Inflation and Sunshine - The Ideal Cocktail for Cycle Retailers
Posted on 9 Apr 2009
10% of Cycle Retailers experienced their highest turnover month in the last 12 in March 2009!
This was one of the powerful results of our March market research, carried out with over 250 retail businesses throughout the UK, whose turnover represents c15% of the total UK cycle market.
Following on from a like for like shrinkage of c4.5% in specialist cycle retailers between October and February, March sales roared back with an overall like for like growth of 22.6% vs. March 2008.
Here are the key numbers:
- Sales volumes uplifted by 48% in March vs. February and were only 4.7% below September 08 sales volumes, when cycle retailers last experienced significant growth in the market.
- 76% of retailers surveyed in March were up in the month vs. March 08
- 24% experienced a sales shortfall vs. last year.
- The overall increase in the growing businesses was 39 % vs. March 08
- March 09 contributed 10.5% of the last 12 months turnover in these retailers.
- The overall decrease in the shrinking businesses in March was 25.6%
One retailer in the South East reported a 49% sales increase in March, which he attributed to: "on the ball responses to e-mails/sales enquiries, well maintained website with up to date stock availability and most important PMA (positive mental attitude)". Tellingly, he did add: "if the weather was poor it might have been a different story!"
Weather was one of 3 key drivers identified by our research team.
The warmest March in the last 10 years did no harm, but the most significant boost to sales volumes appears to have come from price inflation driven by the wide scale increases enforced by the weakness of sterling. Price increases of up to 50% are now flowing into the market place and as we have actively encouraged, retailers are passing these on to consumers, protecting gross profit margins as far as possible. This has lead to significant price and sales value inflation.
The third driver relates to the ongoing polarisation of the market and the proactive action of many to revise their strategy and up their game, giving them a lead against their competitors and the slow moving corporate retailers.
There remains no clear differentiation on a regional basis and as reflected in the ActSmart March polls on Bicycle and P&A sales, most areas of the business remain buoyant, particularly workshops.
However, there are ongoing indications that the entry level bicycle market is not strong and this may be further borne out by Halfords annual results due out now. Strangely the results scheduled for publication today have not appeared, perhaps delayed until after Easter on the basis that the long weekend might bring a sprinkle of sugar to what is predicted by some to be a somewhat sour dish. UBS are reported to be expecting sales at least 3.4% down compared to 4.8% up in 2008.
Specialist Cycle Retailer core sales were up 5.3% in Q1 2009 and 0.7% for the last 2 quarters, October 2008 - March 2009. British Retail Consortium figures for March will be released on 16th April and we have no doubt that ACT members performance will prove to be significantly better than the UK trend.
Recent analysis undertaken with Government business agencies suggested that the Sports and Leisure sector would recover ahead of most others, citing Q1 2009 as the bottom of the market and we anticipate continued growth moving into peak season.
April 2008 sales volumes uplifted by 15 % on March 2008. Supplier inventories may struggle to keep up over the next few months as growth levels exceed economic expectations and with any major improvement in exchange rates looking unlikely, investment in stock availability to underwrite sales ‘appears' to be a sound strategy currently.
Further market analysis on March and Q1 will be made available after Easter.
Performance figures detailed herein were derived from 279 independent cycle retailers and workshops throughout the UK, ranging in size from annual turnovers of £2.5m to below £50k. The performance figures apply to core like for like retail sales only; they do not include sales achieved via retail finance or cycle to work schemes, the addition of which would significantly increase the sales growth. Further details of how to participate in the ActSmart research program will be published shortly.
