Introduction In the autumn of 2001 the Board of ACT initiated a programme to re-organise the Association into a modern business services provider for independent retailers.
Faced with declining retailer numbers, a reducing membership and gospels of woe throughout independent retail markets across the UK and Ireland, a clear requirement for a new form of provision and provider were identified.
It was anticipated that such a turnaround would take at least 5 years and the Executive Committee view that 2005 is likely to prove a pivotal year in this development plan, facilitating the launch of new provisions and delivery methods during 2006 that should allow the Board to announce the successful conclusion of stage 1 at next year’s AGM.
ACT has materially extended its alliances with trade and consumer facing cycling organisations during 2005 and through this, improved its influence and the benefits of membership and partnership. The Board would like to acknowledge the influence of Phillip Darnton, President of BAGB and head of Cycling England in promoting change through closer liaison and joined up thinking, embracing all stakeholders within cycling.
The Bike Hub fund has proven a particularly successful joint venture between ACT and BAGB. ‘Bike It’, the primary beneficiary of the fund, is an exciting initiative, developing a new generation of cyclists, benefiting local communities and without doubt will serve to motivate family cycling into the future. Furthermore, developments to the www.bikeforall.net portal due for release in early 2006, will clearly promote IBDs contributing to Bike Hub directly to consumers, along with many of the benefits and services they offer.
Supporting the future of independent retail ACT recognises that the primary challenge facing IBDs is that of day-to-day retailing, competing in an increasingly mass merchant dominated marketplace. It is in this area therefore that the Association has most significantly increased its participation and influencce.
ACT is an active member of the Independent Retail Consortium, which represents over 100,000 retail shops and the All Party Small Shops Group, working alongside other independent retail organisations to challenge the domination and activities of large retailers in developing their market share and resulting in the recent acknowledgement by the Office of Fair Trading that further investigation is warranted.
Delivering value and profitability Whilst these campaigning successes are extremely encouraging, more important to ACT are the business development and support initiatives that add value to membership and commercial benefits to the profitability of individual IBDs.
Before the end of 2005, ACT expect to have developed over 2200 business partnerships between IBDs and service providers, an increase of over 75% during the year. 10% of these partnerships will be with non-members who can now experience limited benefits of membership, at premium rates, before joining the Association. ACT now truly embraces the whole of the IBD sector, whilst offering ever- increasing value to members.
Membership has grown yet again in 2005, contrary to the experiences of nearly every other independent retail based trade association in the UK. ACT’s current membership represents over 810 individual business entities, with well over 1000 businesses now partnering ACT via service provision and membership. The number of IBD trading outlets with ACT membership continues to grow despite the continuous loss of members through closure at a rate of c10% of the total membership each year.
ACT has developed a national insurance replacement network of retailers more significant than Halfords, within a year of the launch of the ACT owned ‘Fetch’ brand, offering a service to IBDs at commission rates of less than 50% of those generally accepted by other retail providers of insurance replacements. Fetch has already developed a leading position in not only replacing quality, branded products to cyclists who suffer theft or accident damage, but in caring for the interests of cyclists who suffer injury in accidents.
ACT played an instrumental role in delivering the tax break scheme, long overdue, but resultant to 1999 Government legislation, incentivising cycle usage for cycling to work. ACT partnered service providers and leading bicycle brands, notably Trek, Specialized and Giant, campaigning with Department for Transport, Office of Fairtrading and Customs & Excise to deliver legislation and a provision comparable to the successful Home Computer Initiative.
The real benefits of this initiative will only start to be fully realised by IBDs during 2006. ACT now has a provider network greater than Halfords, who have been particularly aggressive in this sector, but continue to lack the product, service provision and demand from local businesses who, encouragingly want to support specialist retailers, echoing ACT’s experiences within the All Party Small Shops Group.
What IBDs must appreciate is that this initiative and opportunity is long term. It is not a ‘quick buck’ formula, not something to be approached purely as a short-term volume generator, as it would appear that corporate retailers view it. It is about sustainable growth in cycling to work and the significant spin off benefits that this brings to the wider community and the IBD customer base. This approach will result in an ever increasing demand for repeat schemes to be provided by IBDs, whether it be independently, via partnership schemes such as Cyclesheme.co.uk or via the Booost national IBD network.
During 2005 participation within the HSBC credit card processing service rose to 40% of the membership, establishing ACT as a leading affinity customer of HSBC generating over £70m worth of card transactions every year. With plastic now overtaking cash as the preferred method of payment, many members and hundreds of IBDs are still losing out on annual savings running into four figures due to non-participation. The HSBC provision is chased by so many of our colleagues within the Independent Retail Consortium, yet many IBDs continue to ignore this opportunity. There are two ways to improve profits, increase profitable turnover and reduce overheads. ACT offers both, in abundance, but HSBC credit card services should be Number 1 on every IBDs list. Imagine the rates that we could jointly deliver if we truly pulled together as a sector.
IBDs are increasingly competing with all high street retailers for consumer spend and must be able to at least match the offering of other retailers. Consumer credit is an important feature in winning the battle for large ticket sales, but 2005 has seen new providers come and go and established provisions withdrawn from some IBDs who cannot meet turnover thresholds. ACT’s exclusive consumer credit service via Black Horse Retail Finance is now used by well over 20% of the membership to effectively increase bicycle turnover and compete on the high street, without any turnover threshold requirements.
ACT’s insurance provisions – Cycleguard cycle insurance and Norwich Union shop insurance are now both used by hundreds of ACT members, increasing consumer service and direct income to members,whilst reducing insurance overheads by 15% for comprehensive shop insurance cover, which in itself more than funds the annual cost of ACT membership.
The promotional benefits of ACT membership continue to expand and over 400 members now participate within ACT’s Yellow Pages advertising package and the free extended web listings available to all members on the ACT website.
ACT’s information provision has reached new heights during 2005. Via the members-only section of www.act-bicycles.com ACT, in partnership with leading advisors in retail, business, legal and financial sectors, provide a wealth of information and guidance to members.
2005 has been a progressive year for the Association, and has laid firm foundations for what can be delivered in 2006, with the full support of some 2000+ IBDs and the suppliers with a genuine interest in the longevity of the IBD supply chain.
Finances In 2004/5 ACT recorded a trading profit, irrespective of the significant investments made in delivering extended membership benefits. Much of this can be attributed to the increasingly outsourced structure of the Association that has allowed ACT to access quality services without having to invest in the fixed overheads normally related to such provisions.
Income rose by 10% in 2004/5 vs. 2003/4, whilst overheads were successfully reduced in the year. Income from CyTech reduced due to the loss of the fast route, ‘paid for’ provision, but membership growth served to bolster subscription income, despite holding subscriptions at the 2004 level.
The Board anticipate a challenging financial year in 2005/6. There is a sincere commitment to deliver the exciting opportunities that ACT now has on its agenda. Given the choice of delaying delivery in order to break even or utilise the sufficient resources available in order to provide more benefits to IBDs earlier, the Board have no hesitation in choosing early delivery.
The Executive Committee has faced a tough challenge in re-organising the total infrastructure of ACT arising from forthcoming termination of the lease at Tunbridge Wells and the retirement of Anne Killick. This exercise is now complete on an operational front and has provided ACT with a fully integrated financial management system and database service, embracing all IBDs throughout the UK and Ireland. There will be some inevitable one off costs in 2005/6 in funding the re-location, re-structuring of systems and operations.
Anne Killick’s contribution to ACT over three decades is fully recognised by the Board and we know by many of the current membership. It would not be an overstatement to say that ACT would not have reached its current position as a potential market leading retail trade association without Anne’s guidance and we would like to formally register our thanks for her commitment and endeavour. Anne remains active within voluntary organisations in her region and has been retained by ACT to assist in ongoing advisory and information provisions.
The year ahead
Following the re-location of the ACT head office to Hove and the past few months invested in a total re-organisation of systems and operations, ACT has the springboard essential to realise the potential available to IBDs during 2006.
In 2006 ACT is confident of further increasing its membership, outperforming other trade associations representing independent retailers.
In 2006 ACT has an aggressive objective to increase business partnerships between providers and IBDs by over 35%, achieving an objective of 3000 partnerships and nearly three fold the figure at the commencement of 2005. Every one of these partnerships reflects greater profitability and potential for IBDs and such an achievement will do much for the sector whilst proving ACT’s position as a leading business services provider.
2006 will also see an extension of ACT’s current provisions and the development of key business services into an easy to buy, proven package of benefits and services that will become the benchmark for independent retail service provision.
The new year will see the introduction of several exciting new initiatives, spawned via ACT’s shareholding investment within Retail Academy, which brings together trade associations, training providers, academics and Government; all working together to support and develop a long term future for independent retailers.
These partnerships, aligned to ACT’s support for Centres of Vocational Excellence in the cycle sector and retail in general, bring new elements to CyTech, which will truly establish the brand as the benchmark of quality service provision within the trade and to consumers at large.
In 2006 ACT will extend its online information provision and partnerships, providing IBDs with access to a unique interactive hub dedicated to essential business support at the click of a button.
Throughout 2006 ACT hopes to see a much increased involvement of IBDs in developing cycling at local level, working with other cycling organisations and capitalising upon the local development initiatives arising from the success of Bike Hub and Cycling England’s recently announced “demonstration towns”.
All of these opportunities are real; there are only 2 limitations to early realisation. The first is the active involvement of more IBDs in adopting these opportunities, the second is resource, support and the funds required to deliver these new opportunities within realistic timescales.
Funding limitations impact upon ACT more than most of our colleagues at the IRC, because we operate in a small market with limited retailer numbers, but despite this the Board of ACT has decided to hold full subscription rates in 2006 at the same level as 2004. This will allow IBDs to access all of the growing benefits for less than the equivalent of 62p per day, with subscription discounts for members’ secondary outlets still over 50% of this figure.
In return the Board of ACT sincerely hope that wider industry support and promotion will reward IBDs with an increased membership and the improved profitability that this will bring to the sector as a whole.