.