Cycling is increasingly seen as a healthy and rapid way to beat congestion in our towns and cities.
Councils are introducing more and more dedicated bike lanes every year, while 2005’s terrorist atrocities in London have led to a boom in cycle use.
So it’s not surprising that the capital’s bike shops have reported an increase in trade.
Bike shops are a growing sector
Elsewhere in the country, growing interest in cycling as a leisure pursuit – and in mountain biking in particular – has led to a steady increase in sales.
In fact, bike shops are one of the few independent retail sectors that continue to prosper in the face of the supermarket and chain onslaught.
There are approximately 2,000 such shops in the UK and Ireland, making up 48% of the market. Halfords, the biggest multiple, accounts for only 30%.
According to the Association of Cycle Traders (ACT), the independents can be split into three types: family shops selling mid-prices bikes to adults and children; specialist shops selling expensive sports and mountain bikes to enthusiasts; and hire shops and centres, often in national parks, which sell some bikes but mostly deal in hire equipment.
To run a successful bike shop while competing with bigger retailers, the independent must rely on his or her Unique Selling Proposition (USP): their detailed knowledge of the technical side of cycling combined with outstanding customer service.
A spokesperson for the ACT says: “Today, bicycles are seen by many people as another price-driven commodity sold by supermarkets, non-specialist retailers and mail order providers. This means that independents are under more pressure than ever before and are working harder to demonstrate their unique value to customers who often 'just don’t get it'.”
“Many customers believe a £100 bike is a bargain and taking it away in a box just adds to the convenience; the skills necessary to build and maintain a cycle are often neglected.”
Combination of factors will lead to success
Obviously, if you are running a shop, you don’t have to have mechanic skills yourself; unless you have sufficient funds to employ technicians. There are a variety of training courses, such as Cytech, offered by ACT, which can help you become an expert on two-wheeled transportation.
Unfortunately, skills alone are not enough to guarantee success for your retail venture. A healthy dose of business acumen and the right premises are both vital.
The ACT says that you should always produce a business plan laying out the objectives, the target market, and how it will be serviced with the right products at the right price.
It adds: “Fundamental to your business plan are financial forecasts. This will be the measure of your performance and the basis upon which finance is invested in the new business.
“A three-year profit and loss plan will forecast your sales, gross profit, overheads, cash flow and balance sheet.
“Alongside forecasting you must also consider a stocking plan which reflects monthly sales, closing stock value and therefore drives and controls financial purchases.”
However, you will only reach your target market if you are in the right location. Obviously prime locations with high levels of footfall (passenger traffic outside the door) will be the most viable, but will come at a premium.
Area is key
The prospective owner must examine other shops in the area and take notes on what they offer, at what price, and to which customers.
Research into how many people live within a five-mile radius – the distance most people will travel to a bike shop – is unavoidable.
It’s worth bearing in mind the ‘culture’ of the area: is it pro-cycling? Are there a lot of cyclists on the roads? Are people affluent enough to be able to afford good-quality bikes?
As maintenance skills are a priority in independent shops, it is essential that the shops have sufficient space for a proper workshop away from the main selling space, but visible all the same.
Given the increasing use of bikes for commuting, workshops can make a huge contribution to profit margins.
It’s worth thinking about how many goods you can fit into the main floorspace too, as customers will be put off by too much ‘clutter’. Remember that if you are servicing and maintaining bikes, storage space will be required.
Any business plan should also contain some ideas on how to market the shop and keep up good relations with customers. More fundamental than ever is a website, which can help inform people of products and services as well as attracting them from far-flung locations.
Running a bike shop is not necessarily the most lucrative option in terms of profit margins, but it’s certainly a sector set for growth.
Bikes tend to inspire devotion, and a viable profit rather than riches is all that is required to attract new talent to the industry.
