Halfords is trialling a new standalone store concept – Cycle Republic – which strikes plenty of similarities with its existing BikeHut chain. Can both brands be supported at once, or will Halfords have to choose one or the other?
As put by financial director, Nick Wharton: "It would be unlikely that we would progress with both brands. BikeHut is performing well, but is for the most part very south-east centric. Our first two Cycle Republic stores have opened in York and Norwich. With these stores we shall roll with them for a while and learn from the model, nurturing it forward gradually until we are happy with the result. From there we will look at our options."
Halfords has laid the foundations of what could potentially be the beginning of a new chain carrying a similar range to that of BikeHut. So is this a simple rebranding?
Wharton continues: "With Cycle Republic we’ll be targeting the more serious bike rider, while offering further support at the workshop end – aiming to attract customers with an independent, specialist environment. Initially, there will be a small management team overseeing the early running of the brand, keeping a close eye on customer needs and feedback. The trial is likely to conclude at some point during 2009, at which point we will look at our position in the market and the best route forward."
Confirmation was not given about a speculated website launch. Wharton continued: "We make decisions on the introduction of a supporting web page when we’re sure we’ve got the right name above the door and the right format. I don’t see that the UK market is saturated yet. In terms of chains its still fairly fragmented. Our latest financials highlight what we believe there’s potential to open 50 of these stores nationwide in the long run."
CEO David Wild, said during his first major delivery since taking office in August: "We recognise that smaller standalone retail stores will rely on a repair facility far more than our mainstream Halfords stores, so we will plan to optimise our labour and repair model going forward. Cycling is a significant growth market driven by the economy, sustainability and consumer well-being. We believe Halfords is at the forefront of bringing great value bikes into the UK."
Adding to the company’s portfolio, the ‘neighbourhood store’ tally has reached 20, with an estimated potential for a further 70 in the UK and Ireland.
During the interim results announcement it emerged that central Europe – in particular Poland and the Czech Republic – is seen as by the company as one of the most financially rewarding territories and a key ground for expansion in 2009.
Wild said: "The market characteristics of these countries remain attractive. Where existing stores lie, performance remains encouraging and consumers seem to be accepting the brand. Cycles are hitting the mid-market ‘sweet spot’ in particular."