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Wiggle-CRC rejects insider’s claim of crisis at Chain Reaction Cycles

Whistleblower told BikeBiz that Northern Ireland-based online retailer is being deliberately run down

 

Wiggle CRC has denied claims made by a company insider that Chain Reaction Cycles is in crisis and that the Northern Ireland-based business is being deliberately run down following the merger of the two online retailers in 2016.

The claims were made in a letter addressed to Carlton Reid, cycling author and executive editor of the trade publication BikeBiz, who two years ago was first to break the news that the companies were in discussions regarding a merger.

https://www.bikebiz.com/news/meltdown-at-chain-reaction

Among the claims made in the letter, written by a manager at Chain Reaction Cycles was that when that article was published the company’s management told staff that “there was no truth to the story, it was merely shoddy journalism,” and there were no plans for a merger with Wiggle – although the deal would be confirmed, subject to regulatory clearance, within 48 hours.

> Wiggle and Chain Reaction Cycles confirm merger

The writer said they had been employed by Chain Reaction Cycles “for many years and witnessed the growth year on year,” and felt compelled to “raise a voice for the many, those still here and those sadly gone because of the 'merger'.”

They claimed that when the company confirmed that there would be a merger, staff were told that “it would make absolutely no difference to the day to day running of CRC, all jobs would be safe,” but that former Wiggle CEO Stefan Barden, addressing Chain Reaction Cycles staff at a meeting, confirmed that most warehousing and stock operations would be moved to Wolverhampton, which came as “a major shock.”

They were also critical of Chain Reaction Cycles’ owners, the Watson family, saying: “At no point during the initial take-over rumours or eventual take-over meetings did any of the Watsons make themselves available.

“Not one family member addressed staff, staff that had been unwavering in their loyalty for many years.”

According to the letter, during 2017, “warehouse redundancies were announced monthly,” while wheel-building was shifted to Wiggle’s warehouse in Wolverhampton. Chain Reaction Cycles’ finance department was disbanded after Christmas and, the author says, “redundancies have continued each month of 2018.”

They also highlighted how changes to shift patterns had led to some people, including those with families, having to leave Chain Reaction Cycles because they were unable to work the new shift pattern and replaced by staff on short-term contracts.

The writer of the letter finished by questioning the motives of private equity firm Bridgepoint Capital, which bought Wiggle in 2011 and owns the combined businesses, saying: “It seems Bridgepoint are on a mission to decimate Chain Reaction Cycles to the point where it can be justified in moving the remaining positions to the UK mainland."

However, in a statement sent to BikeBiz by Wiggle-CRC, the company insisted that the claims made by the whistleblower had no basis in fact.

The company, which last year bought Germany-based online retailer Bike24, said: “We do not recognise this representation of our business when the reality is significantly different.

> WiggleCRC confirms it has bought German e-commerce site Bike24

"We have committed to building a world-class, global business in multi-sports, and the merger with CRC, and the more recent acquisition of Bike24 ,are important elements of that growth strategy.

“In addition, we have made substantial capital investment in the business which in the last two years has totalled over £40m."

The company also reiterated its commitment to maintaining Chain Reactions Cycles’ operations in Northern Ireland, where the brand was established in 1999.

"We have stayed true to our commitment to retain the CRC brand and distinct customer proposition, and remain committed to Northern Ireland,” it said.

"Since the merger we have invested in Northern Ireland, bringing disparate teams in multiple locations into new offices in Mallusk, improving both the working environment and facilitating greater sharing of knowledge.”

The statement concluded: "Additionally, our alignment of the customer services practices across the Wiggle and Chain Reaction Cycles brands, enables us to provide better responses to our customers, seven days a week, in multiple languages."

The allegations contained in the letter will come as little surprise to anyone who follows corporate mergers and acquisitions and those involving private equity-backed businesses in particular, which are often accompanied by phrases such as 'unlocking value', 'improved efficiency' or 'harnessing synergies' - corporate-speak for combining operations, with the inevitable result that some departments will be shut down or relocated, with a consequent loss of jobs.

Simon joined road.cc as news editor in 2009 and is now the site’s community editor, acting as a link between the team producing the content and our readers. A law and languages graduate, published translator and former retail analyst, he has reported on issues as diverse as cycling-related court cases, anti-doping investigations, the latest developments in the bike industry and the sport’s biggest races. Now back in London full-time after 15 years living in Oxford and Cambridge, he loves cycling along the Thames but misses having his former riding buddy, Elodie the miniature schnauzer, in the basket in front of him.

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15 comments

Avatar
nadsta | 5 years ago
0 likes

When fatcat bosses actually sing ‘we’re in the Money’ as they sidestep the MMAA, you know they’re not talking about their minimum wage soon to be laid off employees. https://twitter.com/itvnews/status/991009901496422400?s=21

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matthewn5 | 5 years ago
0 likes

You'd think the Competition and Markets Authority might have had something to say about the merger of the two largest bike shops - and taking over the German equivalent - but no, mustn't annoy our friends in the City, oh no.

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FluffyKittenofT... | 5 years ago
2 likes

The company’s management told staff that “there was no truth to the story, it was merely shoddy journalism,” and there were no plans for a merger with Wiggle – although the deal would be confirmed, subject to regulatory clearance, within 48 hours.

 

The sort of  integrity and honesty that has typified British management for centuries, and which has inspired trust and loyalty from workforces across the country.  It's why we so outclass the Germans when it comes to economic performance.

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Kendalred | 5 years ago
2 likes

Funny how none of these "whistleblown" companies come out and say 'fair cop, we did do that'.

Seriously considering adding Wiggle to the boycott list - I've actually been using Sigma Sport quite a bit recently, they do seem to have a lot of option, including stuff for triathlon (sorry).

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macrophotofly | 5 years ago
1 like

Since the takeover happenned I have been weening myself off Wiggle.

It is actually quite easy, once you lose the Platinum status. Prices start to look expensive and there are better alternatives out there taking my money now (including high street bike shops). A few months ago I lost my gold status and so a combination of being suspicious about what was happenning to CRC and the discount loss  I never shop there now   (irronic that their loyalty program turns you against them when you don't try to maintain it)

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alotronic | 5 years ago
1 like

Equity companies don't have morals, few company owners actually have ethics when it comes to payday. Sadly our lovely sport is just a cash-cow for some. Showing loyalty to a business is, 99% of the time, a mistake. Which is not to say there is not value in doing a good job! 

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brooksby replied to alotronic | 5 years ago
0 likes

alotronic wrote:

Equity companies don't have morals, few company owners actually have ethics when it comes to payday. Sadly our lovely sport is just a cash-cow for some. Showing loyalty to a business is, 99% of the time, a mistake. Which is not to say there is not value in doing a good job! 

Technically, the purpose of *any* company is solely to make money for its shareholders, and not break any laws in so doing (or not get caught breaking any...).  Very few larger businesses give two hoots about what it actually is that they are selling (whether cycling stuff, fishing stuff, football stuff, etc) - even the main purpose of a football club is to make money for its shareholders, and the fact its doing it through the medium of a football team is almost incidental.

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patto583 | 5 years ago
2 likes

Did anyone else notice the the Wiggle/CRC response did not actually counter any of the claims made by the "whistleblower" (I hate the term but I've had a few mineral waters this evening). So basically everything said appears to be true (otherwise it would have been directly contradicted, and if only one aspect was untrue then that would have been seized upon). Nice one for the lies then Wiggle. 

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DrG82 | 5 years ago
0 likes

This didn't surprise me at all, my would a big player in any industry buy its main competitor if not to remove them from the business, and why would you keep two lots of everything going when it is cheaper to run one place.
I was surprised that the monopolies and mergers commission let the two merge considering the prominence of them.

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Freddy56 | 5 years ago
2 likes

CRC employment role before the tackover 633

CRC NI current employment role 166

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Alex222 | 5 years ago
0 likes

Having read the whistleblowers e-mail will be doing my best to avoid Wiggle going forward

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ibr17xvii replied to Alex222 | 5 years ago
0 likes

Alex222 wrote:

Having read the whistleblowers e-mail will be doing my best to avoid Wiggle going forward

Admire the principle but the practice will be more difficult. 

Wiggle are pretty much always the cheapest & if they aren't they will pretty much always price match. 

In my experience their customer service is 2nd to none as well. 

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don simon fbpe replied to ibr17xvii | 5 years ago
0 likes

ibr17xvii wrote:

Alex222 wrote:

Having read the whistleblowers e-mail will be doing my best to avoid Wiggle going forward

Admire the principle but the practice will be more difficult. 

Wiggle are pretty much always the cheapest & if they aren't they will pretty much always price match. 

In my experience their customer service is 2nd to none as well. 

This is too true, I tried my best to support my lbs, I have always enjoyed going into a shop and dealing with real people and had many a chat in the shops that I've used. Unfortunately the shop itself would tell me to use either Wiggle, CRC or Evans (who have a branch a couple of hundred metres away. This left me with using the shop for a source of labour, something that dug me out of a couple of holes, but again, I am able to do a lot of maintenance myself. There were times that I'd take the bike into the shop for something quick and simple (a stiff nut, or removing cassette when tool at home lost), they wouldn't charge me, so I'd leave a fiver or buy something that I didn't really need. There is more to your local bike shop than just cheap parts.

The shop is no more.

That's two city centre bike shops gone in the last 12 months.

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Yorkshire wallet | 5 years ago
7 likes

Sounds like the Sports Direct of cycling. 

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mike the bike | 5 years ago
5 likes

 

It is quite an achievement when you devalue the status of business owners and leaders to that of politicians.  But nevertheless it has happened, and now nobody believes a word that slips from their greasy lips. 

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