The cycling market has been of interest for both operators and investors for some time and our analysis shows that although this is still a large and growing market, certain segments stand out as having high growth potential.
Mintel estimates that the UK bicycle retail market is worth £1.5bn, whilst the Bicycle Association believes cycling as whole contributes £5.4bn to the UK economy. If the government's aim to double cycle usage by 2025 becomes a reality, this figure is expected to rise to £10bn.
However, when you look deeper you find more of a mixed picture. While the struggles of Evans Cycles and Cycle Surgery highlight the problems in the midmarket, the premium market continues to show positive signs. So, what are the key areas of opportunity?
The women's market
Despite recent growth, the UK still lags the continent in terms of women's participation. Women make up 27% of cycling journeys in the UK, compared to 55% in Denmark and Netherlands – and experts predict huge potential for growth.
Demand is growing for women's specific bikes, clothing and accessories. Fed up of pink and flowery cycling gear, and men's products adapted to fit, female cyclists want stylish and practical products specifically manufactured for them. One of the largest cycling manufacturers in the world, Giant, recognised this early on and launched Liv, a women's only cycling brand (seen above). Recently Giant attributed 70% of its annual growth to the brand's success.
Just as the e-scooter has grown in popularity over the past few years, e-bikes are expected to record continuing growth. According to Halfords, they have risen from 1% of sales in 2012, to 9% of sales.
What has previously been a more niche market is becoming more mainstream, as all types of users see the benefits of having motorised assistance. Supply-side factors, such as accessibility and falling prices, are also contributing to growth in the market, making it much easier for consumers to purchase.
One area e-bikes particularly caters for is commuting, making longer commutes that were once out of range more appealing to a wider audience. Gocycle, a UK based e-bike brand, specifically caters for the commuter market by producing lightweight, foldable and high-spec e-bikes. Likewise, Brompton made their first foray into the e-bike sector last year.
Beyond bikes and parts, other complimentary products and services offer a chance for brands and retailers to increase sales with existing customers. With more complex mechanics, as well as consumers buying more expensive bikes, servicing is becoming an attractive add-on purchase. It is a key pillar of Halford's new strategy, as it expects far more of its revenue to come from services rather than product sales in the future.
Some brands, such as Rapha, have gone far beyond the traditional model for a cycling brand to encourage spend from customers. Its Cycling Club offers annual membership for £135, with benefits including club rides, exclusive kit and free coffee at its 'clubhouses'. In addition its general merchandise range includes t-shirts, bags and books.
As with most markets, under the headlines lies a mixed picture in terms of growth. Whilst experts debate the future of the market as a whole, we believe there are still areas of opportunity to take advantage of for new brands and incumbents.