2003: Heat drove customers into bike shops

What a year! 2003 was probably the best bike-sales year in the past 10 years. Much of this market review of 2003 was first carried in Bike Europe magazine, January 2004.
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2003 started badly. December 2002 sales figures were depressing. But there were encouraging signs on the horizon. The biggest thing to look forward to was London’s congestion charging scheme, set for February 17th.

London IBDs prayed for good weather. These prayers were answered, the good weather just kept on coming.

And not just in London. All over the UK, glorious Spring weather turned into a hot, dry summer, and then there was a dry and unseasonably warm autumn, followed by a dry winter.

British reservoirs may have dried up because of the lack of rain, but British IBDs were in clover.

Halfords also had a good year. In sales, that is. On the reputation front, its good name took a denting after heavy-handed millionaire executives were parachuted in to the business, and put the metaphorical boot into marketing staff, key suppliers, and some performing chimpanzees.

IBDs and Halfords almost had the UK bike market to themselves. Supermarkets had experienced poor bicycles sales in the final three quarters of 2002 so didn’t order the shed-loads of 2003 bicycles they were expected to. And catalogue retailers - formerly a bike trade mainstay for companies such as Universal, Britain’s biggest bicycle supplier - reined in their buyers, with bicycles being a missing category in many mainstream catalogues.

The catalogue companies will be back. They saw how the UK market for bicycles prospered.

Prospered by how much? We don’t know. The Bicycle Association of Great Britain spent most of 2003 banging heads together in order to create the Bike Hub levy: it had no time to instigate a sales statistics service.

But perhaps this lack of a number-crunching, benchmarking element to BAGB is a Good Thing. Most companies like to think the extra sales they made in 2003 was all down to their own hard work. With no stats service they are not to know that everybody was up, even the duff suppliers


JANUARY

The year started badly. Terry Bowles, the CEO of Madison, the UK’s powerhouse P&A supplier (Shimano, Giro and so on), wrote:

“Coming into work this morning I found myself reflecting on the state of our industry and the prospects for the New Year. If we throw into this cautious note the added misery of a bicycle industry still reeling from the significant decline of its most prestigious and fashionable mountain bike business, the added misery of more multiple/mass retailers dabbling around the fringes of our industry selling ever increasing numbers of cheaper bicycles, and the now well established trend of wetter summers, the facts suggest that we have little reason for optimism in the year ahead.”

He was eventually proved wrong, mainly because of the run of good weather, but news from across the Atlantic seemed to confirm his pessimism. Cannondale filed for Chapter 11 of the US bankruptcy code. Cannondale’s European subsiduary wasn’t part of the Chapter 11 process and Cannondale stockists didn’t seem jittery.

Andy Castle of Alf Jones Cycles in Wrexham said:

“The bicycle side of Cannondale has been subsidising the motorbike side for some time. It’s good the company will go back to concentrating on what they do best. You’ve got to remember that no product has failed here, Cannondale bikes are still highly innovative and desirable. I don’t foresee any long-term changes thanks to the Chapter 11 filing. Who owns the company is not that important.”


FEBRUARY

Tandem, owner of marques such as Falcon and Dawes, bought Bob The Builder. Well, not quite the great man himself, but MV Sports Group PLC, the company that held the licence to make Bob the Builder themed trikes, bikes and P&A. The all-share offer was worth £4.3m.

And it wasn’t just suppliers eating other suppliers, IBDs could absorb their rivals, too. Scotland’s biggest IBD bought one of England’s biggest IBDs when Edinburgh Bicycle bought Hardisty Cycles of Newcastle on Tyne.

Ged Holmyard of Edinburgh Bicycle said "We believe that a smaller number of stronger retailers can provide our suppliers will a better-financed channel for their products. This consolidation should, in turn, help deliver a more reliable service re the supply of a better choice of quality equipment for the cyclist and cycle seeker.”

Edinburgh Bicycle, with a turnover apporaching £6m, was now the second biggest independent in the UK, after Evans Cycles and its £10m annual turnover.

Evans is a powerful London IBD and it would benefit, like all London IBDs, from the so-called ken-gestion charge. Ken Livingstone, mayor of London, took a lot of flak for starting the congestion charge - February 17th doom-sayers predicted computer meltdown and gridlock - but opinion quickly changed when the charge was seen to work so well.

Along with Küppersbusch kitchen appliances, Villeroy and Boch bath suites, and Hangrohe showers, one developer of luxury London apartments clearly saw the light and added bike lock-up facilities to its new £1m+ penthouses at Chelsea Bridge Wharf on London’s South Bank.

It was shaping up to be a better-than-expected first quarter. And then it got even better. Phillip Darnton, later to be elected as president of the BAGB but then still executive chairman of Raleigh and with a marketing role on the National Cycle Strategy Board, revealed that he had squeezed £60 000 from the Department of Transport to fund a consultation process aimed at devising a marketing strategy for cycling.

“This project won’t step on anybody’s toes,” said Darnton. “The marketing plan will create a core thought that all cycle groups and organisations will be able to get behind. There’s a great chance for unity here.”

And Darnton had big hopes such unity could be used to resurrect the levy on all bicycles sold in the UK. This had been allowed to lapse after £1m was raised, from 1997-2000, for Sustrans’ national Cycle Network launch in millennium year.

One of the earliest companies to agree to the levy idea in principle was Universal. At one time a low-end brand only, MD Gavin Marksheffel - son of Universal’s founder - was keen to tag-on an upscale brand. He had bought Muddy Fox, one of the first mountain bike brands in the UK, in 2001. At a February 2003 trade show, Marksheffel pledged to spend £500 000 on a Muddy Fox relaunch. Part of the cash would go on two blonde, buxom models who would be the ‘face’ of the brand.

“We’re bucking the trend,” he said.

“There’s not much money being put into promoting cycling. This campaign will get noticed.”

MARCH

There would be good times ahead but they didn’t come soon enough for The Bike Chain, the store-in-store bicycle retail outlets within 15 of the 16 YHA Adventure shops nationwide. YHA Adventure went into adminstration, taking The Bike Chain with it. Some of the stores were later floated off and they re-formed as a smaller chain.

Another small chain was starting to take shape in key UK retail hotspots. Decathlon added a sixth store. Slow progress, but steady. This French retailer now had six stores in the UK: Surrey Quays, Romford, Merry Hill, Nottingham, Stockport and Sheffield.

Decathlon is still not major mover and shaker in the UK bike trade but with 320 stores worldwide, it could be if it wanted.

And what was once a key mover and shaker started to lose its sheen of invicibility in March. New execs were appointed at Halfords. Soon thereafter 85 HQ staff were made redundant, including key two-wheel personnel.

Suppliers to Halfords went ape over a unilateral imposition of 90-day payment terms by the UK’s market leader. The payment contract had previously been for 30-day terms. A major supplier to Halfords said: “With product being shipped from the Far East and what amounts to 120 day payment terms, we’re effectively financing [Halfords] stock for nearly a year. This will weaken those suppliers who decide to agree to the new terms. This may be good business for Halfords but it’s not very clever long-term to muck suppliers about like this.”


APRIL

Phillip Darnton was sworn in as president of the Bicycle Association, and confirmed his first task would be to resurrect the bike levy.

“I have no knowledge of ‘yesterday’,” he said.

“I want to start with a blank sheet of paper, let’s forget the politics. I think agreement [on a levy] can be reached very quickly.”

MAY

ACT, the UK IBD organisation, accused Halfords of being “under stocked” and “poorly merchandised”. The ACT had done retail spot-checks on a number of Bikehuts, the Halfords IBD-type shop-in-shop format, and found SKU gaps. This was confirmed by a Bikehut manager:

“We have been seriously short of stock of bread and butter lines, cables, locks, brake pads, lubes, tyres, tubes, the list goes on. A lot of the specialist equipment has gone. No Hope in the cabinets, Middleburn disappeared, high end Shimano on the way out.”

Then, as if things weren’t bad enough at Halfords, the retailer launched a TV advertising campaign featuring performing chimpanzees. Most other advertisers long ago abandoned chimp ‘actors’.

The Captive Animals’ Protection Society (CAPS) launched a campaign to persuade Halfords to withdraw its TV commercial. The anti-Halfords campaign spread like wildfire and, soon, condemnation arrived from across the globe.


JUNE

What with public and staff protests because of the chimps ads, a supplier backlash against the new trading terms, and a slow-down in the roll-out of ‘new concept’ Bikehut stores, Halfords was having a torrid few weeks. Too torrid for Scott.

In a letter to IBD customers, Ian Hughes, general manager of Scott UK, said he was ending the agreement to supply Bikehut, which had started in April.

“Since the announcement of my accepting an invitation to supply a New Concept Halfords Bikehut store in Burton on Trent on a trial basis, I have always said that if I was not happy with the trial, or Halfords themselves, that I would pull out of the agreement,” said Hughes.

And pull out he did.

JULY

Euretco postponed plans for a UK roll-out of Profile “the Cycle Specialist”.

Eurecto had wanted to see a minimum number of IBD and supplier sign-ups before officially launching in the UK. Of the 18 IBDs that had expressed interest, six would have signed with Euretco, far beneath Euretco’s target.

AUGUST

Madison launched a semi-transactional, B2C, big bucks website. With full RRPs, 50/50 online/IBD payment, and 5000 SKUs, the ultimatepursuits.co.uk site was a “mammoth project” said Madison’s Dominic Langan, brains behind the site. Other suppliers have had similar sites running for some time but Madison decided to wait and come up with a ‘killer ap’. Sales successes from the site were slow to kick in and Madison later increased ad spend to boost consumer recognition of the site.

SEPTEMBER

A flagship Bikehut store, the only one that was standalone, bikes only and had no Halfords branding, was converted into a cars-and-bikes Halfords. The Havant branch of Bikehut was, in effect, a corporate-owned IBD and the conversion into a standard Halfords was a significant move by the CVC-owned retail chain. However, Halfords PR director Barbara Cadd claimed the conversion was not an indication of national changes:

“The Havant store was a tester store. We’re changing the format of this particular store as part of the ongoing testing of retail formats.”

A significant move, no questions asked, was the news that the Departments of Education and Transport were to spend £50m on getting school-kids out of cars, and on to bikes. ‘Travelling to School: - an action plan’ will help schools promote safe and healthy travel to school. A major part of the package would be local speed restrictions, dedicated cycle ways, and secure cycle storage.

Education secretary Charles Clarke (a former chair of the All Parliamentary Cycling Group) said:

“Increased car use means falling numbers of children walking or cycling with serious health implications in terms of lack of daily exercise and a growing proportion of children who are overweight.

“We want to encourage schools and local education authorities to use these ideas to make walking, cycling and bus travel safe, realistic options for more schools and their pupils.”

More good news from central government came later in the month. The Department of Transport pledged £1m to part-pay for the marketing cycling plan proposed by Bicycle Association president Phillip Darnton. This cash handout was thanks to the launch of Bike Hub, the sort of ‘self-help’ scheme the government likes to encourage.


OCTOBER

By pushing through congestion charging, Ken Livingstone, the pro-bike mayor of London, had a measurable impact on the levels of cycling in London. How measurable? Figures published in October revealed it was a big jump...

Stats from Transport for London showed that cycling into the congestion charge zone was up by 30% compared to 2002.

Figures for all vehicles:

Cars - down 30%

Taxis - up 20%

Vans - down 10%

Cycles - up 30%

Motorcycles - up 20%

HGVs - down 10%.

NOVEMBER

In the run in to Christmas, Halfords-bashing carried on apace. Halfords itself provided the stick to be beaten with. A dictat from on high said that henceforth all bikes beneath £150 would incur a £10 build charge, or would be supplied in boxes. The editor of Bike Europe decried such a move and so did the ACT, issuing a press release headlined: “Buying a bike at Christmas? Safety is not an option.” Halfords quietly shelved the promotion.

DECEMBER

BA president Phillip Darnton and two civil servants from the Department for Transport’s communications directorate appointed PR/marketing, sponsorship and website building agencies charged with promoting Bike Hub and the Sustrans Schools/Skills project the Bike Hub cash would be supporting.

It was revealed a further £750 000 would be sought from a sponsor for the national roll-out of the Schools/Skills project in 2005. Bike Hub cash would be paying for 40 pilot projects, not the full scheme.

The chosen primary schools will be given ‘cycle-friendly makeovers’ to demonstrate that proactive support can led to a massive increase in children cycling to school.

At the chosen primary schools, children in years five and six will benefit from new cycle parking facilites; approved training programmes; safe routes to school coaching; traffic calming schemes and promotional support in school and the community.

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