The UK new bicycle market is struggling as retailer profits continue to fall.
Higher importing costs caused by a weak pound and a technological threat from overseas is causing a headache for bicycle business owners.
Traditional bicycle market is slumping
Evans Cycles saw profits fall 58 per cent in 2016 and Halfords said there was a double-digit decline in bicycles being imported in 2016 with another fall predicted in 2017. The Bicycle Association operations director Steve Garidis said the latest drop in bicycle imports in the third quarter of 2017 were ‘alarming.’
However, Brexit and a weak pound are one thing. The new bicycle technology being seen on the streets of Manchester, Newcastle and London are another.
Mobike shaking things up
Chinese firm Mobike,which operates 8 million bicycles worldwide, has been busy rolling out tens of thousands of orange bikes across the UK, which it hopes will put off people buying a new bike and rent one instead. The bicycles, which have puncture proof tyres, offer two hours of unlimited cycling via your smartphone for just £10 a month or 50p for a half an hour ride. The deposit is £1.
Granted, the system is not perfect, the bikes are cumbersome, some users keep bikes behind locked gates and the app can crash at peak times (5.30pm).
However, once Mobike releases its regular user stats and reviews, cycling business owners may think again if they want to stay in an increasingly aggressive market.
Uber’s move into cycling
One company who knows a thing or two about to disrupt the transportation market is Uber, who this week announced it was buying Jump, a bike sharing start-up similar to Mobike for around $200 million. The bicycles, which have an in-built motor to give you a push-up hills, will now appear on Uber’s app alongside its cabs in San Francisco. If Uber were to expand into the UK market, it would spell more trouble for an already pressured sector.
Renting a bike expanding
Road bicycle owners may say that they’ll never sell their pride and joy. But the days of renting a roady may be drawing nearer with the emergence of Fat Lama, a rental service which raised $10 million in Series A funding last month. The online platform allows you to borrow a high-speed racing bike with no deposit for around £40 a day. Compare that to renting from a traditional bike shop, which requires a deposit of around £500 and the barriers to entry to disappear. Of course, if you smash up the bike when renting it you will be liable to pay up but you don’t have to pay upfront which is the key difference here.
The combined value of sharing economy start-ups was $219 billion by mid 2015, according to a Credit Suisse report and the sector is catering for millennials who are shunning material goods for experiences. How traditional bike retailers will respond to this growing threat to their business remains to be seen.