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Halfords takes on The Cycling Experts

Posted on in Cycles News

The ACT represents ‘direct competitors' according to recent communications received from Halfords.

The ACT is owned by a wide range of cycling businesses with over 2650 subscribers in its cycling community. c.3500 consumer facing operations are listed on the ACT's cycling experts website.

Halfords was originally founded as a local hardware store in Birmingham, then named ‘Rushbrooke & Co.' Exchanging shares in a new public company called The Halford Cycle Company in 1907 and then trading from 9 shop outlets.

Halfords now operates over 460 stores and claims to have 22% market share of the cycle sector, reporting 16% growth in cycling categories in the 26 weeks to 26th September 2014. However, their performance was skewed with 21.3% growth in their Q1 reducing to 11.3% growth in Jul - Sep 2014.

Halfords highlights its cycling successes as the launch of ‘13' its own, new cycle brand; the commencement of its second stab at rolling out Cycle Republic, a cycling-only store format, with Halfords stating that there is an opportunity for 25 stores in Greater London and potentially 100 stores overall; along with the acquisition of Boardman Bikes.

Halfords has also commenced the revamp of its core store format giving greater priority to cycling as promoted in BikeBiz who concluded that ‘Halfords is raising its cycling game, massively'.

What has again failed to be mentioned is that in a move condemned by the ACT, Halfords was accused of squeezing small businesses to generate funding towards its £100m modernisation programmes. As reported by the Telegraph and other national press, Halfords sent suppliers a letter asking them to pay fees worth up to 10% of their sales with the retailer, something which has been taken up by the ACT and Forum for Private Business.

Halfords also reports increases in in-store servicing, but makes no evident statement about its cycle to work business, which is supported by an IBD network, providing access to leading brands that Halfords are unable to access.

Over 40% of IBDs polled have accepted Halfords cycle to work vouchers this year and the pros and cons of working with Halfords has turned into the biggest ever debate on the Industry Forum.

In fact Halfords has become a hot subject on the forum of recent, with threads questioning whether they are evolving into a serious threat, why local companies use them exclusively for C2W and whether they might have acquisition aspirations within the specialist retail sector.

Whilst Halfords has been targeting its IBD competition the independent sector has also been expanding and developing its own offering, but many question if this is the time for greater co-ordination throughout the specialist sector in order to maintain and grow IBD market share.

Although it's more difficult to assess the performance of the specialist sector, ACT reports positive growth in IBD sales in 2014:

  • Calendar YTD 12.6% increase vs 2014
  • April - September 13.3% increase vs 2014
  • July - September 12.2% increase vs 2014

In addition to this business Cyclescheme recently reported cycle to work unit sales growth of 14.5% in 2014, whilst Ride it away, the ACT's retail finance programme is reporting growth in excess of 100% in 2014*. The independent sector also continues to grow the number of trading outlets throughout the UK, alongside a number of repair only operations.

There is however a growing belief that Halfords are overly supported in the sector, when compared to the combined might of the independents. Their network size provides for them to be the retailer of choice for some cycling organisations, if not the individual cyclist members.

Halfords benefit from, but do not contribute to the Bike Hub fund, despite being the largest member of the Bicycle Association of Great Britain Ltd, where c.90% of recent company income was derived from the IBD led fund (participating suppliers match fund IBD contributions).

Halfords have had a soft ride over their supplier investment requests, especially when compared to the ‘Santa Tax' debacle in Xmas 2013, which saw the Debenhams Finance Director subsequently resign. Halfords certainly seem to garner positive press from within the trade irrespective.

However, IBDs are beginning to benefit from the provision of improved retail solutions being delivered to the market in order to compete with the likes of Halfords, alongside technical skills and people development programmes. Now Halfords has taken the gloves off it appears to be time for The Cycling Experts to up their game in unison. 2015 should be an interesting year for cycle retail.

*Ride it away scheme growth has been impacted by new recruitment, like for like analysis will form part of a 2014 annual market re

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