Walk into any branch of Halfords looking for a bike and you’ll likely stumble across a wide range of two-wheeled toys – from the stunt orientated BMX, to full mountain bikes, through the light as a feather, sleek road cycle. However, they’ll all have something in common – they’ll be made and assembled in the Far East.
Planet X Bikes is doing something different by sourcing parts from all around the world so it can construct its own bikes – right in the heart of Sheffield.
The business was first set up by triathlon fanatic Dave Loughran back in 1987. For those of you not in the know, triathlon involves stints in the water, on a bike and on foot across varying distances.
Loughran began by bringing Powerbars, food energy products for athletes, to the UK and then followed that up by beginning to import well-known cycling brand products in.
At the turn of the millennium the business evolved and began to make complete bikes and frames, starting off with a single speed road bike. Since then, Planet X Bikes has gone on to expand its range so that it can, it says, sell top of the range bikes for less than competitors can.
To further accelerate its growth plans, the company has recruited David Hanney as chief executive, as well as poaching Barry Dunn from rival retailer Chain Reaction Cycles.
Hanney spent five years at camping and outdoors-related products chain Go Outdoors as chief financial officer, where he was part of the team which sold a 25 per cent stake in the business to 3i in a deal which valued the company at £90 million.
Fellow new recruit Dunn, and now chief operating officer at Planet X Bikes, has held positions at Halfords and Argos and says, ‘I couldn’t turn down the opportunity to work with a brand that I’d admired for some time.
‘The product and innovation is excellent and hopefully with the help of a few experienced individuals we can achieve something very special at Planet X.’
Aside having a passion for mountain biking, Hanney saw a ‘huge opportunity’ at Planet X Bikes and thought the business could flourish by focusing on customer service, expanding its range and growing internationally.
To do that, he says, having financial security was a big advantage to put the company on the right footing to expand. The company went out into the banking market and secured a re-financing deal with Barclays.
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The undisclosed package, Hanney says, will help to create 50 new jobs over the coming three years – good work for a business which only 15 employees a few years ago and currently has 60.
Now that the Sheffield business has teamed up with Barclays, Hanney says that management will now be able to put money behind core lines which were previously out of stock all the time.
Despite the experience Hanney had with the private equity world though his time with Go Outdoors, the funding method was not one he considered for Planet X Bikes as it ‘comes at a cost and is also a distraction’.
The way the bike firm has grown its business model is helping it to compete well on the retail front, competing on price and customer service through its bespoke fitting that it does in-house.
‘As we are going direct we don’t have a huge high street retail network, as well as brands to pay for, wholesaler margins and stocks to hold in Taiwan – we are incredibly competitive on price,’ Hanney explains.
To produce parts for its bicycles, Planet X Bikes outsources to factories in the United States and Taiwan.
Because of its business model, the company has managed to fund its growth to date through cash. ‘We have a little supply chain and are fast to market so the business has only really needed funding from cash,’ Hanney adds.
‘We can get new products in from idea to market in three to four months, so as long as you keep that fast you don’t need a lot of working capital.’
Going for gold
The overwhelming success of British cyclists in both the London Olympics and Tour de France has given the UK cycling fever, but Hanney is quick to point out that the business is doing very well on its own.
‘It’s great to be involved and cycling has got such an impact at the moment with the Tour de France coming to Yorkshire [in 2014] but our overall success is our products and customers, and we’ve been successful over a number of years,’ he adds.
If Yorkshire had been its own nation back at the London 2012 Olympic Games it would have finished in 12th position, nestled between Japan and Kazakhstan. Planet X Bikes will be hoping to channel this winning mentality as it looks to grab a bigger share of a market which saw £700 million worth of sales in 2012.