Owning one’s own bike shop is a fantasy indulged in by most casual cyclists from time to time. To be surrounded by top quality kit all day, building the bikes of your dreams and talking to likeminded people, what a blast! But what is the reality of such a dream? Cycle shops are a key feature to most high streets and many act as a community hub for local cyclists. In recent years though there have been many closures, which has created a greater push in 2020 to get offline and protect the local stores.
Owning a bike shop can be extremely rewarding. With a keen mind for business, a love of cycling, a good team around you and a knowledge of the market, there is room enough to make a success of this potential new venture. With the help of an industry professional, this blog will provide an introduction to opening a bike shop and the reality of the dream that is opening your own shop.
It is important to know the state of play before entering into any business sector and that is indeed true in cycling retail as well. There may well have been better times to enter the industry – namely around the time of London 2012 when cycling took off in a big way – as the market is currently navigating its way through a tricky period.
The place to go for reliable up to date figures on such matters is Mintel statistics, the award-winning global provider of market research. Their findings suggest that there is a 17% downward trend in sales since the middle of the 2010s. Although this is a trend to keep across, the market also grew a modest 1.6% in 2018 to £925 million.
As well as just giving base statistics, Mintel also offer a breakdown of the market and reasons behind any trends. They say that parts, accessories and clothing, (i.e. anything that isn’t bikes) makes up over half of the total market value and is the steadier area of the sector compared to bicycle sales. The company found that their findings back up the hypothesis that the independent bike shop sector is struggling. They attribute this to suppliers who once used third party bike shops to sell products moving to a direct-to-consumer way of doing business.
But it isn’t all red percentages and unsold stock, Mintel say that premium bike brands and “specialist suppliers” had seen stronger growth. This is due to dynamic changes in the bike industry, chief of which is the e-bike market. This burgeoning sector is growing every season with 70,000 such bikes being sold in the UK in 2018 and imports up 8% with values growing another 15%.
This doesn’t mean that bike shops are money pits but acts as a reminder to be taking the potential venture seriously. “It’s extremely hard work, so you’d better be doing it for the right reasons,” says our expert Simon from London based independent bike shop Strype Street Cycles (previously Swift Cycles).
It always pays to look for current trends in the market whether that be capitalising on the aforementioned booming e-bike sector or delving into gaps in the market that are yet to be explored. If you do find a gap, be sure to research how genuine that potential new market is – there might be a very good reason why there are no specific shops and brands already in the segment.
It is important to set out with a goal-based business plan that develops strategy for every scenario, this way you can begin understanding the market you have entered and with the backing of statistics and research, build a sufficient turnaround. There are huge risks involved, but starting small and growing the customer, reliability and quality stock will eventually pay you back in terms of revenue over time.
Challenges and misconceptions of starting a bike shop
There are many challenges associated with running a bike shop and that’s why you have to chuck yourself fully into the project. As Simon says: “It’s a lifestyle job for sure, but that doesn’t mean we spend all day sitting around drinking coffee.” The main challenges come from the mass market and larger retailers, specialist stores and of course the hugely frustrating and naïve attitude that ‘everything can be found cheaper online’.
One of the great advantages of bike shops is that you can go in and see, feel and test ride a new bicycle, get expert advice and long-term assistance from that shop. When you buy a bike from an independent, you are entering into a lasting relationship where the shop becomes your go-to place for kit, assistance and deals. This element of shops is where good location, brand, familiarity and customer service is paramount.
There are of course various economic challenges that come with the territory of running a bike shop.
“The economic pressures of running a retail business that can be very seasonal is that you have to run quite lean in terms of your core team, so you all have to be able to do lots of different jobs – purchasing, sales, marketing, web development, customer service. We leave bike fitting to the fitters and mechanising to the mechanics – everything else needs to be shared.”
Therefore, bike shops are not too dissimilar to any other independent venture. “All retail businesses need these functions regardless of size, but particularly being an independent, you don’t have the luxury of a head office to take some of the load,” says Simon. There is an upside to this way of working and that is that independent shops like Strype Street Cycles are in charge of their own destiny and can react quicker to changing market conditions. To do this though, you’ll need a reliable workforce.
A lot can be said for first impressions in a bike shop. For the most part, you can tell quite a lot about the atmosphere and helpfulness of a shop by the first interaction with the team. Whether it be a monosyllabic mechanic, patronising shop clerk or timid Saturday lad, we’ve all been in stores that have a weird atmosphere and such vibes are certainly not conducive to repeat revenue. You wouldn’t keep going back to a restaurant where the waiters provided unfriendly service.
Simon of Strype Street Cycles understands the integral element of having a committed, skilled and reliable workforce. “I’ve built teams before, in different industries, but unlike an office environment (where it is almost expected that you’ll fall out with at least one person), having a group of people that work harmoniously together is absolutely critical in retail,” he says.
“From the top down there should be transparency, accountability and trust. When you have that and a great group of people, the whole thing just gels and creates the environment we want for our customers – warm, welcoming, helpful.”
And there’s the crux, ‘trust’. Trust in service, trust in mechanics and trust in products. Strype Street Cycles for example stock a mixture of well-known reliable brands and up and coming, less well-known bike brands. Customer service goes a long way and helpfulness and attitude of shop staff can help to keep a consumer base, whilst the skill and experience of a mechanic, helps to keep a steady stream of work coming through the doors.
Diversifying revenue stream
During the last decade we saw bike shops diversifying their revenue stream in various ways to match the seasonal aspect of cycling. Bike selling is incredibly seasonal with demand peaking in the summer months and decreasing heavily going into winter. As Simon explains, “Workshop and bike fit produce useful income when the bike sales slow down.”
As a result, it is important to focus on a way of diversifying your revenue stream when the big-ticket items are not in vogue. Some ways shops have branched out are athlete sponsorships, corporate schemes and social media presence, plus in-store diversification through bikes for hire, bike fits and maintenance. Some have even started pulling espresso shots on the side to turn their stores into cycle cafes.
This is all to battle back against that monster under the bed, the internet. When the web became a force that was encroaching on physical retail a phrase was coined that ‘you can’t buy a service online’. Whether you want to debate the validity of such a blanket statement or not, it rings particularly true when you attach it to bike shops. The internet can help you answer questions before buying a bike, but it won’t expertly fit you to said bike or give you that all-important human touch.
This is where adapting to the market and keeping the shop fresh is particularly important. “We are constantly thinking up different service offerings that add value to our customer base and encourage regular visits,” says Simon.
He, like any clever independent businessmen, likes to keep his cards close to his chest though. “I can’t divulge the exact nature of our commercial arrangements with suppliers, but we have put some other elements in place that contribute towards our fixed costs and relieve the pressure somewhat.” Diversify your revenue stream and be less affected by the seasonal nature of bike sales is the simple answer.
Proper insurance cover is an absolute must when it comes to setting up a bike shop. Pubic liability insurance, employee insurance, business insurance are all fundamental to running an independent bike store – and will insulate you from the potentially catastrophic effects of flooding, fire and theft.
Of course, there’s only one place to turn when comes to the bike’s insurance. Click here for a free quote.
With great risk comes great reward
Unlike a lot of jobs, there is a great reward from your hard work. Sure, there can be large obstacles to navigate, hard days, weeks or even months and potentially a few tears, but in the end, if done right, overcoming risks results in great reward. Whether that be in terms of revenue or customer satisfaction.
Simon has taken great satisfaction from watching his store’s customer base develop. “Whether it is the guy that came in 10 kilograms overweight who – two years later – looks like a Cat 2 racer, or supporting our elite athletes achieve their dreams.”
Recently one of Strype’s ambassadors Lizi Duncombe, who was assisted by the store with kit and bike fits last year, won the overall at Ironman Argentina. “It was such a great day for her and a huge achievement – just being a small part of making something like that happens feels really good,” says Simon.
You may not see instant impact from opening a bike shop, but over time it is extremely rewarding. It is often overlooked how integral stores are. They are the hub of the cycling community, the libraries of knowledge, the workshops and the direct link to brands. They are places where cyclists can feel totally at ease and at home and so with great risk, does come great reward.
Rebrand or rebirth
We wanted to understand a bit more about how an established bike shop can function in the changing environment of the bicycle economy, so we asked Simon about Strype Street Cycles’ rebrand. Previously trading as Swift Cycles, the shop was winding up in 2019. Simon’s original plan was to buy Swift, but when the deal fell through and the business was wound up, it looked like the end for this reliable London bike shop. As Simon details, “With an enormous amount of hard work, support from our suppliers and the most amazing team you could wish (that were willing to wait out Christmas unpaid and on trust for me to solve the various problems) we managed to re-secure a lease, secure investment and get the whole thing over the line.”
This meant that the vision was now all theirs. With the same staff and ethos as before and in the same location, the shop still possesses the familiarity that customers want. As a result of the reshuffle though, they were able to redesign the shop floor and develop new practises such as a dedicated after sales care channel to ensure constant expert service.
“Where there is an emotional and financial investment in a purchase, a store like ours can add value by taking the time to understand a customer’s needs and offer a solution that not only satisfies their requirements but gets them excited about riding.”
With the online cycle market growing, is there still a place for bike shops? “In terms of the future, I strongly believe there is still a place for physical retail,” says Simon. “In fact, nowhere in my business plan does it mention developing a website and trying to bankrupt myself on Google advertising to secure low margin sales.”
Still interested? See this article as a help towards the first step on the ladder of starting out in the bike shop market. If you have a good head for business, for customer’s needs and are committed to entering the world of cycle shops, it may just be the path for you. Follow the links below for more information on getting started and for up-to-date statistics of the costs associated with running a business in 2020 in the UK.
Even if you aren’t thinking of pursuing a life as a bike shop owner, take the message of this article as an opportunity to support your local bike shop. This year, local bike shop day falls on 2 May, so make sure you put the date in your diaries and go out and back the underrated hubs of our brilliant sport.
YellowJersey would like to thank Simon from Strype Street Cycles for his invaluable insight. They can be found at:
8 Strype Street, Spitalfields, London, E1 7LF