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.
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.
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.
"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.
Born in Scotland, Simon moved to London aged seven and now lives in the Oxfordshire Cotswolds with his miniature schnauzer, Elodie. He fell in love with cycling one Saturday morning in 1994 while living in Italy when Milan-San Remo went past his front door. A daily cycle commuter in London back before riding to work started to boom, he's been news editor at road.cc since 2009. Handily for work, he speaks French and Italian. He doesn't get to ride his Colnago as often as he'd like, and freely admits he's much more adept at cooking than fettling with bikes.