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news
Rapha founder Simon Mottram.jpgRapha announces redundancies in bid to cut costs
Rapha has announced a wave of job cuts. The firm itself says 15 people are being made redundant, although The Telegraph quotes a former employee who said the number was between 60 and 70. Another insider said the figure was nearer 80.
A Rapha spokesman said: “As we entered 2018, we adjusted our trading strategy, prioritising long-term profitable growth above short-term sales. As part of this, we are simplifying certain areas of the business, in order to reduce costs, and consolidate and strengthen our position. These actions will result in the reduction of a limited number of positions in our London headquarters.”
BikeBiz reports that one of those to have left the company is head of R&D, Simon Huntsman.
The news comes after a series of uncharacteristically protracted sales over the summer. Many items have also been listed on the discount clothing website Sportpursuit.
Just over a year ago, RZC Investments, which is owned by two heirs to the Walmart fortune, bought a majority stake in the upmarket cycle clothing firm.
Speaking at the time, Rapha founder and chief executive Simon Mottram said the acquisition heralded, “the start of the next stage of our journey and is testament to the growth and potential that people see in Rapha and in cycling.
"Support from RZC Investments will allow us to further expand our active global community of cyclists, develop even better and more innovative products and services to enhance cyclists’ lives and inspire many more people to take up the World’s greatest sport."
The deal reportedly valued Rapha at £200m. At the time of the purchase, the firm’s profit sat at around £1.4m.
Alex has written for more cricket publications than the rest of the road.cc team combined. Despite the apparent evidence of this picture, he doesn't especially like cake.
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37 comments
They should have moved into normal clothing if they wanted that expensive but greater reach thing. Lots of idiots would still pay stupid prices for a pair of jeans or a polo shirt. Easier to sell stuff riding waves of fashion as well. Only so much gear you can sell a cyclist but this years fashion is another thing.
They should make handbags! That's where the real money is!
They did. Rapha jeans and t-shirts are always, always in the sale, in a range of sizes.
Not many did, given the above.
Yet they still have plenty of money to endlessly repeat an achingly-expensive 'lifestyle' advert that doesn't even show the product.
Rapha: Is there any way we can emphasize our company as vendors of overpriced tat for wankers?
LA-based advertising agency: Let us handle that...
I ride a Planet X bike unironically. It’s aluminium and everything. Tragic.
When I lost my job, my girlfriend left me, I had a bout of necrotizing fasciitis and my house burned down the day after the insurance expired, the only thing that consoled me was the thought that there must be somebody worse off. I didn't really think it was true - until now.
Rapha make some nice kit, but their content driven clothing idea isn't unique anymore.
My issue is with their 'new fit' stuff, the arms are sooo long on a lot of the kit and the fit is for only the very skinniest people alive.
So where a few years ago I was once target market for them, no matter how much they make nice stuff, I'm now simply sized out of the equation, unless I want tops with really long arms and torsos.
Rapha have a bit of a problem... they built themselves up brilliantly, utterly brilliantly, Mottram played a blinder.
However, the brand value was based around niche, quality, exclusivity... the massive positive of this is margin, the negative of this is the natural market ceiling - only so many people will pay top dollar for something that can be aquired for a fraction of the price.
By trying to push through that ceiling, to diversify, they are diluting the brand value. The whole sale business is a monumental mistake IMO, but I am sure they know better than me.
I'm not sure they do, to be honest. I agree 100% with what you have said here (as someone who has never bought, and could not afford to buy) their gear. The positives of being an exclusive, niche business are enormous, but you have to be able to maintain it, and be comfortable with the idea of reaching that natural ceiling.
Apple were once considered the same, but they have been able to break the mould because their major products (smartphones) are things that everyone wants all of the time, and they can maintain margins because they have managed to not dilute the brand but yet attain more than a niche audience prepared to pay top dollar for the same product they can get much cheaper elsewhere.
A cycle clothing manufacturer is never going to do that.
If they want to grow, Rapha have to either grow their exclusive base, and encourage more people to pay top dollar, or diversify into other parts of the market where the margins are smaller but the volume is greater. But that could then affect the perception and value of the brand itself (as you point out).
Growth... in this instance this means "make increased returns for their shareholders". They could have sat quite happily for many many years in the exclusive niche they occupied so well but greed nearly always wins.
This ^, in a nutshell. They broadened their range to broaden their appeal, the quality has varied, the value of the brand has been diluted and the new punters aren't prepared to pay RRP. There was a time when Rapha stuff was a significantly better quality than competitor mass-market equivalents, now not all of it is. Mistake.
These lay-off were announced on Tuesday. Is rehashing a Telegraph story the best you can do in four days?
As others have said, I think in order to sustain the growth that's needed to make the company value worthwhile then the focus is being lost. They almost need to double down on the high end items (assuming they still have a customer base for it) if they keep diluting the brand those with the money to spend on the top price items will go elsewhere and those who would consider the more affordable options will be put off by the 'rapha factor'.
I do wonder how much not sponsoring a world tour level team is costing them, I know they claimed it wasn't making them money but if they're serious about the racing potential then they need to be seen being raced (I know they sponsor other teams and events but the difference in coverage from WT to everything else is pretty huge) I actually think they'd do well if they sponsored a women's team as a headline sponsor.
You mean like Canyon-SRAM...
Well no, because if Rapha was a headline sponsor their name would be mentioned in the name 'Canyon-SRAM' ...
Jeez, I've only looked at 2 articles on Road.cc this morning; one on carbon frames that will take mudguards and this one on Rapha. All sorts of 'venom' written because something doesn't look right or has the wrong image. It's just kit; I stuff mudguards on because Brit weather is so unpredictable and happen to have some Rapha kit which is really good.
Their prices take the piss IMO
If ever there was a brand to polarize people...
Rapha is not 'overpriced pap'. Their products sit in a tier, along with several other high-end cycling apparel companies. This is no different from any other product you can buy. Do you need a new car? Are BMW/Audi/Mercedes 'overpriced pap'? why spend 40k when you can get a Hyundai for under 10?
They invest more in R&D than the cheaper brands, and their customer service is second to none. Personally, that's why I use them. Risk-free internet shopping, and well designed products.
I wear a mixture of different brands. I personally think Assos bibs and tights are better; so I'm no 'Rapha Wh0re'. I've also tried the Torm Merino jersey; the fabric was OK but the cut was poor, so I went back to Rapha.
It just gets very tedious, hearing people knock a company with good intentions: to promote cycling as a sport and lifestyle, and make really nice, stylish apparel.
Laying people off, is a tragic, yet often essential part of business. A 1.5million profit before the RZC aquisition, shows that they are not ripping people off, it shows that their overheads are huge,
TBF Rapha isn't really the 'Merino Jersey guys' they once were, most of their stuff is just standard plastic things, albeit at silly money. Have a feeling they may drop their city line though, that stuff is almost constantly on sale.
Torm’s jerseys aren’t as good as Rapha’s though. Coming from someone who owns both. Want cheap merino gear? Head over to Planet X. Torm is for fat MAMILs with more money than speed etc etc etc
Steady on... I may be slow but I’m not fat.
But no, for a third of the price they aren’t as good... but are they only a third as good? Hmmmm.
I’m also not sure what wealth of merino gear you think Planet X are selling. I see one solitary merino blend jersey on their website. Hardly a comparable range.
It was a joke mate. I haven't visited Planet X's website since I became successful enough to afford Torm, and I haven't bought a Torm jersey since I became successful enough to afford Rapha*
* - also a joke
if you carry on being so successful you can start wearing stuff from Planet-X again, only this time ironically.
Well I wear jerseys from Aliexpress unironically. What do you think of that eh?
I think it's like ten thousand spoons when all you need is a knife
I can’t see that happening any time soon, and anyway, I only very recently offloaded it all to a bearded mug with his hair tied up, in a cafe that only serves 1990s breakfast cereals. Tried to sell him some brakes for his Pompino too, but he wasn’t having any of it.
I know it's been a bone of contention in these parts in the past, but it's fair to say that there are considerably cheaper merino blend jerseys available *cough* Torm *cough* Maybe there's only so long you can charge three times the price before you run out of customers.
IF they are aiming at the large disposable income bloke, whats with the sale...? Always the sale .
Burberry burns its left over tat
Rapha sells it off at 60% off creating an ACTUAL market price of 60% off retail.
...and the stuff HAS to be top line quality. Too often I have open the tissue paper and been delighted only to ride it and been underwhelmed. The rubbish Shadow skinsuit was the last straw and I went back to Assos.
60% off RRP, ie 40% of RRP, is still 10% above wholesale/production cost in luxury. It's what everybody in the schmutter trade does to kill inventory that costs you every day you have to pay to keep it in the warehouse. And -60% is usuall for the hard to shift items - the most popular ones can usually be shifted at -25%, which is still profitable if wholesale+overheads = 60% RRP.
I couldn't realy care less about rapha and their num bumbling owners. Just overpriced, elitist pap as far as I'm concerned.
Yet, cared enough to read the article and post a comment?
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