Giles Parkinson
The new business cycle
Bicycle shops seem to be emerging as the hot new 'green' investment.
Super Cheap Autos today announced the purchase of two bicycle retail chains for a combined $7.4 million, just a week after travel specialist Flight Centre announced the purchase of a bicycle brand and talks over a possible joint venture with the 99Bikes retail chain.
So what could be attracting the interest of two companies involved in the transport industry heavily dependent on fossil fuels?
The answer, according to Super Cheap Auto CEO Peter Birtles, is soaring energy costs and environmental concerns. Birtles says the bike retail and accessories market is worth around $1 billion a year, but is a highly fragmented market.
Bike sales grew by nearly 20 per cent last year and further growth is expected because of those environmental concerns, the rising cost of fuel and expected government investment in bike paths and the like.
Super Cheap Autos wants to take the 11-store Goldcross Cycles and transform it into a 50-store national “category killer” retail chain, like Coles did with Officeworks. Flight Centre is considering the same thing with 99Bikes.
The Super Cheap Auto deal represents a big windfall for David Hall, the founder of the Goldcross and Australian Bicycles. Hall is selling the Melbourne-focused Goldcross for $6 million with a possible $3 million bonus depending on profit results for the 2009 fiscal year.
He is also selling a half share of Australian Bicycles, the supplier to Goldcross with exclusive access to a variety of name brands, to Super Cheap Autos for $1.4 million.
They are not the only ones in the sector. A new franchise chain, Bikeforce, is emerging in Perth and Brisbane and Pacific Brands and Aventi also have their own plans for bike retail chains.
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