, Biking Boom Boosts Retail Sales, But How Long Can It Last?, The Nzuchi News Forbes

Biking Boom Boosts Retail Sales, But How Long Can It Last?

, Biking Boom Boosts Retail Sales, But How Long Can It Last?, The Nzuchi News Forbes

Shares in Britain’s biggest bicycle-to-motoring retailer Halfords reached a six-year high today as the company’s 12-months results showed how the shift to cycling during the pandemic has driven a mighty sales surge.

In a volatile and unpredictable year of trading to April 2, Halfords’ retail revenue rose by 9% (14.6% like-for-like) to just over £1 billion ($1.45 billion). Within that, the big driver was cycling products, up 54%, while the company’s performance cycling business—called Tredz—did even better with 66% growth.

By comparison, the retail motoring segment was down 12% (like-for-like) as car journeys fell by a quarter thanks to a series of lockdowns and people working from home.

However, with demand for bikes outstripping supply there is a strong possibility that in coming months sales could taper off. In a statement, Halfords said: “Supply challenges for cycling products remain acute, and a return to normal trading patterns remains highly uncertain, particularly in the second half. The general economic outlook remains challenging, with consumers likely to be more cautious and expecting greater value from their purchases.”

Japan’s Shimano, a fairly ubiquitous supplier of bike derailleur gears and braking components, saw its sales increase by 64% in the first quarter. However, the company noted “the continued inability of supply to keep up with demand” resulting in shortages in inventories in countries in Europe and North America.


Unprecedented demand for cycling

In the past year, mainstream categories were strong with sales of adult mechanical bikes more than doubling, and electric e-bikes growing by 76% at Halfords. The retailer said: “We identified very early in the pandemic the unprecedented levels of demand for cycling, enabling us to use our scale and relationships to secure stock from new and existing suppliers.”

The company also has a range of its own brands such as Carrera, Boardman and Apollo, enabling it to have more control of supplies, and also over decisions to, for example, upgrade to be more competitive. Over half of Halfords’ adult bikes were updated last year, adding features such as comfort saddles and puncture-resistant tyres based on customer feedback.

, Biking Boom Boosts Retail Sales, But How Long Can It Last?, The Nzuchi News Forbes

Halfords admitted: “Supply was, and remains, a challenge. Where necessary, we adapted specifications and componentry to mitigate bottlenecks in production and worked with new suppliers to achieve a steady intake of bikes throughout the year.” Halfords also tripled its central bike-build capacity, so that shoppers stayed onside.

In out-of-stock situations the retailer introduced digital services to keep disappointed customers updated and engaged. They include ‘email me when in stock’ alerts; the ability to register interest in new launches; and bookable collection slots.

If you can’t buy it, fix it

The poor situation for new supply encouraged some customers to fix their existing bikes and this boosted Halfords’ Cycling Services business which grew more than 50% in the year to April 2 by repairing and servicing over one million bikes.

CEO Graham Stapleton commented: “Halfords’ transformation into a service-led business has rapidly accelerated. We have also continued to lead the transition to an electric vehicle future. By the end of the current financial year, we will have trained more than 2,000 of our store and garage colleagues to service electric cars, bikes and scooters.

In a report that will be published on Friday, market analyst Mintel INTC is expected to reveal that the value of U.K. bike sales rose by more than 40% in 2020 to roughly $1.7 billion as supply constraints pushed up prices. The manufacturing bottleneck also had the effect of boosting the second-hand market with almost a quarter of buyers purchasing a used bicycle.

E-bikes power up

Meanwhile e-bikes are also on the increase in the U.K. They still account for a small single-digit share of the bike market by volume, but by value they made up almost a quarter of sales. The possibility of government subsidies for e-bikes could boost those shares substantially.

Jonathan Rock, associate retail analyst at data and analytics company GlobalData, commented: “Halfords aims to become a leader in electric mobility through sales of e-bikes, e-scooters, and electric vehicle (EV) products. Increasing pressure on the government to invest in, and promote, sustainable travel will result in a sustained push towards EV usage, so Halfords’ early moves to be a leading provider of EV services are wise.”

In the U.S. the pandemic also created an opportunity for America’s bicycle businesses according to the National Bicycle Dealers Association’s 2020 annual market overview, in partnership with consultancy Human Powered Solutions. The report says there was “a dramatic increase in sales dollars and revenue that allowed many specialty retailers to pay off their debts and loans—and for the U.S. bicycle business to actually have a war-chest to finance advocacy and market awareness and growth.”

Bike businesses appear to be in good health. Going forward, on both sides of the Atlantic, there will still be challenges in predicting demand. As restrictions ease, and more people go back to their offices and routines, daytime bike usage may fall, while commuter bike usage might rise. At GlobalData, Rock said: “The rise of the Delta variant and subsequent lockdown delays leave Halfords well positioned (as) many consumers delay foreign travel and opt for staycations instead.”

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