Cycle shops have to pedal harder to beat the competition

Kevin Lee runs a retail bicycle shop on Nantou Street, a quiet, narrow street surrounded by residential buildings in the densely populated Nanshan district of Shenzhen.

The shop gets a little noisy at the end of the workday, as cyclists walk in to check out the latest gear and chat with the shop staff about new trends.

Lee, 30, is among the third generation of the family that started Chung Yung Cycle Co, a Hong Kong cycling business that his grandfather opened in 1950.

The Shenzhen shop mainly sells Trek, a leading US brand of road, mountain and city bicycles, and other big names in imported parts and accessories.

But after eight years of running the shop, the business is not as good as it was a few years before, Lee says.

"Sales grew at least 20 percent year-on-year in 2011 and 2012, but starting last year, business has been cooling down," says Lee, who attributes the slowdown to rising competition from both bricks-and-mortar and e-commerce businesses.

Lee says he has witnessed a growing number of shops that provide more choices for cyclists, with many brands at a wider range of prices.

When it comes to parts and accessories, especially items such as helmets and cycling wear, people often buy online, he adds.

Competition also has limited prices and cut into profits on branded bicycles. "The price on the tag might not change, but the components are of much better quality than before," Lee says.

The average purchasing power of Shenzhen consumers is not as high as that of Hong Kong bicycle buyers, he adds.

"In Hong Kong, the budget for a bicycle could be HK$5,000 ($654; 483 euros) to HK$6,000 or even higher, but in Shenzhen, it stands at around 2,000 yuan ($324)," he says.

Nevertheless, Lee says business on the whole is still rising and there is still room for development.

Middle-aged men have become the major buyers of high-performance bicycles, as they are more likely to be able to afford them and also have compelling reasons to stay fit by riding, according to Lee.

A fast-growing group of customers is students, who are more likely to invite their friends to take short, weekend trips by bicycle or organize small racing meets, he adds.

The demand for fold-up bicycles is growing faster than for racing bicycles, because they can be used to pedal from a railway station to a job, or carried easily in a car on a weekend getaway, he says.

"While sales are stable, we are still optimistic as more people are still discovering the fun of cycling and sales will increase."

He expects income from maintenance and modifications to grow in coming years.

With backing from the parent company in Hong Kong, Lee is able to give extensive training to his shop's workers, which is essential to ensuring long-term profits.

"The cycling business is still in its early stages. We need to educate potential customers, help beginners explore the fun of cycling after work or on weekends, and sponsor races of different sizes to make the sport more influential. Those things will finally translate into more cyclists," Lee says.

chenhong@chinadaily.com.cn

(China Daily Africa Weekly 08/08/2014 page16)