As part of its financial statement today, national cycle retailer Halfords has outlined some of its ambitions for the financial year and the areas it is targeting.
For online cycling parts, accessories and clothing Halfords has already begun to introduce new ranges ready for a ‘full-scale launch of our enhanced PACs proposition in the new financial year’. The firm has also launched a new search engine – Fred Hopper – to improve ease of use for shoppers and introduced a new 24-hour Reserve & Collect service.
Halfords hopes the enhanced online offering will help combat ‘escalating competition’ from the likes of online cycling specialists. That competition has hurt profitability for the retailer, it admitted, with revenues dropping from around £812m in FY10 to £746m in FY13.
Building on its plan to be the ‘Best Cycle Shop in Town’, Halfords reiterated the potential of increased share in the cycle market, stating: "Ninety percent of our focus needs to be on Auto and Cycling as these markets are significant and, with good execution, we can grow our share as well as the overall market."
With that in mind, Halfords has launched a three-year retail plan – ‘Getting Into Gear 2016’ – including elements expected to impact on the cycle business, including an upgrade of its store estate, a focus on improving customer service (‘Service Revolution’) and a service-led digital proposition. £100m will be invested over the three years, including in stock.
Chief executive Matt Davies explained: "Today I am announcing our ‘Getting Into Gear 2016’ plan, designed to significantly improve our Retail customer experience and bring about sustainable and profitable sales-growth momentum. This programme will focus on supporting our colleagues to deliver consistent friendly expertise backed by major improvements in store environments, plus building on the authority of our offer, infrastructure and digital capabilities. We expect these vital investments will inevitably reduce short- term Retail profitability but will deliver long-term revenue and profit growth together with sustainable shareholder value.”
The service angle will be tackled with a 3-Gear qualification programme to train staff. Within that, a further £7m will be invested in staffers across cycle repair, fitting and incentives, depending on volumes and performance.
The statment continued: "To Inspire Cyclists of Every Age we are planning to make this The Year of the Cycle at Halfords, building on the momentum created around the Olympics last year. We have a series of range re- launches planned, including our exclusive Voodoo and Boardman ranges. We are adding several new models to the successful Pendleton range and later in the year we are re-launching a new range of Apollo bikes. We have also just been appointed by Sky as their technical partner for Sky Rides across the country. This will help promote our Cycle Repair offer to the 150,000 participating cyclists alongside the Sky brand. Meanwhile the launch of 15,000 PACs lines is going live this month and we are advertising our Cycle Repair offer on the radio and in the press."
Selling over 1 million bicycles a year, Halfords said it sees good opportunities for growth in the cycle market. Citing the cycle market size as £700m, the retailer said it had around 20 to 25 per cent market share. The firm said the ‘PAC’ market was of a similar size but that it had a 15 per cent share in this market.
Halfords went on to say that the entire cycling market grew by 8.5 per cent last year and over the next five years is anticipated will grow by around 23 per cent. The cycle repair market, worth circa £100m, Halfords said it believes it has only a eight per cent share. By focusing on that area in the last 12 months it saw sales growth of 25.3 per cent and is implementing a strategy for further growth in this category in FY14.