By Anthony Marx - courier mail November 16, 2008 11:00pm
BRISBANE'S own Super Cheap Auto and Flight Centre have expanded into the fast-growing but fragmented bicycle market.
Super Cheap has already diversified its income stream away from the car business with the roll-out of its chain of BCF outdoor supplies stores.
It now sees the opportunity to do the same with bikes and hopes to build a nationwide network of "category killer" full-service retail outlets aimed at cyclists.
As the first step in that plan, Super Cheap acquired the nation's biggest existing non-franchised chain, Victoria-based Goldcross Cycles, in a deal worth $6 million in May.
Super Cheap managing director Peter Birtles wants to grow the Goldcross group from its current 11 stores in greater Melbourne to a chain of 50 outlets dotted across the country, as well as securing a foothold in New Zealand. Four of the stores are expected to open in southeast Queensland in time for this year's holiday season.
"We have been looking at opportunities in the bicycle retail market for some time," Mr Birtles told shareholders at the annual general meeting last month.
"The market has grown significantly over the last few years and we believe that a number of factors, including public policy, environmental concerns and demographic changes, will continue to drive growth over the coming years."
Data from the Bicycle Industries Association back up this optimistic assessment.
New bike sales reached a record 1.42 million last year, a 42 per cent spike on the 1 million sold in 2003. That far exceeds the number of new cars sold in 2007.
Driving the increased interest are a range of factors such as higher fuel costs, traffic congestion, environmental concerns and a greater focus on personal fitness.
Governments are also investing in cycle paths and Brisbane City Council is poised to become the first Australian capital city to launch a bike hire scheme modelled on those already used in Paris and Barcelona.
These trends have not escaped the attention of Flight Centre chief executive Graham Turner, who is keen to diversify his revenue base as airline commissions continue to dwindle.
Flight Centre has entered into a 50/50 joint venture with Mr Turner's son Matt Turner, the operator of three Brisbane bicycle shops trading under the name of 99 Bikes.
Using the Flight Centre franchise model, Matt Turner hopes to expand the business across the state in the near term and nationally over the long term.
Flight Centre in May also announced that it had committed $150,000 for the exclusive wholesale national distribution rights for the Merida cycle brand for three years and had also secured permanent rights for the Indi brand.
Both Super Cheap and Flight Centre hope to take advantage of the fact the bicycle market remains highly fragmented, with about 1300 independent stores nationwide.
But they will face competition from larger operators such as Pacific Brands' chain of 18 Bike Hub franchise stores and another 18 operated by Bike Force licensees.
Retailers without such a singular focus on biking, such as K-Mart, Big W and Rebel Sports, are seen as less of a threat because they cater for a more budget-oriented segment.
Rosemarie Speidel, a program director with the BIA's Cycling Promotion Fund, said the entry of Super Cheap and Flight Centre would boost competition and force smaller operators to become more responsive to consumers.
"Traditionally bicycle retailers have been run by people passionate about cycling with limited knowledge of business management,'' Ms Speidel said.
'' Those retailers most likely will struggle to compete but there will always be demand for a local bike shop as bicycle riders do not want to travel long distances to get their bike repaired.''
Her group has made a submission to the Federal Government's new body Infrastructure Australia calling for $200 million a year to be spent on cycling works in capital cities.
"The benefit to cost ratio of the investment is considerably higher than for many road projects and they can be implemented in a short time frame,'' Ms Speidel said.
''This investment will replace about 200 million km of car travel in our capital cities over four years and generate economic benefits of $3.64 billion over 25 years.''
She noted that Australia's per capita bike sales were high compared with international standards but the percentage of trips made by bicycle were low but growing.
"This appears to indicate that people are aware of the multiple benefits of cycling and its convenience but lack of access to good and safe facilities which are linked to trip generators such as shops, schools, recreational facilities and workplaces stops them from riding more frequently," she said.
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