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Kryptonite's boss on growing in Europe, acquisitions and AXA - BikeBiz

Kryptonite's boss on growing in Europe, acquisitions and AXA

Kryptonite owner Allegion took over rival lock brand AXA in the summer. BikeBiz quizzes Kryptonite boss Nick Watkin on what it means for the brands
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Kryptonite's owner Allegion bought rival lock brand Axa in the summer. BikeBiz quizzes Kryptonite general manager Nick Watkin on what the acquisition means for the trade, and creating a buzz in Europe...

How’s business?
In Europe we’re doing exceptionally well. Over 18 months we’ve been reaping the rewards of investing in people and products.

In the UK market we’ve had a reasonable presence for at least 15 or 20 years and we want to continue to grow. In US we are in good shape in terms of share and we obviously want to maintain that and continue to grow but we’re working hard to make the brand bigger in Europe.

How was the reaction to the launches at Eurobike?
Show season was a real buzz for us. At Eurobike particularly there was a real step change this year. We had lots of dealers coming up to us and products were almost the thing we were talking about the least. We were talking about the brand, our services, our dealer support programmes including the planogram programme, how dealers can make more money…then it was “oh and we have these new products too”.

In the past we’ve had presence in Europe and we distribute to the continent out of a UK warehouse. But we’ve proactively gone for it. Eurobike was a real buzz for us.

When I met the Kryptonite team last they told me there is a lot of opportunity for the brand…
The opportunity for us is geographical in nature, to get our fair share in Europe. We have a wide portfolio of products, specifications and technology and services and our offer can be replicated where we have been successful in Central Europe, Scandinavia, France and Germany.

Kryptonite’s owner Allegion acquired lock brand AXA in the summer. What does that mean for Kryptonite and retailers?
From a consumer point of view there won’t be any change in the short term. The brands are operating separately, although there is some back of house integration like finance, HR and IT. From the front end you hopefully won’t notice it!

There’s an interesting high quality challenge here: What do we do with these two brands with their different strengths in different regions? They are both brands that have a huge market share in different territories. It’s a question we haven’t answered yet. There are of course opportunities. There’s different products and expertise in different areas. Engineers from both brands are exchanging knowledge and there will be benefits for both product ranges.

But for now it is business as usual. Dealers won’t see any difference for some time.

The AXA acquisition was a step up for Allegion and we now we get more global market share. As we were competition, especially in Europe, they will complement each other well. AXA is strong in Benelux, while Kryptonite is strong in the US and UK. They are different product types, a good percentage of AXA is in OEM, Kryptonite is an urban, slightly youth-oriented brand, AXA is a clean, more technical sale perhaps…There’s fresh air between the brands. They have to stand on their own two feet.

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Was the acquisition a long time in the making?
The Allegion management structure is entrepreneurial and they’ve invested in us which is a relatively small part of the Allegion business. We (action sports security) are not their core. Although they are in security, it’s mostly for commercial buildings and residential homes. They looked at the opportunity and the fact that we don’t have the share in the EU and have invested to get that bigger share. Acquisition was one route to get there quicker.
Kryptonite is in a nice position to be able to do that. These opportunities exist and there is a mechanism to make acquisitions and examine if brands can join us. Never say never, but there’s lots of work to do while the dust settles.

As a US company with a solid footing in the UK, how do the two cycle markets compare?
I’ve lived in the US managing Kryptonite and am now back in the UK, so I’ve seen both sides of the Atlantic in detail. Apart from a few exceptions, like cruisers, the bikes sold in the UK and US are relatively similar. They are not ridiculously different. So the products people want to use to secure their bikes are not hugely different in the UK and US. Both are focused on sport or exercise in the main. That is changing but we aren’t like the Netherlands or Germany. They are similar so the locks we sell in each territory are quite similar too.
There’s no extra testing in the US, so there is no equivalent of Sold Secure. It has merits, but Sold Secure can create depth in the market. People may produce locks that just scrape through a particular test. That can cause manufacturing issues and drive SKU proliferation – you don’t have that in the US – but it’s not necessarily a bad thing.

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You’re extended the Anti Theft Protection Offer (ATPO)...
ATPO allows a shop to sell ‘peace of mind’ to a consumer who buys one of our locks and shows we stand behind the quality of it.

We’ve had ATPO in the UK a long time. We introduced it in 1978 and in the UK soon after, but beyond those it hasn’t been available in many countries. Now it’s being rolled out into more European countries.

We try to make our product security levels very straightforward for consumers. Our goal is to get people the right lock, depending on how long it is left for and where they use it – too often it is confusing for the consumer and even for dealers – so we just have a simple one-to-ten system. Our Planogram makes security levels simple for dealers and crystal clear for consumers.

Ideally you have a consumer coming into a shop and instead of being faced with a wall of locks you have a well ranged group of locks and a tangible understanding of what each level of lock offers.

The ATPO sits neatly in that. Today in the UK the progamme is only offered for one year and it is free – with the new ATPO in January you can register for up to five years, at different costs, but for high and ultimate secruity locks the first year will still be free. Now the claim process – we don’t have many – is no longer manual and time consuming as it can all be done online. Dealers can show customers how easy it is. It shows how Kryptonite is different to other brands. It’s not just the sale of the lock, it’s the whole experience. 

Eighteen months ago our management team sat down to chat about taking the brand forward. We offer good warranty and we’ll continue to innovate, but let’s park that. We said “let’s concentrate on how to help dealers make more money and help consumers buy the right product”.

We want to help dealers with profitability and make the consumer comfortable with choosing the product that is right for them.

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Can we expect to see more gravity and component-based security products from Kryptonite?
It is definitely an interesting area for us, with some obvious possibilities like wheels. We’re doing extra research on what people want protected. That was driven by the Messenger line and the feedback we got from that – people just want to carry one lock, basically. Two good locks is ideal, but one is more popular.

In terms of Gravity there’s no reason why we shouldn’t and you want to give thieves a tough time when it comes to expensive components. But you do have to be realistic about how many people are worried about if their derailleur will be taken. There’s a law of diminishing returns, we don’t want to be a component manufacturer. The SKU count for different components and different bikes would be immense. It’s not realistic to expect 200 SKUs on dealers’ shelves. It is an area we will pursue, but there will be a limit.

What about the future for Kryptonite in the cycle market?
It is looking rosy. The biggest challenge is outside the UK.

No one actually wants to buy a lock. It’s not sexy – you don’t want to think about it. Locks of course tend to be urban but there’s not one type of cyclist we target. They all need locks, that’s the beauty of the category.

When a consumer wants to buy a lock they go online and research it and I think we do more than anyone else to help them make a good choice. We have more than a fighting chance to get the sale. That is mirrored in the UK and US with the stock on dealers’ shelves.

That’s not the case in Europe as there’s lots of big competitors there, so that is our challenge. You push people into shops but the locks have to be on the shelves. All our products have a ‘buy local now’ button and in the US that takes you to a site that lists where you locally can find stock of the product. We can close that link and go straight to the shop. These mechanisms don’t exist in the much more fragmented Europe market. The challenge is to get that and make sure products are on shelves of a dealer and hopefully merchandised well.

Kryptonite is distributed to the UK cycle trade by Madison.

www.kryptonitelock.com

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