How’s business been in the last 12 month? Have sales made up for the wet summer?
It’s been a tough year in general. We’ve had to work a lot harder to achieve the same results, but that said we’ve grown profitably as a whole. We don’t rely too heavily on the online guys like Wiggle and Chain Reaction. Although they are important customers they aren’t any more so than IBDs. Lots of companies have benefitted from the growth of those online guys and much of their growth has been overseas, so that’s not necessarily true growth for the UK distributor in the UK market. So for us we are always looking at understand what’s going on in the UK market.
But we’re lucky we’ve got some great products that see us through the winter months like Niterider lights, Kinetic trainers, Glacier Gloves, Lizard Skins, Pedros and Feedback Sports… we do as much business in the winter months as we do in the summer, if not more, with those brands.
In terms of being where we are at the end of the year, the only surprise was how bad the weather was at the start and what impact it had on the season.
The thing is that distributors are a bit behind what is happening at retail. By the time retailers are impacted it then takes three or four weeks for us to feel the effect. But overall in the past 12 months we’ve had a great performance and a good year. I wouldn’t say it’s been an easy time for anybody, but considering the climate it’s not a bad position to be in.
How do you view the state of the trade at the moment? Is the poor economic climate affecting bike sales?
I think that cycling as a whole is in far better shape that the rest of the economy, but we’re all competing for the same pound. The economic climate is probably affecting the industry less in London – whenever I speak to people who travel to London they haven’t seen the same impact there as the rest of the country. Whether that’s the case in the bike industry specifically…it’s hard to say.
With the media attention this year the perceived health of the industry has been that it is really good, but I’m not sure that’s necessarily really how the industry is doing. All my friends think we must be making a ton of money. It has been a hard summer as we’re so weather dependent. This year has probably been harder than most, but the combination of bad weather and the bad economic climate – whenever there’s been good weather the economic news has been poor – we never seem to have good weather and good economic news together. We don’t get the two wins together. But there’s no doubt the economic climate has affected us, but no more so than any other industry.
It’s been a big few months for 2pure with the merger with Chocolate Distribution – how did it come about?
Chocolate was created to allow us to invest in new business, primarily in the road segment, without diluting 2pure’s model. After two and a half years of running with Chocolate there’s no doubt the market has changed. And it made sense for 2pure to take on Chocolate’s brands. It was as simple as that.
The road market has had a good time and it has brought new people into cycling. Road is up on last year, without a doubt, but then a few years ago there wasn’t that much road bike business in the UK.
And the thinking was to strengthen 2pure’s road offering? Is road where much of the growth is being experienced now?
Two years ago we didn’t have much in the road segment with 2pure. We could see the growth in interest, participants and events and the only brand we had for the road specialist market was Clif Bar. But in the last 12 months more of 2pure’s brands developed road product like DSP bar tape from Lizard Skins, etc. 2pure had road product growing within it so it just seemed like a really good time for 2pure to take on those road brands from Chocolate. So yes, part of the strategy is to strengthen 2pure’s road offering. I think MTB has had a flat 12 months, but it’s not in bad shape.
What does the merger mean for dealers?
More product from one distributor. There’ll be better support as 2pure’s marketing team is better equipped than Chocolate was and there’s better aftersales support too.
It wasn’t an acquisition then, but is there future opportunity for that kind of deal?
That’s right, it wasn’t technically an acquisition.
One of the 2pure philosophies from day one was to have ten or less brands, but another core value was that we should be adaptable and flexible. I struggled with this a lot when we decided to bring Chocolate’s brands into 2pure. But we’ve been true to the core value of growing the business by adding value and improve experience for partners. So we decided that the ten-brand limit was maybe not so appropriate to our business and the current state of the cycle market.
We’ve removed the limit, but we’ve still got our core focus and what we deliver for those brands, our customers and consumers. We’re not going to go to 40 brands in the current shape of the business. It doesn’t mean we won’t ever go up to 40 brands, but unless you can do a great job for the brand and add something new to the marketplace there’s no point.
Although if we were presented with an interesting merger it doesn’t mean we’d rule it out, but for now we’re just concentrating on what we’re doing.
Core Bike is just around the corner. Will you be able to squeeze all the new brands in?
It’s always a tough one and we’ve struggled with it each year. We’re going to be smarter with what we display and try to be selective. All our brands will be represented well, but space is always going to be tough. It kind of defeats the object if the dealers can’t get around the displays because you’ve crammed so much in. But we’ll have two rooms this year, we’ve got the Chocolate one too.
How important is the show for 2pure and its dealers? Will there be show offers?
It’s the most important event in our calendar each year, more than just about buying but also about interaction, comparing notes, learning from others and motivating us for the season ahead.
We always have some specific show offers and will this year, maybe some tastier ones this year. We always run our SIP – Selling In Programme – which we’ll be signing up dealers for. It enhances dealer margins when they sign up to different brands. And we’ll launch new product there and there will be at least one new brand at the show.
Will you be exhibiting at any other shows in 2013, or is it too early to say?
We’ve committed to the Scottish Bike Show. One of the main reasons is that it’s going to be at the [Sir Chris Hoy] Velodrome and that’s a great venue. In terms of getting people along it’ll be really strong. It will be quite an interesting show, with much more to offer this year. We’ll also be at the Bike and Tri Show in Manchester. Again, it’s a new and different consumer show, and we’ll be there with 9Point9, our outdoor distribution arm.
How is the outdoor market faring compared with bikes?
It’s been a hard time in the outdoor market. It’s a mature market, going through a change and it will be good for the market long-term. The bike market is cleaning up constantly, but outdoor has been chain focused and when Blacks went under there was a lot of inventory to get through and that has had an impact on other retailers. Many have not seen growth.
Finally, do you anticipate that cycling will benefit from 2014’s Glasgow Games?
Just like the Olympics and Tour de France it helps keep it in the public eye. We’ve not really started to see the impact from the Olympics or the TdF. I do think it’s been a great year for sport in the UK, with the Ryder Cup, Wimbledon, Grand Prixs, etc. All that has had an impact in terms of people watching TV! But I think we’ll see a benefit in 2013. That combined with the Commonwealth Games in 2014 will mean we’re in for a good couple of years.