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Cycling market downturn worse than expected, says Halfords

UK’s biggest bike retailer claims it is performing better than rivals despite challenging market; meanwhile, London and SE chain Balfe’s Bikes posts loss

Halfords, the UK’s biggest bike retailer, has said that the downturn in the UK retail cycling market is worse than it expected, but adds that while its sales in the segment have fallen during the first half of its current financial year, it is performing better than its competitors. Meanwhile, Crawley, West Sussex-based independent bike shop chain Balfe’s Bikes has published its latest  full-year financial results, posting a loss for the year to end-March 2023.

In its interim results announcement to the City yesterday covering the 26 weeks to 29 September 2023, Halfords’ chief executive officer Graham Stapleton said that while like-for-like [LFL] sales, which strip out the effect of stores opened and closed during the year as well as other changes to trading space, had fallen by 2.8 per cent, the business outperformed the market, which it said had seen a decline of 5.8 per cent.

“Given the more discretionary nature of this category coupled with the unfavourable weather conditions over the summer, cycling continues to underperform our other product categories,” Stapleton said.

He singled out the group’s performance within the Cycle2Work scheme as being “very resilient, with sales up 15.0 per cent year-on-year,” with Halfords the largest provider of bikes under the initiative, and also highlighted “double digit LFL sales growth” at online business Tredz, which he said had increased its market share “at a time of significant consolidation within the cycling market.”

Total sales within the cycling segment for the period stood at £192.3 million, down 3.1 per cent year on year, but Halfords said that it had grown market share during a period in which the retail market for cycling in the UK has been in turmoil – as we’ve previously reported, online business Wiggle Chain Reaction, which recently entered administration, is the highest profile casualty and a number of smaller businesses have also ceased operations.

> Wiggle Chain Reaction put up for sale by administrators, as expert warns collapse is “just the start of big changes” across bike industry

Given its size and strength in the market, Halfords is something of a bellwether for the performance of the UK cycling retail sector as a whole, which following the boom brought about by the coronavirus pandemic has seen sales fall back sharply, with the cost-of-living crisis also leading to consumers reining in their spend on non-essential purchases.

As part of its ongoing strategic review of its operations, Halfords has said that it is focusing more on the motoring side of the business, which saw like-for-like sales rise by 8.2 per cent during the period, and now accounts for 62.8 per cent of its retail sales mix, compared to 37.5 per cent for cycling.

That strong performance in motoring helped group sales rise 13.9 per cent per cent to £873.5 million during the six month period, with pre-tax profit up 3.3 per cent to £19.3 million.

Meanwhile Balfe’s Bikes, which trades from a dozen shops across London and the south east of England, saw its sales fall by 10.5 per cent to £26 million in the year to 31 March 2023 according to its latest accounts, filed this week at Companies House.

IThe business posted a pre-tax loss of £1.5 million against profit of £116,000 during the previous 12 months.

Commenting on the accounts, the company said: “The cycle industry has seen significant turbulence during and post the covid pandemic period, initially with a significant increase in demand for cycling during the lockdown periods and post with demand falling back significantly to lower than pre pandemic levels.

“These changes in demand have caused significant disruption to the supply chain with large overstocks seen globally across the cycle industry during this financial year.”

Balfe’s Bikes said that it had “sought to mitigate some of these impacts by reducing its cost base and enhancing focus to areas of the market which have seen better performance, including bicycle servicing, sales of electric bikes and by expanding the range of parts, accessories and clothing stocked to support existing cyclists.”

It added that “there are early indications of some success,” with “sales and profit” for the current financial year to end-March 2024 being ahead of the preceding 12-month period.

Simon joined 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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Robbiedondo | 2 months ago
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I think the real problem is that kids want different things today, they want electronic goods etc but don't want to get on a bike, the outdoor life for young kids isn't like the old days, I certainly don't see kids out on the street like when I was young and no amount of investment or editorial is going to change that, when I was on the board of my old cycling club, this was a constant topic, but you can only entice people to get more involved and race etc if they are interested in the first place and if they feel that they have the time

Rendel Harris replied to Robbiedondo | 2 months ago

Exactly this I think, it's a red herring to say that kids have been put off by the price of top-end cycling equipment – there are plenty of good budget bikes available and the secondhand market through eBay, Gumtree, Facebook Marketplace etc offers far better bargains than I can remember being available when I was a kid in the pre-Internet days. What's happened is, as you say, kids are doing different things these days, my generation (50s) and maybe the two below it has stuck with cycling as we've grown up, obviously most of us have got richer and so can afford more expensive bikes. That's not what's putting kids off, the price of rugby boots, cricket bats, tennis racquets etc hasn't gone up much in real terms and yet everywhere you look clubs are desperate for players, municipal courts are standing empty. It's a tragic shame and it's going to have severe societal consequences in terms of health if we don't do something to pull it round, but it's happening everywhere and it's because of the changes in children's lifestyles, to try and go off on some ridiculous rant it being all the faults of manufacturers and those who review their products is just ridiculous.

matthewn5 replied to Robbiedondo | 2 months ago

There's probably 3 times as many cars on the roads now, if not more, than when we were kids. That's a pretty big disincentive to the sort of happy-go-lucky cycling around the neighbourhood or village that us retirement age folks enjoyed as kids.

planetjanet | 2 months ago
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The cycling industry, in bed with daft cycling 'journalists', forever pushing more and more fancy, ridiculous, overpriced bikes and kit HAVE KILLED CYCLING for young people. Road CC is a business pushing 'stuff' and trying to make money from people with money. It's job isn't to promote cycling as a wonderfully cheap fun recreation and sport for young people. Gone are the days when schoolkids would LOVE to get a bike for Christmas and belt around with their mates and not stess about their Rapha image, with some later taking things seriously. The entire cycling industry is now laser focused on 30 to 60 year olds with disposable and guess what? The market is saturated with people competing for their money and when kids see £5000, £10,000, £15,000 bikes, they give cycling a miss. Commercialisation is killing cycling. Screw your silly go faster £5000 wheels.

Simon E replied to planetjanet | 2 months ago
planetjanet wrote:

The cycling industry, in bed with daft cycling 'journalists', forever pushing more and more fancy, ridiculous, overpriced bikes and kit HAVE KILLED CYCLING for young people.

Are you sure?

The motor industry, in bed with 'journalists' is forever pushing more and more fancy and overpriced cars but it is doing OK despite the increased cost of fuel, insurance, servicing and so on. Or maybe loads of BMW, Audi and Mercedes dealers disappeared and I didn't notice.

Mobile phones get more and more expensive but people don't say "I've stopped buying new smartphones, I just have an old one for messaging and use my Dad's laptop when I need it" or "Buying clothes at retailers and online is sooo expensive, I only visit charity shops now".

And let's not ask whether people are buying less food, booze, fewer takeaways etc when food price inflation has been around 30% p.a. (the answer is for many that they are not; though I don't mean that no-one is experiencing hardship, far from it!)

So perhaps the health of the cycling industry is not determined by the price of premium top-of-the-range models. We've already been told that sales of those models are steady, it's much lower down the price range where the problems are - the markets where volume of sales is far higher than your SL8 Dura-Ace stuff. And journalists can only review what they're given and invariably that's higher-priced bikes because more people want to read about them, even if they have no intention of ever buying one.

From what I've read, it's a classic boom-and-bust scenario; Covid provided the former but things like Brexit, the return to car-centric 'normal' roads and financial uncertainty due to inflation, house prices and various other factors (including government u-turn on active travel and green policies while pitching in on things like LTNs and the fictitious 'war on the motorist') have hit the cycle supply chain hard.

planetjanet replied to Simon E | 2 months ago
1 like

Doh, you totally missed the point about YOUNG riders, straight over your head and onto irrelevant whataboutery.

grOg replied to planetjanet | 2 months ago

There are numerous entry level bikes which aren't selling, meanwhile, the premium end is still selling; of course roadcc is aimed at enthusiasts that like looking at bling bikes; no different to motorist enthusiast media that feature flash motors.

The reality about the bike business is that it's not price but lack of interest from most people, including the young, which has resulted in the bike industry downturn.

My experience as a long time bike flipper is that the lurgy lockdown triggered a lot of people to buy bicycles and try cycling, most of whom didn't like it and quit cycling as soon as normal life resumed. After decades of fixing and selling bikes at affordable prices, they have stopped selling, with especially no interest at all from young people.

Simon E replied to planetjanet | 2 months ago
1 like
planetjanet wrote:

Doh, you totally missed the point about YOUNG riders, straight over your head and onto irrelevant whataboutery.

I think you're conflating top-end bike prices with reduced participation, whether that's riding bikes for leisure or competition (for which there are multiple reasons). As Rendel has pointed out, good used kit is widely available and finding it online is easier than ever so new bike prices aren't necessarily the barrier they might appear to be.

Islabikes' situation is the result of competition in the marketplace. The market for kids' bikes has changed for the better in the last 10 year. But the YOUNG riders you refer to are not the ones who are struggling to find the money to buy bikes so I don't understand why prices might put them off.

Or do you think it's the lack of newspaper rounds for them to save up their pennies that is causing reverberations across the whole industry and far beyond?

I believe my post is based on facts, not hyperbole, so I suspect you chose to dismiss it as whataboutery rather than consider that I disagree with your diagnosis.

Jimmy Ray Will | 2 months ago

The industry is in for a brutlaly rough ride, and we are only really at the start of it. 

The fundamental challenge that I see is that consumers simply don't have the money to spend on bike stuff.

Or should I more accurately say, at a serious enthusiast level, many consumers have maxed out their monthly cycling spend on finance and subscriptions.

Zwift, Strava, Training Peaks, coaching fees, club membership, organisational memberships and similar subscriptions collectively take a not insignificant chunk of cash each month. Add in the finance for the £8k bike, £1k indoor trainer, fancy fan, big screen etc. etc. and it's easy to understand that the remaining balance for nice things like kit upgrades, new clothes, experiences etc. is minimal. 

Too many have committed their cycling spend on big ticket items and subscriptions, leaving little left for retailers, event organisers, cycling activities, socialising. That knocks on to distributors and manufacturers. 

Worse is the long term prognosis... as the current driver towards indoor training and coached solo training, mixed with reduced budgets for experiences and socialising, is stripping the fun out of the sport for many.

The analogy I use regarding the cycling training challenge is this - imagine youth football; a talented young athlete is identified and is then 'developed' by taking them off the football pitch, and in isolation, making them repeat a small number of set drills in their parents garage. The only time they see a pitch, or a ball, or another player, is match day... that is cycling training 2023 style. 

And once the fun is gone, it is only a matter of time before people lose interest. I believe we will be losing a large number of these serious enthusiasts in the next 12-24 months, which will flood the market with high quality second hand gear. 

It's ugly! 

London270 | 2 months ago

Halfords must be doing well if the motoring side of the business added to cycling make up 100.3 per cent of its retail sales mix.

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