Cycle Retail In Meltdown.

[foxychick]

Looks like Wiggle and Chain Reaction are going into liquidation, think Chain Reaction are one of the biggest online retailers in the World, things must be really bad and i fear for a lot of small independent cycle shops.

[slowster]

Threads merged. Apologies for not spotting the previous thread in Cycling Goods & Services. I figure that for now the thread is best in Does anyone know..?

[rareposter]

Looks like Wiggle and Chain Reaction are going into liquidation...

It's a "self-administration" - it allows the company to keep trading as normal without having the debt collectors knocking on the door while they aim to restructure and seek further funding from private equity or venture capital firms.

[JohnR]

Looks like Wiggle and Chain Reaction are going into liquidation, think Chain Reaction are one of the biggest online retailers in the World, things must be really bad and i fear for a lot of small independent cycle shops.

Provided the small independents have got some spare cash it's a potential opportunity to acquire stock at good prices. Who bought all the auctioned Moore Large stock?

[rareposter]

Provided the small independents have got some spare cash it's a potential opportunity to acquire stock at good prices.

It doesn't work that way - CRC/Wiggle are huge buyers within the industry and they work with multiple dealers and distributors.

Everything on the CRC website that isn't an in-house brand has been bought from those manufacturers or their distributors. If that stock hasn’t been paid for (which is very common, you essentially pay the manufacturer back as and when you sell the stock) that’s going to cause cash flow problems across the industry.

Besides, there's millions of pounds worth of kit there, we're not talking a couple of dozen pairs of shoes that someone could pick up cheap and sell on.

Who bought all the auctioned Moore Large stock?

No idea but by the time it was sold, adding on the VAT and the auction tax didn't make it a great bargain anyway, most of what I saw was selling at very near original RRP.

[Squirrel chaser]

Well then does anyone know if the fall of such companies as wiggle etc will help the LBS industry?
After all we all need cycling so why not stop shopping online and go to the bike shop like we always used to......

[Cowsham]

I think it's just the cycle of boom and bust -- can't think how covid is to blame except that with people off work but still being paid and told to buy bikes to keep fit but not go out on them or go out on them but don't crash ( I didn't hear that bit about not crashing )

So in summary big bike shops cashing in on the demand but forgetting that it doesn't always last and over expanding. Seems to repeat repeat repeat repeat.

[Squirrel chaser]

Provided the small independents have got some spare cash it's a potential opportunity to acquire stock at good prices.

It doesn't work that way - CRC/Wiggle are huge buyers within the industry and they work with multiple dealers and distributors.

Everything on the CRC website that isn't an in-house brand has been bought from those manufacturers or their distributors. If that stock hasn’t been paid for (which is very common, you essentially pay the manufacturer back as and when you sell the stock) that’s going to cause cash flow problems across the industry.

Besides, there's millions of pounds worth of kit there, we're not talking a couple of dozen pairs of shoes that someone could pick up cheap and sell on.

Who bought all the auctioned Moore Large stock?

No idea but by the time it was sold, adding on the VAT and the auction tax didn't make it a great bargain anyway, most of what I saw was selling at very near original RRP.

Very few if any cycling industry suppliers offer credit. Most stuff has incentive to buy such as get 1 free for buying ten as an example.
I would expect that CRC own all of their stock outright if not 99% of it...

[rareposter]

After all we all need cycling so why not stop shopping online and go to the bike shop like we always used to......

Because a bricks-and-mortar shop cannot possibly hope to compete on prices or stock availability. I can order online a specific part for any of my bikes (remembering of course that many many bikes now have proprietary parts or very specific parts) and have it delivered free of charge next day.

If I go into my LBS, I know for certain that he won't have those tyres or that cassette or that size/colour of jacket - he's got a decent range of "standard" stock but no independent can afford to be stocking much more than that on the off chance that someone wanders in for that exact product. That means ordering it from them, waiting a week until it turns up and paying more for it than I would online. Now for some stuff, I will do that because in my particular case, it's a brilliant bike shop and I want to support it but for a casual consumer without that relationship, they're not willing to do that - in the same way that people walk into bookshops, look at the titles and prices then go and buy them on Amazon.

Even the chain bike shop that I used to work in had stock that had been sitting around on shelves for years because it was so specific and it invariably had stock at the end of each year (usually XXS and XXL) or some bike in a particularly unfashionable colour which had to be sold off super cheap (often at a loss). To be fair, the chain was actually pretty good ant managing supply/demand and moving stock between shops to maximise exposure and sales but a small independent with one high street shop doesn't even have that as a backup.

It's why independents aren't leaping around going "woopee, we can buy some cheap kit when they go bust!" because none of them want or can afford that stock - it's incredibly expensive, takes up a lot of storage space and in 2 years time it'll be out of date, unfashionable etc. And that's before you get to stuff about warranty, agreements with the original manufacturer or distributor etc - most manufacturers for obvious reasons want a network of authorised dealers, not random high street shops selling off whatever they managed to pick up cheap in a liquidation auction.

[Squirrel chaser]

So as customers we can control what you suggest by only shopping at the LBS and not being so demanding.
It's a sad time that the internet has created and people are too stuck up to compromise these days.
So I'll continue to use my shops and get what I can. Prehaps others should do the same

[rareposter]

I would expect that CRC own all of their stock outright if not 99% of it...

They don't. There are credible reports from within the industry that one retailer has about £2m exposure to them and plenty more with up to £1m.
The bigger the company (CRC etc), the more leverage they have over suppliers to basically "give" them stuff if not free then at incredibly favourable prices with the remaining payment coming once it's been sold.

https://bikebiz.com/wiggle-crc-to-enter ... ports/amp/

[Jdsk]

...
Because a bricks-and-mortar shop cannot possibly hope to compete on prices or stock availability. I can order online a specific part for any of my bikes (remembering of course that many many bikes now have proprietary parts or very specific parts) and have it delivered free of charge next day.

Yes.

There's no point in trying to base the future business model on some goldenagery.

I've made two decisions:

• I buy from online retailers who also offer advice and support and exceptional stock and I'm happy to pay more for parts from them. At the moment this is mostly SJS Cycles (but delivery isn't next day!).

• When I need skills beyond my own I turn to a mobile mechanic. It's much more convenient than taking the HPV to a shop and I can learn by watching and joining in. We agree in advance on who's buying the parts.

Jonathan

[Squirrel chaser]

I would expect that CRC own all of their stock outright if not 99% of it...

They don't. There are credible reports from within the industry that one retailer has about £2m exposure to them and plenty more with up to £1m.
The bigger the company (CRC etc), the more leverage they have over suppliers to basically "give" them stuff if not free then at incredibly favourable prices with the remaining payment coming once it's been sold.

https://bikebiz.com/wiggle-crc-to-enter ... ports/amp/

Never used to be like that.
More fool the manufacturers then . $%?! Em!

I can only hope the internet shopping bonanza dies a hideous death and we get shops back,not just bike shops either.
I would like a shop I can go to and be able to buy what I need rather than take my chances with some cheap junk I can't look at before I buy.

[Squirrel chaser]

...
Because a bricks-and-mortar shop cannot possibly hope to compete on prices or stock availability. I can order online a specific part for any of my bikes (remembering of course that many many bikes now have proprietary parts or very specific parts) and have it delivered free of charge next day.

Yes.

There's no point in trying to base the future business model on some goldenagery.

I've made two decisions:

• I buy from online retailers who also offer advice and support and exceptional stock and I'm happy to pay more for parts from them. At the moment this is mostly SJS Cycles (but delivery isn't next day!).

• When I need skills beyond my own I turn to a mobile mechanic. It's much more convenient than taking the HPV to a shop and I can learn by watching and joining in. We agree in advance on who's buying the parts.

Jonathan

This is the problem.
Everyone want everything delivered or at home .
People are lazy now

[rareposter]

This is the problem.
Everyone want everything delivered or at home .
People are lazy now

As with many things, I think we've sleep-walked into this situation over 20+ years. It sort of started with big out-of-town retail centres (the idea being that it was a one-stop place where you could get everything, no need to go traipsing up and down your high street with it's "poor" selection of shops and goods).

Then the internet promised all that from the comfort of your sofa and the only way the internet can compete is on price and delivery because it's a pain if something needs returning or warranty and you don't get the same customer service as you would in person. So they undercut everyone, manufacturers and distributors don't mind this at all because their products are now getting vastly more exposure online than they ever could in a real shop so they'll offer favourable terms to the internet giants and less favourable terms to the real shops. My LBS has to pay for stuff up front and his trade price is a lot more than the trade price of bigger shops with more financial clout - in turn their trade price is higher than the internet giants with their vast order books.

For example: CRC are buying 50,000 inner tubes so they get them at pence each. My LBS is buying a box of 20 at a time so he has to pay a pound each. CRC can sell them at £1 and still make a profit. My LBS has to sell them at £2. People see that and go to the internet. This example goes through all of retail - books, clothing, white goods etc.

And then people complain about the "death of the high street" and that drives this sort of fatalistic "well I can just buy it online" attitude and the spiral continues. And then when the high street is truly dead, all it takes is for one vast retail emporium to run into trouble (because ALL retail is controlled by a dozen or so vast parent/grandparent venture capital companies) and the demise of one can result in the loss of all the daughter companies that sit underneath it.

In this case it's not CRC/Wiggle that's the problem; it's their parent company (SIGNA Sports United) that has had some of its funding pulled by its own parent company (SIGNA Holdings). SSU owns CRC, Wiggle and some other European online retailers; in turn CRC and Wiggle have in-house brands like Vitus and Ragley so the whole lot is under threat.