2021 has undoubtedly been an unorthodox year, with independents, brands and distributors alike feeling the inevitable effects of a turbulent period for businesses the world over. BikeBiz catches up with several UK distributors to reflect on a bizarre yet successful period for the cycling industry.
Today, we hear from Lloyd Townsend, managing director, Ison Distribution
I suspect similarly to many of our counterparts, we’ve had consistently huge demand for products and several unexpected and unwelcome headaches with the supply chain. The high demand and added pressures on the supply became more obvious when the outcome of the pandemic options for folks became clear in summer 2020.
Frankly, cycling just went crazy. I think this was primarily driven by cycling being one of the few things that folks could do as an activity, and also offered a safe and affordable alternative to urban public transport. Aside from unprecedented demand on the supply chain, complications were added with Covid staffing issues in the factories and the container shipping headaches that most folks will have heard about.
No brand distribution changes have occurred so far in 2021. That said, the planned introduction of many new lines – such as the Vincita bags brand – have been delayed due to how hectic we have been in managing everything we already have going on.
Similarly, we haven’t been actively looking to add any new brands, but there are likely to be some opportunities for Ison to expand with new brands if they fit into our strategic requirements for the longer term. New brands aside, we have some really exciting brands that were already added new into the Ison portfolio just prior to Covid that are set to see significant growth – such as Princeton Carbon Works, Redshift and Squire.
With bricks and mortar retail now starting to come back into focus for consumers, we are expecting to see significant growth with brands like Squire locks that are especially well suited to IBD bricks and mortar sales – a great product with good margins for IBDs and next day availability from us.
Squire and Ison are continually investing heavily in new products and a significant boost in sales and marketing activities with the aim of establishing Squire locks as the premium bicycle lock brand in the UK. Otherwise, several ‘in-house’ new product developments that were put onto the slow burner in 2020/21 are now heading back onto the development griddle for 2022/23.
Behind the scenes
We have been running at pretty much ‘flat-out’ levels since April 2020. We had planned to change our back-end stock system for 2020/21, but a combination of Covid and Brexit related complications have delayed that change being actioned.
Naturally, changing the back office would be likely to cause some disruption, and I think when you are running at full speed, it’s perhaps not the best idea to loosen your shoelaces and to try pulling on some new shoes. However, we did make some tweaks to our established systems – especially so in regard to the proactive information flow relating to stock availability and backorders.
The whole of the Ison staff and especially the ops teams have performed at an exceptional level under difficult conditions. The management are grateful to every member of the team for their outstanding efforts in this strangest of times for us. It seems often driven by reassessments of lifestyles through the past 18 months, there have been an unusual amount of staff changes.
We are continuing to make several new appointments with the primary objective of better serving our dealers (and suppliers) as we emerge back to some form of market stability from what has to be one of the strangest series of market conditions we have ever known to try and navigate this business through.
In this past year, we have experienced a period of record demand, difficulties with production and huge complications and delays on shipping. As a company, we try to avoid price changes, as we know the disruption that they can cause to dealers is often painful.
Nevertheless, although we have absorbed the majority of extra costs in the past nine months, the combination of supplier price increases, huge shipping cost increases and some raw material increases are causing an untenable pressure on our prices. We are therefore regrettably having to pass on some of the increases.
A post-Covid world
Post-Covid, I am expecting to see a small overall lift in cycling generally compared to pre-Covid levels. This should be driven by a legacy carryover of some of those who either found or rediscovered cycling during Covid. That said, naturally, I recognise that the high Covid demand levels seen during the past 18 months are not sustainable.
For example, I am sure we all know of a friend (or two) that desperately wanted a new bike in the summer of 2020, but that bike that you sourced is now barely being used now that they can go back to doing many of the activities they were enjoying pre-2020. That said, in all of this, there are going to be a number of those new-found cyclists that will carry on being cyclists – it’s just a question of how many.
In addition to what I would call the ‘Covid cycling legacy’, the changes in lifestyle and urban transport options that promote cycling (including e-bikes) will continue to have a positive (and sustainable) effect. For example, I can see continued growth in the emerging ‘etility’ bikes sector from Benno.
We tried hard to second guess the demand as the Covid effect struck and as a consequence, we made some significant commitments in the summer of 2020 for product to be put into the supply pipes.
In amongst all of the relative chaos, I’d like to say we got everything right, but frankly, we didn’t. There are still some products we regrettably are simply going to struggle to supply for quite a while yet. That said, there are several key lines that are arriving into us, and our shelves are starting to gradually become restocked. As a quick snapshot, we are currently back up to around 75% of our typical pre-pandemic stock holding level on a given day. I expect folks will understand that things are still tricky for several items, but we have been, and continue, to pull lots of stops out to try and best serve our dealers.
We are also trying to allocate items that are in short supply so that dealers that have supported our brands over the years can continue to have a reasonable chance of receiving products. Many of our well-established customers place backorders with us for items well before they arrive. This scenario enables us to allocate stock for them in good faith, particularly whilst some items remain in short supply.
To put our backorder levels into some kind of context, we have always operated a backorder system for our dealers as a default for temporarily sold-out items. Our current backorder entries are now running at over 20-times the typical levels. It also became clear last year especially that dealers needed as much information as we can offer to manage their own stock flow.
We initiated a proactive ‘Backorder Advice’ that goes out every two weeks by email. This provides dealers with our most up-to-date information on each product line that a dealer has on backorder with us, including the ETA of all items on backorder for their particular POs.
2022 and beyond
For me, we’ve effectively seen a record ‘harvest’ in 2020/21. It’s now going to be mostly about investing back into the future to enable us to better serve our customers and suppliers: investment in a new back office and systems, increased stock holding, investments in our sales and marketing activities, investing in supporting our staff.
As we see real-life physical events start to come back into being viable, we are looking forwards to once again meeting our customers, suppliers and the media. 2020 saw us notch up our 125th year in the bicycle industry, as we started with my great grandfather’s brand of The Light Blue bikes but, of course, it was not easy to celebrate 2020.
However, 2022 will be our 30th year as ‘Ison Distribution’ – so I’m hoping we will be able to celebrate this milestone. I recognise that all of our customers and suppliers have a lot of choices, and I remain grateful to those who choose to continue to support Ison Distribution.