The Belgian retail bike market is at a tipping point: growth is slowing down, and the industry is consolidating, empowered by both technological and structural changes. The major players improved their market position, amplifying the competition among them and pressuring the margins. BrightWolves investigated the market dynamics of recent years and looks ahead to 2024.
Market growth and retailer consolidation
In 2023, the Belgian bike market grew by 7% to €459M. This growth can mainly be attributed to the larger chains, with revenues upward of €1M. The ten largest retailers together represent 41% of the market, an increase of 8% compared to 2022.
"After 5 years of growth (23% CAGR) the market is now reaching maturity", says Miguel Van Damme, Managing Director & Partner at BrightWolves.
Expert interviews and a survey of 70+ retailers show that the market expects a 10 to 20% decrease in revenue in 2024. Aggressive expansion and investments by the larger groups combined with the turbulent financial situation of the many small independent retailers have created a need to prioritize profitability.
Leasing and electrification drive the market
Trends towards electric bikes remain dominant in the market, with 64% (BrightWolves survey) of all bikes sold in 2023 being electric. The emergence of e-cargo bikes and speed pedelecs highlight a shift towards more expensive models. Even though they are contributing to the revenue, they also lead to new cost challenges. Additionally, leasing is gaining ground as an essential segment of the retail strategy, negatively affecting the margins of the bike retailers offering leases.
Financial health under pressure
With a yearly growth of 16% debt position, mostly small stores (revenue < €500K) are struggling to control their debt. In 2023 the average debt of small retailers surpassed the revenue by 50%, signaling an increasing dependence on short-term loans. Larger retailers on the other hand remain financially stable by comparison, with debts remaining 19% lower than revenue. Nevertheless, the gap between debt and profitability keeps growing, mostly for retailers with recent investments in expansion and digitization. Currently the efficiency of such investments remains absent. Furthermore, over the course of the last 4 years the operational margins of the bicycle retailer have decreased from 18% to 8%. A few reasons for this are large investments in recent years (take-overs and investments in operational efficiency) as well as the liquidation of inventory. A sample taken from websites of a dozen bike retailers shows that currently 34% of bikes are discounted, being offered at an average reduction of 19% in price.
“After 5 years of growth (23% CAGR) the market is now reaching maturity with a modest growth of 7% in 2023 and an expected decline of 10% in 2024”. Miguel Van Damme, Managing Director & Partner at BrightWolves.
Market segmentation within Belgium
Flanders remains the driving force behind the Belgian bike retail industry, representing almost 87% of the total revenue in 2023. Antwerp and East Flanders lead the provinces, with Wallonia lagging behind. The differences in growth per province show asymmetric growth: Flanders still growing a slight amount while Wallonia shows a marginal decline.
Review of the business model
Electric bikes are an expensive product compared to traditional bikes. This results in less absolute sales and bike care becoming a more important component of the bike market. Because of this the bike market will move towards a service-based model, where after-sales, maintenance and repairs gain importance. The challenge for retailers will be to make this a profitable component of their businesses. Many retailers, of any size, lack a clear view of activities and profitability within their workshops. Standardization and monitoring this service is becoming a necessity. A digital presence, a product range tailored to the public and exceptional customer service should be on every retailer’s priority list.
Prospects for 2024 and must-haves for future bike retailers
The expected revenue decrease of 10% to 20% in 2024 highlights the need for retailers to change their strategies. While the sector is consolidating, financial discipline, efficient inventory management and aftercare prioritization are of the utmost importance to remain profitable. Offering leasing options, maintenance and additional service such as accessories can ultimately contribute to stability in a challenging market.
Conclusion
The Belgian bike retail market, having reached a form of maturity, will need to anticipate and react to changing consumer trends and new competition. Retailers who anticipate leasing, digitization, and providing improved customer experience, will be able to distinguish themselves in an increasingly competitive market. Strategic changes and focus on profitability of the stores will be essential for sustainable growth in 2024 and beyond.
BrightWolves
BrightWolves is a progressive consulting firm that works to build a resilient future for companies. From strategies to implementation, our team of motivated consultants and experts refine your strategy and work towards its flawless implementation. BrightWolves was founded in 2017, and currently consists of 80+ employees and offices in Belgium, the Netherlands and South Africa.
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