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Sydney Morning Herald wrote:Hard to brake even as another bike store struggles
Sydney bike chain Cranks is believed to have become the latest casualty in the bicycle world, amid rumours it has closed at least four of its five well-known stores.

Cyclists have reported Cranks' North Sydney store has been cleared out, while phones at the remaining four stores in Balmain, Chatswood, Enmore and Ryde ring out. Fairfax has not been able to get in touch with the owners.

The chain's website is still operating but contains no information on any difficulties.

Ouch, I was in the Cranks Chatswood store not long ago.
The GST debate is mentioned but as we have seen on BNA is a non-issue.

In discussions of price differences, stats show that there has been an impact on some local bike stores with accessories however bikes the percentage of bikes purchased overseas are so small that they hardly make a dent. On the accessories some bike stores adpat and change to brands that are less competitive or who have more consistent global pricing.

It is a hard market but it is not only overseas competition, as they note Bike Exchange is massively successful - which some retailers and brands argues accommodates the 'price fight'. There are plenty other online based retailers also in on the market - but lets not forget, plenty of highly successful local bike shops.

Not surprised. Even without consideration for the mail order side of the chain, the number of LBSs that popped up in Sydney has been rather surreal. This present run of closures could easily be explained by poor business planning and execution and over-saturating the market. A bit of consolidation will be good for the remaining LBSs who are on more solid business footing.

Just the latest victim in the Australian economy going to pot. We've transitioned into a global economy at a time when we are one of the most expensive places to live and do business in the world. Not good. It's the less astute players that will go to the wall first, and for mine that kind of masks the trend. It's easy to just put this down to bad planning and execution rather that the economy transforming for the bad.

The notion that this will be good for anyone is short term thinking. Every job and business that is lost has a ripple effect that makes the whole Oz economy weaker.

It's a pain that we have to have. In the long run and irrespective of how the globalisation penetrates, there will always be LBSs, just not so many as we have now. Consolidation will permit the remaining LBSs to better weather the coming changes.

sogood wrote:Consolidation will permit the remaining LBSs to better weather the coming changes.

It's hard to draw macroeconomic conclusions from one small business closure. But signs of economic contraction are signs of economic contraction. As a data point, this is a spot of bad - not good - news for the bike industry.

Howzat wrote:It's hard to draw macroeconomic conclusions from one small business closure. But signs of economic contraction are signs of economic contraction. As a data point, this is a spot of bad - not good - news for the bike industry.

If you read the report, also known directly to me, three good sized LBSs have closed down in the inner city and surround in the past 1-2 months. But I agree, it's a data point, not definitive, but good enough to postulate.

After they charged me $35 for two tubes and some tyre levers I'm not surprised.

The_Eggman wrote:Just the latest victim in the Australian economy going to pot. We've transitioned into a global economy at a time when we are one of the most expensive places to live and do business in the world. Not good. It's the less astute players that will go to the wall first, and for mine that kind of masks the trend. It's easy to just put this down to bad planning and execution rather that the economy transforming for the bad.

The notion that this will be good for anyone is short term thinking. Every job and business that is lost has a ripple effect that makes the whole Oz economy weaker.

Cranks (in Balmain) "left" their store (I don't know the details), and another bicycle store took their place. Which by default would have split their maintenance market in half, because unlike the usual new store opening up scenario, Balmain bikes and not Cranks is sitting where everyone remembers the bicycle store to be. (and probably in all honesty the more convenient location), which probably directs a lot of maintenance business back to them.

The internet retailing phenomenon in Australia has not hurt Australia. ie some stuff is more easily sold overseas from Australia than it used to be, which makes up for any losses in the horribly innefficient and expensive australian retail system. If nothing else a surfeit of cheap rentables helps people try different businesses.

i only recently brought a bike from Cranks.. does anyone have any ideas how the warranty would work in that instance?

its a pain to us.. but i'm assuming the people that invested into the company are probably in more pain

Sorry to see Cranks North Sydney gone, they actually had a mechanic that could fix things right the first time. And being a regular I was looked after.
Hope you guys get a job somewhere soon.

Agree it must be hard to compete, sometimes it feels like they aren't even trying, but seriously who works hard to go broke.

I am curious though, I have been commuting by bike for the last 10 years and have noticed a big increase in other riders, both commuting and weekend warriors.
Surely there are enough customers to keep the good stores alive.

I have only ever had mediocre experiences with Cranks in Willoughby/Chatswood so not surprised at all. Terrible customer service. The thing that finally made me swear to never go back was when they charged me $10 for an old bike box after prefacing it with the fact I get my bike serviced there (which I did). A day later there were 5 out the back of the store.

That is tough that you pay for bike box. Usually you are doing them a service and when I moved a little while back - my bike shop was happy to give me as many as I could take.

Anything official known yet (aside from the stores not being open for business)?

zero wrote: The internet retailing phenomenon in Australia has not hurt Australia.

You might be the only person in Australia that believes that.

ie some stuff is more easily sold overseas from Australia than it used to be.

Like what?

Manufacturing isn't even close to being competitive globally, so why on earth would anyone buy stuff from here?

Sparx wrote:After they charged me $35 for two tubes and some tyre levers I'm not surprised.

did they hold a gun at your head to make you pay?? you shoulda put the cash back in ya wallet and walked

It's super competitive, but that is no reason for the govt to subsidies o/s shops. If you bought an item overseas for $500 then if a local store got that same item it would be $500 plus 10% duty if it was clothing, then gst to the customer, $605. OK $577.50 if it was 5% duty on parts.

Not saying they may not have gone bust anyway, but what a kick in the face from your own government. And anyone who may have problems with warranty or service that will be nothing compared to those poor business owners who will probably lose their houses.

ThePhil wrote:It's super competitive, but that is no reason for the govt to subsidies o/s shops. If you bought an item overseas for $500 then if a local store got that same item it would be $500 plus 10% duty if it was clothing, then gst to the customer, $605. OK $577.50 if it was 5% duty on parts.

Not saying they may not have gone bust anyway, but what a kick in the face from your own government. And anyone who may have problems with warranty or service that will be nothing compared to those poor business owners who will probably lose their houses.

This whole statement is invalid in so many places that all I can say is, well it's all wrong
Cheers
Richard

WyvernRH wrote:
This whole statement is invalid in so many places that all I can say is, well it's all wrong
Cheers
Richard

Imagine if the fixed taxes for your business were 20% higher than your competition, would you survive?

ThePhil wrote:

WyvernRH wrote:
This whole statement is invalid in so many places that all I can say is, well it's all wrong
Cheers
Richard

Imagine if the fixed taxes for your business were 20% higher than your competition, would you survive?

In this case...yes. Simply because o/s only supplies bicycle parts...LBS does (or should do) so much more besides. So if I were an LBS...I wouldn't even try and compete with O/S on parts (except perhaps wear parts like chains, tubes and tyres). But I would go all out on service - that gets them back through the door every time.

In this case...yes. Simply because o/s only supplies bicycle parts...LBS does (or should do) so much more besides. So if I were an LBS...I wouldn't even try and compete with O/S on parts (except perhaps wear parts like chains, tubes and tyres). But I would go all out on service - that gets them back through the door every time.

What exactly are you getting them back in the door for if you are not going to sell them any parts? Coffee?

There are a number of workshop type businesses that have started in the last two years. While they still carry various accessories and spares, the main business is bike servicing - and if they can do this very well where some local bike shops concentrate on the sale but don't satisfy when it comes to servicing, this will get people in the door.

On the Coffee - why not? Sounds funny but a lot of people associate cyclists with coffee and a number of stores are building up on this - building the social character around the business and securing repeat business.

SilentbutDeadly has a valid point - not everything is available online and overseas, I know of bike shops that have reduced stock of certain brands and items which have become uncompetitive and opened up other brands or items which are harder to get online or are not significantly cheaper. This is adapting.

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BTW, in the SydneyCyclist forum a member suggested that Atelier de Velo in Sydney was insolvent and linked to an ASIC document. I was suprised and gave the shop a call, obviously they are not going to pass over details on the phone to a stranger though I suggested that the ownership/business model has changed and they said yes. So Atelier de Velo still serving coffee in the CBD.

ThePhil wrote:

In this case...yes. Simply because o/s only supplies bicycle parts...LBS does (or should do) so much more besides. So if I were an LBS...I wouldn't even try and compete with O/S on parts (except perhaps wear parts like chains, tubes and tyres). But I would go all out on service - that gets them back through the door every time.

What exactly are you getting them back in the door for if you are not going to sell them any parts? Coffee?

Why not?

Parts (in many cases) are almost loss leaders. A typical LBS is trying to make most of its margin on the sale of new bikes and accessories and the labour component of servicing bikes. Margin on parts is icing since many parts (apart from typical wear parts) are not typically held in stock these days - it is too expensive and capital intensive to hold the diversity of inventory. However, some LBS make this process work by providing and maintaining a level of service that encourages customers to place orders, spend the extra money and come back time and time again (think ForTheRiders and TBSM for example). Many don't...and that is often why they fail.

zero wrote:Cranks (in Balmain) "left" their store (I don't know the details), and another bicycle store took their place. Which by default would have split their maintenance market in half, because unlike the usual new store opening up scenario, Balmain bikes and not Cranks is sitting where everyone remembers the bicycle store to be. (and probably in all honesty the more convenient location), which probably directs a lot of maintenance business back to them.

There's more story to it based on my understanding of the sequence of events. Cranks leased their previous Darling St store front and gradually established their presence on the peninsula. Then the landlord did not renewal the lease and opened his own bike store (dodgy!). Cranks then went hunting and opened their just shuttered Montague St store. To me, this new Montague St location is a superior one, with far better foot traffic and visibility. It's a real shame they are now closed and the excellent staffs are now lost. In terms of bike services on the peninsula, I think 3 is too many (Cranks/Balmain/Velofix). Now we are down to two.

AUbicycles wrote: SilentbutDeadly has a valid point - not everything is available online and overseas, I know of bike shops that have reduced stock of certain brands and items which have become uncompetitive and opened up other brands or items which are harder to get online or are not significantly cheaper. This is adapting.

Adaptation is fine and all successful businesses adapt on an ongoing basis, just no need to tax them more that the other lot, whilst they are trying to do so. On the coffee thing most shops would not be zoned for food service or even have a kitchen. Then it gets a bit self defeating, imagine if somebody wanted bike service and the staff was busy making skinny latte's. You'd end up really annoying people.

Interesting piece in the sydney morning herald today arguing that retail is doing pretty well thanks very much, share prices are up and dividends are being paid. Better returns than the rest of the market or housing.