BA market data: A shot in the arm for the cycle industry

In January, a Bicycle Association (BA) led initiative that seeks to provide a shot in the arm for the cycle industry was soft-launched. Market data services aggregate and anonymise sales figures from shop tills, allowing businesses to compare their own performance with regional or national averages. It also allows them to predict trends and growth without sharing their own data with anyone else. While this kind of service is commonplace in some retail industries, until now it has only existed as a much costlier, and less comprehensive service, the BA says.

Sports Marketing Services (SMS) will manage the service on behalf of the BA, which is funding it for the industry, running on a not-for-profit basis. The service will be available for free to IBDs with a turnover below £5 million, who contribute their data. SMS already services the golf, tennis and cycle sport industry.

The BA’s Steve Garidis says: “Customers, trading conditions and market trends in cycling have never evolved faster, and the cycling industry has never been more diverse and competitive. Cycling is changing and growing: for sport, for leisure, for health and for transport. Now our industry needs accurate market data more than ever – to underpin our advocacy work and to strengthen UK cycling businesses. That’s why the BA has developed this service – on a not-for-profit basis – designed to be as low cost and accessible as possible.”

The BA hopes to use the data to make the case for greater Government investment in cycling, from infrastructure to subsidies, and to highlight cycling’s contribution to the UK economy. A recent report, produced for the BA, found the bike industry was worth more to the UK economy than the steel industry. However, this was interpreted from bicycle import data – a blunt tool in comparison to point of sale retail data.

Supporters of the scheme hope having the kind of data other industries have enjoyed for years will help reverse the fortunes of the cycle industry by providing insights into what sells and what doesn’t. The BA argues good market data can help businesses understand customers better and learn what is needed to “grow sales and improve profitability”.

SMS, which was recruited through a competitive tender process, will handle, anonymise and aggregate the data, so individual business data will not be visible to others. They will collect raw sales data on the first of each month via a shop’s EPOS provider, or central database, and feed that back to the industry.

SMS sports business and marketing manager Edward Willis, who is leading on the cycle industry data, tells BikeBiz: “I think the benefits are fairly multi-faceted. For retailers there are clear advantages to being able to better manage their product, stock and portfolio because they have better visibility on what’s selling, what’s successful. We aren’t saying John’s Cycles down the road has sold X number of bikes, we are saying in a particular area or price point sales have been X.”

He says data also acts as a benchmark, which for brands might mean performance of new lines, while for retailers it might be putting sales performance in context – which is important in challenging economic times. “For example,” he says, “a 5% drop in sales might mean you’re still outperforming the market in a given area, whereas a 5% increase might mean you’re underperforming against the market. For those small retailers there is a huge amount that they can learn. IBDs may find stocking one type of range may put off some people that they may be able to attract if they sold a different range.”

BA associate director Simon Irons, who led the project, says the service takes “the best of what we have seen from other sectors like UK Grocery, where market data has long been established as an essential benchmarking tool to help businesses improve their sales and profitability performance”. He adds: “Working closely with our members, including IBDs, brands and large retailers, we can ensure the service is both high-quality and completely tailored to their needs.”

BA is targeting 70% coverage by the end of the first year, and to help boost numbers, anyone signing up during the ‘soft launch’ phase, before 31st March, will receive a lifetime upgrade to the ‘silver level’.

Paul Kenchington, who owns Bicycle Chain, with four bike shops in the South West of England, welcomes the scheme. He says: “One of the biggest problems we have in the industry is because there’s no accurate data everyone is sticking their finger in the air and hoping for the best, which means you either get too much or too little product.

“Most reps will tell you the product is selling, and if you deal with a rep over time you begin to learn that’s what they say about every product. I have taken on lines in the past because of GFK [market] data, and was chuffed to bits with the results. One of the stresses for the IBD is if you’re a single outlet you have no idea really what’s going on in the market, which is a scary place to be, because you can be making some very bad buying decisions.

“The problem for the cycle trade in general is no-one is making enough money. We are having to dump unsold product at the end of the year, which is great for the customer but not for the industry as a whole. Every other industry has this so it’s incredible we didn’t have it until now.”

The more businesses sign up, the better the data. The scheme will be funded by BA members subscribing to the service, so more people signing up means lower costs for each member.Heather Baker, who runs Saddles and Paddles in Exeter, welcomes the market data. She says: “I think it’s going to be incredibly useful, more so for people who don’t really know what to expect.

“Let’s say cycling shoes were a big growth area. I might not realise because there’s so much you can stock as a bike shop, and it’s hard to know what’s going to be worth your time. With this data you can keep track of other areas to enable you to invest in it yourself. As a small business you can’t do everything, and you can’t know what all the trends are, whereas a bigger shop down the road, because they sell more, might have a better idea.”

Baker adds that this information will help small businesses compete against larger companies. “We are better together, the more we can share what we are doing, the more we can start to build a support network for our own businesses.”

How does it work?
The market data service is free for IBDs with an annual turnover of below £5 million who sign up to contribute data. IBDs will see a simplified version of the market data that’s easy to understand and interpret, on a monthly basis, as well as a monthly ‘top five’ products or lines, to help inform buying and planning.

Bigger businesses can sign up to bronze, silver or gold memberships, with more detail
on products, comparisons against their own sales data and online reporting service available to higher tier memberships. Higher tier users will be able to compare their own data to market and sector averages down to category, sub-category, and even SKU level in some areas.

Irons says there will be support for businesses on how to make the most of the new service. He says: “We will have to spend the first 6-12 months educating people on how to use it, to get the best value out of the service. To help people use it, to make more money, we are going to plan every quarter to produce training material to help people on how to use it.”

That might include showing the top five selling items to help ensure shops have popular lines available to customers. Irons also hopes it will be possible to show what stock is available across the industry, so that if a retailer runs out of a line mid-season, they could see how much of it is held in other shops and decide whether or not to restock. This could potentially reduce the risk of a small retailer being left with excessive stock.

How can data help with advocacy?
The BA says the data will be a key tool in its new plan to “leverage deeper investment in cycling from Government and other agencies”. It sees this as at least as important as the trade insight.

Cycling UK’s Sam Jones welcomes the market data as an important advocacy tool. He says: “One of the big problems Cycling UK and other organisations have faced is in actually showing how much cycling can make, as usually what we will talk about is how cycling can save the economy £X due to the health and environmental benefits – and for politicians those figures roam into the realm of make believe. Industry figures will be a much better benchmark, showing how cycling makes a positive contribution to the UK economy in terms of turnover and both direct and indirect jobs.”

In 2011, the London School of Economics produced a report, commissioned by Sky
and British Cycling, revealing that cycling contributes £3 billion to the UK economy.
This was believed to be the first report charting the economic value of the cycling industry in the UK, and it made national headlines and is still quoted today.

Not only did it cite how many people the UK cycling sector employed (23,000 people), but the value of each cyclist to the country’s economy (£233). As well as demonstrating cycling’s current economic value, the report sought to indicate how much it could contribute if more people saw cycling as safe and convenient – not least through decent infrastructure.

At the time Ian Austin MP, vice-chairman of the all party parliamentary cycling group, says: “This important report shows that encouraging greater participation in cycling can bring not only social but economic benefits for Britain.”

Why cycling’s benefits extend far beyond the cycle industry

In 2018 Transport for London gathered research on the economic benefits of cycling, which consistently shows the benefits to local businesses of walking and cycling friendly streets around the world.

In one study cycling, walking and public realm improvements on high streets increased retail sales by 30%. It found cycle parking delivers five times more retail spend than the same area of car parking – not least because one car parking space can store 12 bikes. New research found improved streets for walking and cycling led to an increase of 216% of people stopping, sitting and socialising, and 17% reduction in retail vacancies.

Cycle lanes can also carry more people than motor traffic lanes, helping to tackle congestion. New cycle lanes helped some London streets carry up to 5% more people
at the busiest times of day. What’s more, cycling and walking projects deliver a whopping £13 for each £1 spent. The health benefits are well known.

Businesses are increasingly aware that cycling and walking friendly places help attract workers, particularly millennials, who are more aware of the human impact on the environment. New research from a survey of business improvement districts in London, commissioned by Transport for London, found more than 85% think cycling is important for business performance, for attracting more customers, creating vibrant areas and attracting and retaining staff. 95% say the same for walking. Only 29% said their areas were currently good for cycling.

Not everyone realises the economic benefits of active means of transport like walking and cycling, however. Previous research has found businesses overestimate their customers’ car use by three times.