Graham Bradshaw, executive officer of Retail Cycle Traders Australia, says shops like Cyclespeed are well-positioned to weather the low-gear retail environment and the increased competition from overseas online retailers.
“Shops selling high-end bikes are doing quite well, and those shops that provide a workshop for service and repairs are holding their own,” Bradshaw says.
“Definitely niche areas are still doing okay. I would’ve said there was a geographic aspect to that, but then Brunswick Street Cycles (BSC) went under and I would’ve thought being based in Melbourne’s inner suburbs would’ve made them well placed to handle a downturn.”
The collapse of Melbourne retailer BSC took many in the industry by surprise. The business had three stores in Melbourne’s CBD and inner suburbs and was mooted to be opening another. While details are still sketchy about the reasons for the closure, it is believed that BSC had significant credit issues with suppliers.
Andrew Jones of Cyclespeed says the collapse was disappointing because BSC had been a beacon for the many smaller shops in Melbourne which had opened in its wake in the past 10 years.
“I guess they have, sadly, become the poster child for what not to do in the industry in terms of paying those high rents and having high staff numbers and whatever else,” Jones says.
Bradshaw says the pressures that led to the BSC collapse are common for retailers in general, not just those selling bikes.
“There are a lot of pressures in the retail environment at the moment and bike retailers are not immune to that: Australian wages are quite high compared to elsewhere, the cost of retail space, electricity, all these affect bike retailers as they do other retailers,” he says.
The thrust of the changes the RCTA wants in order for Australian retailers to be able to compete on a “more level playing field” against overseas online retailers, according to Bradshaw, were outlined in its submission to the Productivity Commission retail industry inquiry. The four main points argued by the RCTA were:
Bradshaw is quick to emphasise that online trade is not the problem, but rather the cost structures that give overseas retailers significant advantages over Australian retailers. These cost structures have been further exacerbated by the high Aussie dollar making online purchases far more affordable for local shoppers.
However, Jones is sceptical about whether shoppers, especially the internet savvy ones he deals with, would care, for example, that an internet retailer was branded as Australian. Jones says his customers just want the best product at the best price.
“There’s no future in expecting your customer base will just subsidise you because you’re a good guy who runs a local store,” he says.
“Very few people these days give a crap if something was made locally or not. They do their research and if it’s better quality from elsewhere or it’s cheaper and better value they’ll go for that – there’s not a lot of sentiment involved.”
