Bricks and mortar bike shops - are they profitable

hifiandmtb

Sphincter beanie
Summit Cycles is pretty niche. Indeed, it's now the go-to store for all MTB blingy builds.

They seems to have found a spot in the marketplace in Sydney that didn't exist before.
 

tomacropod

Likes Dirt
Familiar stories! There's got to be a balance - my workshop relies heavily on the patience and tolerance of it's mechanics. Let's just say its an ...unusual setup.

..which is why, in the long term, I would do something completely different. mitchy_'s LBS sounds about right, except I would get women on the tools as well.
There are still bike mechanics in Canberra?

Summit cycles is a good example of a shop taking a risk and doing well, on the face of it. Time will tell. Other specialists like Ride in workshop, cheeky transport etc are not solely aimed at mtb but have a diverse enough clientele and staff to be able to survive any drop in consumer discretionary spending. This is a serious thing to consider when forming your business plan.

- Joel
 

fatboyonabike

Captain obvious
There are still bike mechanics in Canberra?

Summit cycles is a good example of a shop taking a risk and doing well, on the face of it. Time will tell. Other specialists like Ride in workshop, cheeky transport etc are not solely aimed at mtb but have a diverse enough clientele and staff to be able to survive any drop in consumer discretionary spending. This is a serious thing to consider when forming your business plan.

- Joel
stu at WERKS (Queanbeyan)
all the rest are full of kids that dont really know shit from cheese about bikes!..
you could go and see Dodgy Nick at Bike superstore in mitchell, if you feel like being fleeced!
 

bikeyoulongtime

Likes Dirt
Super Niche? I'm not sure that should be your target. 1-2% of a small market is tough. If your niche is (for example) high end Xc/trail, and quality servicing/race preparation, what do you say to the guy who walks in wanting a road bike, with cash burning a hole in his pocket?
I'd aim at a niche of 'bike people' first, and disciplines second. For the scenario above, the short answer is the guy gets shown what we can get, and is most likely referred to a friendly bigger retailer who he goes and buys from. But that's OK. He knows we're there, and we've looked after him as best we can. The seed is planted. Or, if hes' like me, he knows his frame size, and what he wants, and comes in because he can get it from us. In which case we get it in asap.

people wanted to be there - even just to hang out!
...have a diverse enough clientele and staff to be able to survive any drop in consumer discretionary spending.
both really key ideas. Also, I'd see being really involved in whatever disciplines you want to specialise in as a key item. Be seen, out on your bike, shredding the shit out of it. Sponsor events, help organise things...
 

spoozbucket

Likes Dirt
There's plenty of shops doing really well and servicing a broad range of the market, the thing they have in common is customer service. Hell, the shop I worked at years ago had people just stopping in to say hi, with coffees to go around. The range was broad but people wanted to be there - even just to hang out!

There is a shop in Newcastle(and I imagine other places) that was just doing services and fitting parts from CRC and the like, I believe they were going okay and are now also a Kona dealer.
A friend recently quit his job in a bike store and they were making decent money and were grossing will over a million annually, I'd hate to think how many morons you'd have to deal with to turn over that sort of money.
 

Cropduster

Likes Dirt
I'll add my .02c, as i'm relatively new to MTB but certainly not new to buying and selling in general, i've got an opinion, like everybody. LOL

Firstly i run my own business, i'm a one man band in a very specialised market, there's big players that do everything by the numbers and there's me, small, knowledgeable, trade certified and committed to customer service, i have to have a point of difference and selling purely on price is fast ride down the gurgler! my customers know i can answer their technical questions and back up their requirements with reliable honest service, i'm not the cheapest but i do well enough to be a thorn in the side of the big boys.

Being new to MTB i needed an education (still learning lots) but of the local 5 shops only one was helpful and happy to answer my questions and school me on what would be best for me. I bought my bike there, i buy most of what i need there. I will endeavour to support them as much as possible because they support riders with their shop, unfortunately i am in the minority, being a small business owner i appreciate good service and know how easy it can be to go under, one of the 5 shops in my area closed last week.

Forums like this that share experience, knowledge and expertise can be a double edged sword to a shop, a good reputation shared here can be a big boost to business, especially a good workshop, but sharing on line bargains obviously drives customers to buy on line for the savings and decreases shop margins as they try to compete, a shop is at the mercy of it's distributors who by and large make the lion share pf profit margin on what they supply, they have to, they stock everything and commit to long lead times to hold enough stock to keep everyone happy, bike shops can order on demand from a customer but they obviously need to generate that demand and repeat it.

Not enough customers understand the fiscal realities of running a business, the stock alone is a major expense but there's rent, signage, advertising, possibly franchise fees, phone, electricity, wages for staff, insurance for stock, liability, workers comp, provisional tax, accountants and solicitors fees, workshop tools, EFT fees the list goes on and on, all these expenses have to be paid, whether customers walk through the door or not, on line business' can cut most of those expenses straight away, pretty easy to see how they can sell product cheaper, it's an unfair advantage to take a customers money and then reply saying it's on back order but they can get away with it, your LBS can't.

Good on you for wanting to open a shop but whatever you _think_ you need to budget to get it open and have back up capital, double it, at least, and make sure you know your competition inside out before you begin. you will be taking money directly from their pockets and it WILL get cut throat, understand each of them as well as they do and know what you can bring to your customers that makes you an alternative that they want to support, nothing warm and fuzzy like "i love bikes", you may well do, and it will show in how you conduct your business but customers are demanding, have high expectations and many choices on where they can spend their (often small and hard won) disposable income, and customers can be as ruthless as your competition.

Good luck.
Paul.
 

tomacropod

Likes Dirt
I'd aim at a niche of 'bike people' first, and disciplines second. For the scenario above, the short answer is the guy gets shown what we can get, and is most likely referred to a friendly bigger retailer who he goes and buys from. But that's OK. He knows we're there, and we've looked after him as best we can. The seed is planted. Or, if hes' like me, he knows his frame size, and what he wants, and comes in because he can get it from us. In which case we get it in asap.





both really key ideas. Also, I'd see being really involved in whatever disciplines you want to specialise in as a key item. Be seen, out on your bike, shredding the shit out of it. Sponsor events, help organise things...
Is your market (Canberra) big enough to specialise in a discipline? How will your money come in, for the first 12 months? Are you prepared to work on crappy bikes and pretend to be interested? high end mtb could, with time, make up perhaps 30% of your revenue. It will take time and hard work to win that business. Have 100k you're prepared to lose? Do you know enough, mechanically, about not only the bikes you're into, but the old 10 speeds, folding bikes, electric bikes, bmxs and hybrids to be able to be able to do that work quickly and make money?

Being out there fostering goodwill is great but it is not money.

- Joel
 

bikeyoulongtime

Likes Dirt
1. Is your market (Canberra) big enough to specialise in a discipline?
2. How will your money come in, for the first 12 months?
3. Are you prepared to work on crappy bikes and pretend to be interested?
4. high end mtb/cx/pedelecs/road/gravel could, with time, make up perhaps 100% of your revenue. It will take time and hard work to win that business.
5. Have 100k you're prepared to lose?
6. Do you know enough, mechanically, about the old 10 speeds, folding bikes, electric bikes, bmxs and hybrids to be able to be able to do that work quickly and make money?
7. Being out there fostering goodwill is great but it is not money.
1. yes, specifically if the 'discipline' is 'people who care about bikes and are not dicks'. As for what type of bike, well I have my favourites, but other have theirs.
2. it won't. but my idea is not a normal bike shop... maybe it will. who knows? but it won't *have* to.
3. no. But I know shops who will and I'm happy to refer...
4. fixed that for you, and see point 7.
5. not yet, which is why I don't have my own shop :)
6. yes, too much! which is why 3 - and 1. Happy to fix/restore golden oldies, but it ain't cheap.
7. in the long run it is, all part of point 4 - winning the business you want, being able to decline the business you don't want.

I guess my main thrust is that there's no point trying to compete on price or range - CRC/Wiggle/Pushys/MTBdirect all have a small shop beat hands down there. So a new shop needs to really kill it on service, offer something different, specialise, carry something unique, provide a service that isn't currently offered in the market. Not easy - and not very profitable for a long time. I would also work at staying small - I don't want to work too hard, after all!

In other words, I'd personally be happy to run a part time garage operation - only reason to have a shopfront is to carry certain brands of parts without having to do an international mail dance to sort out warranties. Anyway, check back in 5 years - I might be in a sweet little space near some trails and a good coffee shop, wrenching, chatting and having fun :)

Back to the OPs post, yep, I think a brick and mortar shop can be profitable, and this thread has some golden ideas (mine are probably a little screwy, but other posters have given some absolute gems).
 

tomacropod

Likes Dirt
1. yes, specifically if the 'discipline' is 'people who care about bikes and are not dicks'. As for what type of bike, well I have my favourites, but other have theirs.
2. it won't. but my idea is not a normal bike shop... maybe it will. who knows? but it won't *have* to.
3. no. But I know shops who will and I'm happy to refer...
4. fixed that for you, and see point 7.
5. not yet, which is why I don't have my own shop :)
6. yes, too much! which is why 3 - and 1. Happy to fix/restore golden oldies, but it ain't cheap.
7. in the long run it is, all part of point 4 - winning the business you want, being able to decline the business you don't want.

I guess my main thrust is that there's no point trying to compete on price or range - CRC/Wiggle/Pushys/MTBdirect all have a small shop beat hands down there. So a new shop needs to really kill it on service, offer something different, specialise, carry something unique, provide a service that isn't currently offered in the market. Not easy - and not very profitable for a long time. I would also work at staying small - I don't want to work too hard, after all!

In other words, I'd personally be happy to run a part time garage operation - only reason to have a shopfront is to carry certain brands of parts without having to do an international mail dance to sort out warranties. Anyway, check back in 5 years - I might be in a sweet little space near some trails and a good coffee shop, wrenching, chatting and having fun :)

Back to the OPs post, yep, I think a brick and mortar shop can be profitable, and this thread has some golden ideas (mine are probably a little screwy, but other posters have given some absolute gems).
Starting in a garage is a good way to test things out and build a client base at low cost. Quite a few successful bike shops and importers started as home businesses. There's a gap for a shop in Wright or nearby.

- Joel
 

indica

Where did I come from?
my favourite LBS is a very small shop. owner runs the workshop with a girl manning the sale counter.
A mate does that in Adelaide. And does it well.
Service is the concept that survives alongside the internet sales.
 

ducky1988

Likes Dirt
A mate does that in Adelaide. And does it well.
Service is the concept that survives alongside the internet sales.
What store is that? Whippets?


There is a new store in Adelaide that only sells apparel. No servicing, bikes or anything other then the stuff that you wear. It's really clean, they know what they're talking about and you don't need to wait for them to finish working on a bike before they serve you.

My friend and I have a dream to open our own store with a cafe/beer aspect to it. The main focus would be on making it a place where people want to come and hang out while talking about bikes. A lot of places here seem to focus on churning out product without creating a relationship with customers. If they do it is only with the guys willing to spend 8g plus on a bike.

I think that with the internet being so good right now the only thing that separates a store from the net is service. Why would I go into a store to get something when the amount of quality human interaction equals the amount you can get from pushys?

If you are passionate about something that'll reflect onto the customers and be a bonus for both parties.
 

g-fish

Likes Bikes and Dirt
1. yes, specifically if the 'discipline' is 'people who care about bikes and are not dicks'. As for what type of bike, well I have my favourites, but other have theirs.
2. it won't. but my idea is not a normal bike shop... maybe it will. who knows? but it won't *have* to.
3. no. But I know shops who will and I'm happy to refer...
4. fixed that for you, and see point 7.
5. not yet, which is why I don't have my own shop :)
6. yes, too much! which is why 3 - and 1. Happy to fix/restore golden oldies, but it ain't cheap.
7. in the long run it is, all part of point 4 - winning the business you want, being able to decline the business you don't want.

I guess my main thrust is that there's no point trying to compete on price or range - CRC/Wiggle/Pushys/MTBdirect all have a small shop beat hands down there. So a new shop needs to really kill it on service, offer something different, specialise, carry something unique, provide a service that isn't currently offered in the market. Not easy - and not very profitable for a long time. I would also work at staying small - I don't want to work too hard, after all!

In other words, I'd personally be happy to run a part time garage operation - only reason to have a shopfront is to carry certain brands of parts without having to do an international mail dance to sort out warranties. Anyway, check back in 5 years - I might be in a sweet little space near some trails and a good coffee shop, wrenching, chatting and having fun :)

Back to the OPs post, yep, I think a brick and mortar shop can be profitable, and this thread has some golden ideas (mine are probably a little screwy, but other posters have given some absolute gems).
I've been in the industry for 4 years now. First in retail (in both one of the most successful and profitable independent bike stores in the country, and then in a specialist store that lost its way and couldn't hold onto its clientele). Now I work in wholesale.

My suggestion is if you haven't worked in a bike shop yet, go get a job and spend 1-2 years learning. It's a very fickle industry.. Knowing people (both suppliers and other stores) will help you a lot in running your business, you'll learn a ton, even just in 2-day a week PT work.

Recently there's been a very large number of specialist stores opening up around the country - both specialist retail, or workshop only. For the most part these are being opened up by young, smart, experienced guys (and girls!) who are picking gaps in the market that they know they can cater to. The difficulty with a specialist store is staying on the pulse of whatever demographic you're selling to, all it takes is a shift in trends, or a newer, "cooler" store to open up nearby and you'll lose your market. Low overheads mean that you can make a decent living for yourself doing this, but you'll never be raking in heaps of dosh.

The family stores have potential to be big business ($2mil+ turnover per year for a well run large family store).. There's much higher overheads, and it can be soul-destroying work in peak periods or slow times. If you can pick an area not catered to by a large family store, there's great potential.. but obviously these stores need more cash up-front and therefore, much greater risk.

As to whether bricks and mortar can be profitable, absolutely. There's a definite change in the industry over the past couple of years. Stores are delivering much higher quality service, at much more aggressive prices. Online stores will obviously offer cheaper product, but that doesn't mean bricks and mortar can't be competitive.
 

marc.r

Likes Dirt
Most of what people seem to want here is a bicycle club house analogous to a golf or rubgy club... Somewhere to drink beer, get advice and talk about your hobby.

How do those business models work?
 

silentbutdeadly

Eats Squid
An acquaintance opened up a little bike workshop/studio in our town earlier this year. He's an engineer that's been a roadie for ages and a bike mechanic for nearly as long. He's got a tiny shop front in an off retail area (so it's cheap to lease) and it's his workshop and sales area. Just two bike brands and a simple range of accessories plus a range of stuff available to order from catalogues. Oh and coffee...quite good coffee. Overall he's actually doing quite OK...even sold a few bikes despite the fact that the main planned income was (and is) shop labour.

His biggest drama in his first year has been establishing decent relationships with distributors. As a small shop in a regional town, his volumes are always going to be tiny. And a great number of distro's just don't want to know him because of that. One said that since he wouldn't carry their bread and butter (plus another B) parts and accessory brand in a space dominating display...no we won't deal with you.

When these distro's are dealing some of the biggest cycling brands on the planet then that makes it a bit tricky...none of it is his fault. All the positive customer service in the world is not going to help when you struggle getting replacement big brand parts on behalf of customers...fortunately, operations like Monza, Echelon, GKA, DeGaris, Cassons and Shimano Aus have come to the party in a positive manner but many others just couldn't be arsed.
 

tomacropod

Likes Dirt
An acquaintance opened up a little bike workshop/studio in our town earlier this year. He's an engineer that's been a roadie for ages and a bike mechanic for nearly as long. He's got a tiny shop front in an off retail area (so it's cheap to lease) and it's his workshop and sales area. Just two bike brands and a simple range of accessories plus a range of stuff available to order from catalogues. Oh and coffee...quite good coffee. Overall he's actually doing quite OK...even sold a few bikes despite the fact that the main planned income was (and is) shop labour.

His biggest drama in his first year has been establishing decent relationships with distributors. As a small shop in a regional town, his volumes are always going to be tiny. And a great number of distro's just don't want to know him because of that. One said that since he wouldn't carry their bread and butter (plus another B) parts and accessory brand in a space dominating display...no we won't deal with you.

When these distro's are dealing some of the biggest cycling brands on the planet then that makes it a bit tricky...none of it is his fault. All the positive customer service in the world is not going to help when you struggle getting replacement big brand parts on behalf of customers...fortunately, operations like Monza, Echelon, GKA, DeGaris, Cassons and Shimano Aus have come to the party in a positive manner but many others just couldn't be arsed.
A lot of distributors now realise that these small accounts add up to a lot, and will grow with time. Regional areas can have trouble attracting sales rep visits but there's no reason not to sell to them. Some brands require a line of products to be stocked but this is a minority and usually for the purposes of fairness to other dealers in the region.

-Joel
 

hifiandmtb

Sphincter beanie
His biggest drama in his first year has been establishing decent relationships with distributors. As a small shop in a regional town, his volumes are always going to be tiny. And a great number of distro's just don't want to know him because of that. One said that since he wouldn't carry their bread and butter (plus another B) parts and accessory brand in a space dominating display...no we won't deal with you.
Is this something he could take to the ACCC?
 

Soul-Rider

Likes Dirt
Coffee! cheap, say a buck and free if someone's buying big.

Movie nights! Show the latest MTB films on a Friday night with a few beers, a BBQ and pump track championship!

Check out the 'Over the Edge' bike shops for an alternate business model that seems to work well. The guys in Melrose are brilliant!
 

scblack

Leucocholic
Is this something he could take to the ACCC?
No law says you MUST sell to everyone who puts their hand up.

At my company I have cut credit to customers for being fuckwits. And set up others at Retail pricing structures, rather than wholesale pricing.

Some customers are simply not worth the effort it takes to sell to them. A well run business will cut ties if a customer would be unprofitable.
 

Dozer

Heavy machinery.
Staff member
This is kind of relevant to the topic and perhaps can be seen as a good example of why society needs bike shops:
I was in the local store saying hi to mates that own the store on the weekend. Actually, I buy my bikes from the store, pull them out of the box and prepare them myself, I take hours to do it properly and enjoy it. Anyway, I wheeled the bike in to show the guys and had a funny situation arise where my favorite kind of bike rider wheels his triathlon bike in, walks into the middle of the conversation I am having, butts in and says to the store owner "this bike wasn't set up properly. It has a rattle and I want it repaired today or I want my money back". I started laughing at the guy, I despise pricks like that but I did refrain and I moved back a few steps so I could listen to the rattle that stops his bike from working. The owner of the store politely says "Thats no good. Lets have a look. Can you show me the rattle?".
The guy lifts the bike up by the bars and drops the front end on the ground thus making a small knock, not even a knock; a tap of sorts coming from around the headtube area.............where the cables get bumped around. As you'd imagine, I giggled a bit too much and walked away mumbling something to myself about how useless tri guys are at everything. Yep, the store owner told the guy that his bike is fine, it's just the cables bouncing around where they are free from restraint to cable to the controls on the bars. The fucking guy stamps his feet and says he wants it fixed! What an unreasonable jerk, I was tempted to kick him in the vagina and haul his disrespectful arse out of there but before I could start my next tirade of laughter, he is given some pink fluffy tie wire to go under the cable to stop the knock. I shit you not, he was satisfied with that fix (just barely) and walked out without offering to pay or say thanks.
The store owner said the guy is a brand whore and has bought three bikes off him. He makes sure the guy pays full retail on everything and gives him detailed invoices of all services done. There's a good example of why society needs bike stores. ;)
 
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