ANALYSIS
Some brands will shift towards direct-to- consumer sales
PHOTO CREDIT: NATHAN MULLET VIA UNSPLASH
are also looking to “de risk” the supply chain by bringing manufacturing and service operations closer to home. According to Houlihan Lokey: “The speed of this shift going forward is strongly dependent on progress in production automation, which is already at a high level for alloy components and is seeing promising concepts for carbon fiber components.”
Direct-to-consumer
The report and its authors hold the opinion that: “Much of the current profitability crunch can be attributed to the bullwhip effect [throughout and after the pandemic], when forecasting was much more difficult.” Since then, it is understood that many players have made “significant changes” to planning processes, data management, and inventory tracking. As bike brands and dealers become more accomplished in this respect, the industry as a whole is anticipated to become more resilient to future market swings. However, the report argues that bike brands will also benefit from “upping their retail game”. Part of this will see some shift towards direct-to-consumer sales, franchise concepts, or flagship stores. These new approaches to retail come at the risk of tension with independent bike dealers. This conflict becomes apparent when asking industry experts.
28 | August 2024
While 56% said that bike dealers will remain the most important sales channel in the future, more than 80% indicated that traditional bike brands will need to establish or expand direct-to-consumer channels or click and collect capabilities to remain competitive. One individual told Houlihan Lokey: “We are preparing to be ready for direct-to-consumer as a sales channel. There is nobody who does not prepare for it. But combining direct-to- consumer with retail is very difficult.” In concluding the report, the authors write: “When we consider these dynamics alongside the fact that financial investors will need to divest more mature assets within the next couple of years, it becomes increasingly clear that the bike market will see a corresponding rise in M&A activity starting in 2026 to 2027. “As the market recovers and bike firms position themselves
to exploit emerging trends and technologies, we expect wise investors to start identifying prime targets now. In our view, bike manufacturers that have strong branding, a convincing e-bike portfolio, premium price positioning, and a clear distribution strategy should be top of the list. “By focusing on these strategic differentiators, investors will be well placed to act early and reap the rewards of an industry that has gone from boom to bust—and back again.”
To view the report in full, visit:
hl.com/insights
www.bikebiz.com
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68
