Local bike shops getting pounded – With Greg Leech a.k.a. Snag
The retail landscape for motorcycles is changed forever. And we better get used to it. There is more pain to come.
Talk to any motorcycle retailer and they will tell you. The retail position for the local shop is tough in 2014. Tougher than ever.
In fact, in the last 10 years, returns for a mid-sized, strong business have halved. Yes, around 50 per cent down.
Of course, a great deal of this can be sheeted home to internet purchasing. And why not? When you consider that most of the gear bought from overseas by your average Jack sitting behind his Hewlett Packard (which he got cheap from who knows ferkin’ where), is not going to be charged GST, the traditional shopfront retailer is immediately 10 per cent behind the eight ball, and that situation looks set to worsen with a rise in the GST rate to 12.5 per cent highly likely in the near future. Bleak? Yes.
There are some retailers who can lay claim to being fast on their feet by setting up online ordering systems, floor inventory viewing capability and the like, but in the main, Australian motorcycle retail outlets were slow to react to the internet. Of course, they had good reason. When online overseas purchasing was in its infancy, there was a basic distrust of sharing of credit card details, download speeds were ordinary and delivery often took weeks, if the purchase arrived at all. There was a natural inclination among retailers, who, it has to be said are often old-school in their thinking, to dismiss the whole thing as the latest fad. This gave the whole online thing a running start.
One of the major bugbears for the shopfront retailer is price disparity. Who hasn’t gone online and seen a product at a much lesser price than the local shop can do it? The shop guys have to charge GST, when stuff bought from overseas doesn’t draw it. They are therefore behind the eight-ball from the outset. Toss in the costs associated with staff, property, insurances and a dozen other elements, and it’s not hard to see that competing is almost impossible.
While motorcycle participation rates are up, the pool of buyers and what they will spend is pretty stagnant. They are clearly going online, with the result manifesting in shops closing all over the place. The knock-on there is, of course, the employment ramifications and a loss of expertise. In rural areas, this can have a very strong effect on demographic, as well as the social cost of higher unemployment figures. It can devastate the country town, when considered over a range of industries and products. A farmer who formally had a relationship with a shop, often over many years and a range of purchases, may now have to transport a machine hundreds of kilometres to have it fixed or even serviced. That’s down time on a working farm, and, again, there is a real cost right there.
Internet buyers can purchase without ever leaving their seat at work. God knows how many employers are subsidising the buying habits of their employees. Again, hands up if you have never bought a product or service, or at least browsed similar while on the clock. You up the back, put your hand down, we all know you are bullshitting…
Margins on new motorcycles are pitifully low. Dealers make next to nought on selling new bikes, and they have never been cheaper than they are today. And, don’t fall for the idea that the bigger the bike, the bigger the profit for the dealer. That’s totally wrong. I know of certain scooter models that manifest in a far greater margin for the dealer than the same mob’s GSX-R1000. Woops. Did I give away the brand there?
So, where to from here? Well, the move locally is towards the Bunnings model. Big warehousing, big shops, multi-franchise dealerships. Where lots of stock can be carried or at least quickly accessed, where buying power puts the retailer in a position to be somewhat price competitive. That’s a must. If the price disparity widens any further, well traditional bike retail has had the gong. Pack up, do not pass go and retire.
The sad upshot here is the lack of human contact that on-line, lone purchasing engenders.
I have been going to the same bike shop for 25 years, and my brother goes there too. I’ll tell you who it is. Mick Hone Motorcycles. I have developed a relationship with Mick, I am welcome there anytime, he has made things for me and given me hundreds of pieces of advice. Some of which I may not have wanted, but that’s Mick.
I value that relationship. I go there for coffee, for companionship, for a laugh, to see what’s new… Lots of reasons. I’ll always go there. But I am in the minority and that’s not going to change. Personally, I lament that situation. I know, ‘tell it to the blacksmith’.
Let me remind you of this. When you buy online from overseas, the money all goes elsewhere, there’s no win anywhere locally. Have you got kids? Do you want them to be employed? Just take a second and think about that.
Yeah. See? Well, I reckon we owe our locals something. Let’s not let them go down without a fight…
The Action Motorcycles store in Parramatta – Photos thanks to Kevin Kazee