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On your bike

Like many others, I have taken to cycling to relieve the boredom of various lockdowns. More specifically, I have taken up mountain biking – I have only managed to seriously injure myself once so far, but the purchase of an MTB Hopper (look it up) and an optimistically booked summer trip to the Alps could change that. I will be investing in body armour, a full-face helmet and a good first aid kit.

Indeed, while technology has been the obvious big winner from the pandemic, exercise has been another – outdoor exercise at least, one of the few pastimes that our benevolent leaders still allow us to indulge in. And, having already enjoyed several years of growing interest from Bradley Wiggins-inspired ‘Mamils’, cycling has been at the forefront of this trend – according to the Bicycle Association, retail sales of bikes have grown by 60 per cent this year and sales of e-bikes have doubled, meaning an extra million cyclists now on the UK’s roads. Not all new cyclists are on the roads or Alpine trails, either – many have taken up the sport from the comfort of their own homes using technology-enabled equipment such as Peloton or virtual race platform Zwift. A year, then, in which you would have expected anyone selling anything bike-related to be cleaning up. 

What has actually happened offers an interesting case study in trend chasing, and one embodied in the recent fortunes of retailer Halfords, which updated the market on its trading this week and whose numbers offer plenty of evidence of the boom – its retail cycling like-for-like sales are up by an extraordinary 49 per cent in its financial year to date, helping its shares rise sixfold since their March lows. 

But the outlook is less sunny, and there is a risk that – like the two best performers on the market last year, AO World and Premier Foods – the share price momentum might come to a skidding halt as the realities of further lockdown disruption sink in. Like many British retailers, the combination of Brexit confusion, port congestion and Covid-19 stockpiling has disrupted the arrival of components. Add that to the fact that January to March isn’t the typical bike buying season in the UK and management is concerned that bike demand in the coming months may not be enough to outweigh the challenges in the motor division (17 per cent of revenues in the 2020 financial year), where revenue has fallen 18 per cent in the year to date. 

Indeed, such has been the demand that many suppliers and retailers simply haven’t been able to get hold of the stock to meet it. It took me several months to replace my battle-damaged wheels via eBay; deputy editor Rosie Carr’s quest for an e-Bike is a saga that has kept us enthralled all summer. And it is perhaps worries over trading momentum that is stopping Halfords – an essential retailer that has just had its “best Christmas ever” – paying back furlough money and business rates relief, unlike peer Dunelm, a non-essential retailer that  also updated this week and is paying back its government borrowings. 

Musings on corporate ethics aside, what Halfords reminds us of is that turning a trend into consistent profit isn’t always that easy. And its supply constraints demonstrate the huge difficulties many business will continue to face as the world claws its way back from the pandemic – take the automotive industry, for example – to which Halfords is also exposed. It is seeing forced production shutdown because of chip shortages, as demand from consumer electronics manufacturers has boomed. And then there is perhaps the most exciting trend of all: bitcoin, and the end of money as we know it. But that’s a story for another day…