Bike shop sales blip in May
Posted on 11 Jun 2009
After two months of exceptional growth in March and April, where underlying sales grew by in excess of 20% vs. 2008, May saw a reduction in like for like cycle shop sales of -7.1% against last year.
Cycle retailers were not alone with overall like for like retail sales shrinking by -0.8% in the month according to the BRC-KPMG Retail Sales Monitor.
The reason for this turnaround was primarily apportioned to the exceptional May 2008 retail sales performance, something that is also applicable to the cycle trade.
The level of growth in March and April and the sheer volume of sales in some cycle retailers suggests that a significant element of business has simply been brought forward, something that can only be good for the sector with more people cycling longer through the spring and summer seasons. However it makes sales forecasting more complicated.
Cycle retailers are not alone here either as it would appear as overall shopper numbers fell by 5.1% compared to May 08 and 3.1% from April this year, according to the Synovate Retail Traffic Index.
Stock availability has had some impact upon sales volumes as suppliers have struggled to keep up with the unexpected early year demand, but this is not deemed to be material for the sector as a whole.
May core sales volumes were comparable with April, the normal seasonal uplift nullified by April's stunning volumes.
May Fact File
- May like for like core sales fell by -7.1% vs. 2008 (April 19.4%; March 22.6%)
- 19% of retailers reported core sales UP by more than 20% in May09 vs. 08 (April 51%)
- 10% of retailers reported core sales UP by between 10% - 20% in May 09 vs. 08 (April 12%)
- 12% of retailers reported core sales UP by between 0.1% - 10% in May 09 vs. 08 (April 10%)
- 15% of retailers reported core sales DOWN by between 0.1% - 10% in May 09 vs. 08 (April 8%)
- 15% of retailers reported core sales DOWN by between 10% - 20% in May 09 vs. 08 (April 9%)
- 29% of retailers reported core sales DOWN by more than 20% in May 09 vs. 08 (April 10%)
- The overall increase in the growing businesses was 22.8% vs. May 08 (April 36.5%)
- The overall decrease in the shrinking businesses was -24.1% vs. May 08 (April -20%)
Although those retailers reporting a sales shortfall didn't fare much worse than in April there were significantly more of them with 59% of retailers reporting a reduction in the month vs. May 2008.
However, 19% of specialist retailers continued to report sales growth in excess of 20% in May. The overall growth rate in these retailers in May was a staggering 50% and this 19% of contributors to the research accounted for 37% of the total reported sales volume in the month, compared with less than 19% in 2008.
The Wider Picture
- 2009 year to date like for like core sales growth is 5.2%
- Cumulative sales growth since the economic downturn in September 2008 stands at 4.5%
- Last 3 months like for like sales growth 9.5%
- Quarter 1 2009 like for like sales growth 5.8% - Halfords reported a -3.8% l.f.l. sales reduction in the same period.
The specialist sector is clearly holding its own despite Halfords claims of increased market share, but within the mix there is doubtless a much greater variance in shop performance than a group like Halfords would experience.
Sharing information and identifying growth potential and strategies is critical to the sector. We are all in part dependent upon each other as continuity of a large and growing specialist UK network can only be good for the specialist market, suppliers, consumer choice and the sector as a whole.
Card sales, particularly credit card are reportedly increasing ahead of other transactions according to a recent presentation to the Retail Policy Forum as consumers, finding it hard to source credit elsewhere turn again to credit cards as the easiest facility.
With volumes and average transaction levels also increasing retailers AND suppliers are strongly recommended to contact their card processors to review your rates and reduce costs, especially via the preferential ACT/ActSmart scheme with HSBC.
So is May just a blip? The figures suggest that this is the case for a large number of cycle retailers, but we shouldn't forget that June 2008 was exceptional for the sector, achieving the highest monthly turnover in the whole of 2009 and after a damp start to the month it may be July before sales growth returns for some.
ActSmart's monthly research and analysis is increasingly seen as the barometer for suppliers and retailers alike so it would be beneficial to all to get some wider feedback and debate going via the Comments section at the end of this report. Anyone can contribute, simply login or sign up to free Bronze membership here and have your say on your industry.
Performance figures detailed herein were derived from 282 independent cycle retail businesses and workshops throughout the UK, ranging in size from annual turnovers of £50k to £2.5m, representing well over 300 shop fronts. The performance figures apply to core like for like retail sales only; they do not include sales achieved via retail finance, cycle to work schemes or other non-core sales transactions, which will increase growth rates accordingly. No internet/mail order only businesses participated in this research.
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