Hello people of the wheel.
Firstly let me wish you all a very Happy New Year. Let us hope that 2023 brings plenty of positives to us all.
I for one hope to renew my love affair with the bike after a distracted few years. It will be a slow (literally) but rewarding process, of that I have no doubt.
I’m penning this partly as a catharsis but primarily to relay some thoughts and feelings and give some insight into 700, and I suppose myself, as we move forward. It’s going to be a bit of a shit sandwich if I’m honest – but I think and hope that the result is net positive!
The last few years have brought countless new challenges to small businesses and have warranted owners like myself, taking a step back to re-evaluate many aspects of their approaches and operations. After a period of reflection we have made several decisions that we feel best serve our cycling customers, community and planet, while protecting our business and the livelihood of employees.
There can be no doubt that the cycling and fitness industries benefitted from the increased uptake of sport during lockdown. However, the rate was never sustainable and the market was always going to correct itself.
The consequences of that flood of demand is a tempering, and so it is that 2022 has borne out those expectations. The huge demand for product in Covid times not only saturated the market, reducing demand, but multiple continued lockdowns in the Far East – where the bulk of production takes place – hampered the ongoing delivery of components and parts for those that did want or need them. Only now is production beginning to resemble normal, but delays of over a year remain in place for some products.
Things are quiet.
Couple this with the fallout from Covid and Brexit and you have a dramatically reshaped retail landscape. Macro economics are woeful; the cost of energy and living in general (you will no doubt be aware as you don another jumper and turn the thermostat down another degree) is having a dramatic effect on our day to day lives. There is belt-tightening across the board.
We are not immune.
I was wandering into a protracted diatribe about each aspect that has changed the face of our economy – but it seems superfluous. A simple list of issues highlights the compounding domino effect that ultimately leads to this post.
Simply put, everything is more expensive by a significant margin now, than it was 2-3 years ago. It’s a function of many factors linked to, or compounded by Covid / Brexit. The squeeze is felt everywhere but ultimately ends with the consumer and the retailers that have to present those price rises – and who largely suffer the immediate vitriol as a result!
Macro economics are dire with recession now confirmed and likely to last until 2024 if not longer. A relatively strong US Dollar vs Sterling means many premium US produced products now cost significantly more to buy and import. Energy price rises, driven by the war in Ukraine to some extent, not only increases the costs of heating and lighting, powering parts washers, computers and infrastructure, but has a knock-on effect on logistics (couriers, Royal Mail etc) the services we use to import our premium products and ship them to you.
At a more local level, Brexit has added significant red-tape to procedures surrounding import and export – which costs more in both time and money. Increased logistics costs as a result of fuel prices, are compounded by a lack of drivers (cheers Brexit) which shifts driver salaries ever upward.
While price increases are felt along the chain, at the retailer level, not only are prices increasing (we have seen up to 20% price shifts in the last 18 months), but margins are being reduced, with some wholesalers squeezing by up to 8%. That number may not sound much, but it has a dramatic effect on profitability – particularly when viewed through the Glasses of Reason (they’re real, I have a pair!). When operational costs are rising as outlined, and in the bike trade where that percentage equates to 20-80% of your profit, depending on what you’re selling, it’s clear that something has to give.
While prices have crept up continually over the last 2 years (product prices / domestic and international shipping / packaging etc) we have maintained our pricing as far as possible to keep things flowing.
After reviewing operations it is sadly apparent that, while not at all what we want to do, it is not feasible to continue to operate as we are and unfortunately some changes need to be made. With that said, we are also acutely aware that you too are probably feeling the pinch. We are all human and despite what many may think about retailers, 700’s goal is to deliver quality product and advice that best serves our customers over the longest term.
I am and always have been about value for money, not cheap or quick and easy. If I was remotely engaged with the latter two, I would sell more easily recognised brands that dupe you into buying sub-par product at a higher price and with greater margin for me: there are no shortage of them. Similarly, I would fit cheap cables, bearings and brake pads to your bike during servicing to ensure greater profit. I don’t. I won’t. Because 700 is about quality and each individual is just that.
I’m not interested in validating opinions for the sake of it and a quick cash grab, and who wants a sea of homogeneity when you’re riding out? In a world of marketing spiel and paid-for-reviews, I firmly present my middle finger, sir! I’d much rather have an actual conversation about options than be told what I should be selling (or indeed buying) because some guy who got paid 10’s of thousands of pounds to “review” it, said so.
I digress – but it’s a part of the point. The team at 700 are conscientious to a fault, and while we are clearly a business, we are not here to fleece you.
So, what’s happening?
We have taken a look at numerous aspects of the business and are taking steps to efficiently cut costs but without impacting our services. We have also taken a look at what we can do better from a socially responsible perspective.
Focus:
The Covid era and challenges with supply that it held, resulted in many shops like ours deviating from their original remit in order to supply a budding new cycling community with the bikes and accessories they wanted. We are pleased to say we managed to fulfill 90+% of the requests we had for bikes and accessories during Lockdown.
After lockdown, the remnants of broad product sourcing has diluted our focus a bit and there is the danger of losing our identity. So, in 2023 we will be re-focusing on our core market – that of mid to high-end, quality road and gravel bikes and the associated accessories and spares.
What will this look like? Well, some brands will likely get culled but those that remain will represent the finest quality and real value for money at their price points – as well as a demonstrable commitment to us as a retailer and you as a consumer.
In addition, we will be focusing in on more quality, niche brands that have unique offerings and – where possible and in line with our ethos – we will be supporting UK companies.
This will take some time as we clear old stocks and re-evaluate relationships with suppliers, committing to those that have supported us and our customers best over the last decade.
Pricing:
As a small business we are not operating on huge margins, we are not grey-importing products (and are thus keeping our money in our own economy) and we are not benefitting from monstrous bulk discounts by those companies working for their investors rather than their customers (and likely not paying a great deal of UK tax).
Our approach with distributors is relationship based. We will continue to support UK distributors and sell products at their retail prices while ‘in-season’. This helps to protect the brands we believe in – since we choose those brands that do the R&D and have a unique selling point or enhanced value offering. Reducing prices will only occur during seasonal sales or where we need to clear product to replace with something we deem better. Our product line is considered and curated but we won’t needlessly hold a product if there is clearly a better option for customers. We will continue to price match identical IN STOCK and UK sold items where at all possible.
Where we source our own product lines (Bōken for example), pricing will be fair and honest and reflect the quality we expect and wish to share – in all cases, these products will be significantly cheaper than the same ‘branded’ product. As we move forward we hope to bring an expanded range.
Shipping:
This is a biggie.
It is worth knowing that we lose money on every single item shipped via Royal Mail and, at best simply pass on the BASE cost of DPD and other couriers’ prices.
Costs of shipping have been increasing unabated for many years and most dramatically for the last 2 years. We haven’t raised our prices.
Recent communications from logistics companies – including Royal Mail – suggest that prices are set to increase further still (around 8-10% in the first quarter of 2023), “temporary” fuel surcharges look set to stay (who knew?!) and as such we will have to pass on at least a proportion of this rise, particularly in light of revised, remote shopping habits of many in the post-Covid era.
In order to minimise the impact of these price hikes and given our currently generous levels of return compared to many, we will be scaling back our Customer Rewards return. Buying habits are interesting – but also pretty obvious on the whole these days! Since many will hunt items at sale prices (especially in the current climate) or, at the other end of the scale, are buying premium, low-margin product that does not command a CR return, this is likely not to affect many people.
If I’m brutally honest – while I’m a fan of the loyalty program that the Rewards Scheme represents – we are committed to rewarding those who are committed to us anyway, and in reality I don’t see it makes a vast amount of difference. Of course, I am happy to be told by you if you view it otherwise. We will always review anything our customers think will add value to their experience but I would rather give more immediate and tangible savings elsewhere, to the broadest possible customer base.
Servicing:
Servicing costs are increasing. This is a function of time involved.
All your beautifully clean looking, internally routed bikes are becoming progressively more complicated to service. These complications are time hungry. A perfect example for you is a headset bearing replacement:
A rim brake bike with externally routed cables (even one with internally routed gear cables) takes around 30 minutes to properly service. Potentially less.
However, a modern disc brake equipped bike with brake hoses routed through the headset (yes – through the headset) is a far more finicky beast. This requires dismantling (in most cases) of the integrated bar stem that is likely fitted, as well as the disconnection and re-routing of disc brake hoses – and the probable brake bleed that comes with it. This obviously is more labour intensive and takes far longer.
Since we charge the majority of our one-off services based on time anyway (it’s the most honest way to charge you) this will have little bearing on most work done on a one-off basis.
Our fixed service charges however, will need to be revised and will increase to reflect the average time required to complete all elements of that service – it won’t be huge changes and they will as always be honest. We have held off doing this for many years.
We will introduce this in February to give those of you that need to – the chance to service your machines at the lower rate in January.
Positivity!
There’s a plus side! As a bike shop promoting cycling, not only for our own physical and mental wellbeing, but for the benefit to the environment – we have a duty to our planet, the places in which we ride and the habitats we explore and enjoy on those rides.
It is apparent that we can do better in our approaches to our environment. While none of us individually shies from doing our part, we can always make smarter more informed and more responsible choices. For example, cycling or walking a few miles for a Click + Collect item, rather than having it posted, is a simple way to reduce environmental impact and is a great excuse to get some steps in and make in-roads on your exercise targets.
So, in order to offset our carbon footprint, re-establish much needed native biodiversity and bolster dwindling habitats in the UK, we intend to plant a tree for every fixed service bought, and provide you with a certificate to validate the veracity of the statement. We will roll this out from February.
Depending on how the Tree per Service offering goes, we will look to expand it out to more areas of the business – perhaps a Tree per Bike sale as well? Ultimately, we all enjoy the freedom that riding a bike brings and we would do well to remember that while the planet doesn’t care, future generations would probably rather ride in a green and pleasant land as opposed to scorched / flooded earth and lethal UV levels. Together we can help preserve and restore our environment.
While we have had LED lights for years and already use a biological parts washer with Zero impact from environmentally hazardous waste, we will review our waste management too, we can do better as we move forward.
I will follow up this post with another to flesh out the detail behind the Tree per Service and will update it with the number of trees we’re planting on your behalf as we go. Hopefully I’ll get a counter on the homepage too!
The Crux:
In reality what this all means to you dear (committed) reader – is some small price increases that allow us to continue to deliver and build our considered product offering, down the line. We want to present the best products, with the best service to those who want to build relationships and receive a no-bullshit approach to their cycling needs. At the same time, your commitment to us will be reflected in our commitment to the environment, all while minimising the impact to all our customers, local or remote.
We are very happy and thankful to have you with us and we trust that you understand – as always we are keen to hear your feedback, so if you have any thoughts, drop us an email.
