Halfords "not a charity"
Posted on in Cycles News
Halfords has been exposed trying to raise millions of pounds via their suppliers to help fund their modernisation plans after reporting cycle category sales growth of 41.6% in Q1 2014.
The investment requests sent to 95% of Halfords suppliers in early May reflect practices previously exposed in the grocery trade and ActSmart is demanding action to stop this sort of activity seeping into non-food sectors.
Despite Halfords tactics being widely exposed and condemned by the National Association of Cycle Traders (ACT), The Telegraph reports that Halfords CEO Matt Davies is ‘unapologetic'.
Mr Davies is reported to have said that Halfords is ‘not a charity' and that ‘everyone needs to carry their weight'. He claimed the requests are "voluntary", however, he conceded that suppliers who did not pay the fee would be looked upon unfavourably because selling their products would be less profitable.
The letters requesting the 10% investment arrived out of the blue and gave suppliers just 1 week to contact Halfords to ‘confirm this investment opportunity'. Some of the individual investment requests ran into hundreds of thousands of pounds.
Halfords has a long record of falling in and out of favour with its suppliers following cyclical strategies to court the brands and then shun them. Historic efforts such as the original Bike Hut theme failed, but as the figures reflect, recent changes have had some impact upon turnover. In light of these tactics suppliers might want to reassess the viability of their relationship with Halfords.
The cycle trade is one of the few sectors that retain a strong independent sector with c.2900 cycling experts (retail outlets, workshops and hire centres) throughout the UK representing a much more significant market opportunity than Halfords c.15% market share through 465 outlets.
A spokesperson for the ACT said "in light of news that some cycle suppliers might actually acquiesce to such demands for funding, it might be appropriate for the Association to ‘kindly request' a contribution of just 1% of supplier turnover for a fund to help develop the independent retail sector. At least the brands know that they will receive exposure in store, technical knowledge and support and better continuity than with Halfords."
Halfords is the largest member of the Bicycle Association of Great Britain, which represents cycle manufacturers, distributors and wholesalers and also claims ownership of the Bike Hub levy.
The industry's Bike Hub fund is dependent upon investment from independent retailers, match funded by suppliers, for the promotion of cycling. Any benefit derived from Bike Hub benefits the industry as a whole but Halfords does not contribute to the fund and an early offer to pay a nominal £20,000 was declined and described as derisory by the ACT, given the level of independent retailer contributions.