The chief executive of Britain’s largest bicycle manufacturer Brompton has warned that the cycling industry will face continued challenges over the next few months with more businesses likely to go bust this winter.
Struggles within the industry have been well-documented, the boom enjoyed during the pandemic turning into more tricky times since as consumers are less willing to spend due to inflation and other economic factors, coupled with more specific challenges for bike brands such as excess inventory left over from when demand was high and the impact of supply chain issues.
There has been widespread price-slashing and numerous names big and small have disappeared from the UK cycling scene altogether in recent times — from major distributors like Moore Large and 2pure through to smaller local cycle-related businesses such as Look mum no hands! cycling cafe. Elsewhere, and globally, there have been redundancies at Raleigh, Rapha, Zwift, Wahoo, Strava and more, while UK manufacturers Planet X and Mercian were saved by last-minute sales.
Perhaps most headline-worthy however was Wiggle Chain Reaction’s demise into administration which preceded the brand’s intellectual property rights being bought by Mike Ashley’s Frasers Group for just £3 million.
Things have been more rosy at Brompton, where in May we reported that while sales dipped slightly in the financial year to 2023, profits were up a third despite “challenging conditions” and a “war of attrition” against rip-off rivals.
The chief executive of the iconic folding bike brand Will Butler-Adams told the Financial Times he fears the bike industry is not out of the woods yet with potential ongoing concerns for manufacturers and retailers and warned: “This winter, we will see more businesses go bust for sure.”
While the company can view itself as relatively healthy given the woes elsewhere, Butler-Adams did suggest the economic climate could hinder Brompton’s plan to build a new “car-free” factory in Kent.
Proposals were first unveiled in 2022, with the hope that the headquarters would be ready to move into by 2027, however Brompton has faced delays as the highways authority raised concerns about the scheme’s impact on the local road network and the lack of any car parking facilities at the site.
Now, even if granted planning permission for the £75m project in the next six months, Butler-Adams admits “we’re not immediately going to start building because the [economic] climate is too weak”.
> Brompton CEO bemoans “bloody Brexit” for ongoing problems within bike industry
“Companies [can] go bust when they move factory,” he added, urging caution to ensure the project is undertaken at a time that suits the business financially.
In the company’s latest accounts for the financial year to 31 March 2023, Brompton revealed that while the number of bikes sold (91,785) was marginally down on 2022 (when 93,460 were sold), turnover was up 21 per cent on the previous year as pre-tax profits increased by 46 per cent to £10,680,953, resulting in a post-tax profit of £8,685,432, up 35 per cent on 2022.
This came despite what Brompton called “challenging conditions in the cycling industry, driven by the wider global economic uncertainty and the market normalising post Covid”.
Last year, Butler-Adams detailed the “war of attrition” that the brand was fighting against cheaper brands copying designs across China and Europe. He called the copycat problem “very serious” and explained it takes “four to five years to develop a product or evolve something” only for other manufacturers to move in once it goes to market.
“Whenever you innovate you take risks, you get things wrong, and then the moment you finally put it on the market, all of that innovation, all of that risk, someone comes along and says ‘oh, thanks for telling me how to do it, I’m just going to rip you off’,” he said.
9 thoughts on ““This winter we will see more businesses go bust for sure”: Brompton boss warns bike industry woes not over yet”
So Brompton are delaying the
So Brompton are delaying the new factory move – have always wondered what the logic was behind building that albatross of a project, hours away from where their current skilled workforce live. They make a nice fold up bike that hasn’t really changed in years, probably reaching saturation where everyone who wants one has one – especially with people commuting less. It just seemed a sure fire way of burdening them with a massive overhead, risking production quality as sales flatlined.
If they sold 93,460 units in
If they sold 93,460 units in 2022 and 91,785 20 2023, that would suggest they are far from “saturation”. Yes, they last a long time, but newer models, new markets and new customers from people wanting a portable travel alternative to cars I would suggest means tbey have a bright future. They also don’t do what almost every other bike manufatcurer does and roll out drastically new models every year. Changes are more cosmetic, electric models aside , and this for rme is more sustainable from a business perspective. .
My trusty Brompton is 19
My trusty Brompton is 19 years old, the best toy i ever bought, ever !
As regards bike shops, rather
As regards bike shops, rather than bike manufacturers, there seems to be a very big hole in the market, right in the middle. There are plenty of Halfords, Evans (Fraser Group) etc at the
really(edited:) really really cheap end. There are a lot of places doing expensive luxe stuff (“The saddles we have in stock are over there, but you need to know that they’re all one brand and we only sell them when accompanied by a professional saddle fitting and bike fit”). But all the mid range stuff is only available out there at the end of a broadband connection.I agree, however I can’t
I agree, however I can’t really see this hole in the market being filled for mid-range retail, both the volume and margins are too small to support the overheads of a shop. I see the future of the small LBS laying in mostly services, such as repairs, bike fitting, etc while retaining small stocks of essentials such as tubes, tyres, chains and so on. It’s difficult to see anyone investing £150k in bike stock to sit on the shop floor when within a year the distributor or brand will be dumping those same models through online channels for less than the LBS paid for them. Shops that have skilled mechanics who are happy to fit parts purchased online or unbox and set up a bike from an online retailer should do well as soon as their customers realise that skills and time cannot be bought online.
I think if I were setting up in the bike business today, I would seriously consider the service only route described above, either that or operate a single brand (such as Specialized Concept Store or Giant) where the brand supplies most of the stock on sale or return in return for brand monopoly and providing staff and premises.
True, and many shops now
True, and many shops now accept online orders and will ship the bike directly to you… (in addition to the “direct to consumer only” like Canyon, Aliexpress, etc.)
That’s how I bought my latest bike, I was first ready to order directly from a shop, but the Shimano version was not in stock in my size, and they couldn’t tell me how long it would take. Ordering the groupset separately and replacing it would have been incredibly expensive. After searching online I found a model from another brand that was exactly what I was looking for (except for the colors!) With the list of distributors on the brand’s website I compared the prices of the shops, and a good part of them offer to ship... The bill was 10% more expensive than my initial choice, but also lighter, better wheels and brakes, GRX rear derailleur instead of 105, thru-axle, etc.
About services, I was thinking about starting a mobile repair service, but although demand is here, financially speaking it doesn’t look good at all… at least not to earn a living! BTW, most LBS I know are losing money, it’s more like an expensive hobby for them, this was already the case 20 or 30 years ago, and this is also the case for most other small shop owners… at least in my city!
What these manufactures don’t
What these manufactures don’t get it the coast of living crisis that’s effected us all. There’s a certain amount of taking the pi55 too I think. Seeing acoustic & ebikes selling at £8 to 9K is ridiculous considering a small car cost £20K ish and what’s goes into that.
There’s too many suppliers and not enough customers basically. The fodder will dissappear sadly. Those that remain complacent will never survive!
Guyz2010 wrote:
There are lots of cars that cost £80k (and a lot more) but nobody is telling brands to stop selling those. And out of all the cars I see around Shrewsbury not many of them would have cost £20k new. The cost of living isn’t hurting all the people with shiny Range Rovers and German 71-on plate cars.
This whole misplaced whinge about ‘bike brands taking the piss’ is getting very boring. The problems in the bicycle supply chain are not related to the price of top-end road race bikes but the lower priced models across all types. This is echoed in Halfords’ poor trading figures and the continued difficulties faced by distributors and retailers after the post-Covid boom.
I think your car prices might
I think your car prices might be out of date, a base spec Polo is over £20k. Car prices like everything else have gotten silly over the last few years.