Amongst the 220 delegates attending the inaugural Asia-Pacific Cycle Congress in Brisbane, peak bodies of the Australian bicycling industry were also contributing. Retail Cycle Trade Association Executive Officer Graham Bradshaw met with Cycling iQ to explain how.
Who is RCTA and what are the organisation’s objectives?
Retail Cycle Trade Association of Australia, or RCTA, is the national body that represents the retail side of the bicycle industry. When I say “represents”, that means to government – state and federal – and regulatory authorities such as the Australian Competition and Consumer Commission (ACCC), Standards Australia, and so forth. We were formed in 1949 and there’s been times when we’ve been inactive and very active. We are governed by an elected board of currently 10 retailers, based from west to east Australia.
Further to that, what are your objectives here at the APAC Cycle Congress?
I’m here to learn, to see what else is out there as I’ve been in the advocacy movement for quite some time. I’m here to put the industry’s point of view forward if I’m asked – including input from retailers – and I attended the (Brisbane Bike and Lifestyle) bicycle exhibition last Sunday. There’s lots of conferences around, but this could well be the start of something. I think we might look back in ten years and say, “well that was a key moment, when something started to happen”. It’s the first time a state government has got behind something like this.
Did the organisers actively engage peak bodies in the bicycle industry to attend the congress? How did you find out about it?
They did. One of the things I do as the Executive Officer is take a seat on the Australian Bicycle Council (ABC). The ABC is a national-level body that is made up of representatives from state and territory road bodies like the Road Transport Authority (RTA), VicRoads, etc. It also has representatives from the bicycle industry’s wholesale and retail sectors. There is also a advocacy representative; currently that is (ex-Tour de France cyclist) Stephen Hodge. We were made aware of the congress through the ABC. Most of us are here. Actually, there was an ABC session held on Monday.
Have you formed a message from the congress that you can impart to your members?
There is a continuing message. We’ve been pressing for a long time for retailers to become more engaged, raise their standards, train their staff and this more or less continues. There are still people that find bike shops (to be) confronting places. Even Tim Blumenthal (Executive Director of Bikes Belong Coalition, USA) said he finds it confronting sometimes. There is a need for the industry to open up more. Bearing in mind what percentage of purchasing decisions are made by women, most bike shops don’t really feel comfortable to them. It’s a problem for the shop and for the industry as a whole.
Do you think RCTA and other industry bodies have something to offer the congress which could overall complement the other delegates here?
I certainly hope so. Stephen Hodge is here representing the Cycling Promotion Fund (CPF) which is part of our industry so, in that way, we are already involved as an industry. An issue is we don’t have a huge data set – I’d be interested to see what similar organisations overseas have in terms of data – on what’s sold where, and at what time. We know what’s imported in big lumps, but we don’t know the breakdown. We know what’s trending across Australia, but not across the states and sub-groups.
So how does the RCTA get its funding, and is there enough resource to get the data you need to and from members?
The RCTA is funded primarily from membership subscriptions. The more bike shop members we have, the more money we have. The wholesale association, Bicycle Industries Australia (BIA), is funded the same way, whereas the CPF is funded by voluntary subscriptions from big companies – that’s a much bigger slice of the pie. I’ve got to be careful on how we spend our money. Data collection has proven to be very expensive, once a certain degree of detail is needed. That’s going to be the issue for collecting quality data; how much money can be raised. The Productivity Commission recommended the government could spend more money on online (overseas and domestic) retail data collection. That’s talking general retail, but even that’s a start in helping us understand where stuff’s coming from and how. It’s general retail, but we can extrapolate from that.
Looking at the data, broadly speaking, there’s a general frustration in the lack of depth in Australia’s bicycle importation statistics. You can see how many bikes are brought into Australia, but not specific categories. Is there any way to change that?
There is, I think, and it probably requires changes to how Customs Australia operates in terms of their classifications. As an example recently, we are pushing to raise the power levels of electric-assist bikes from 200W to 250W, in line with Europe. A particular branch of government asked us how many electric bikes were imported each year. So, we went to Customs Australia and they said “no, the Australian Bureau of Statistics (ABS) has that data”. So, we went to the ABS and they said “no, Customs Australia has that data”. It turns out they don’t have any data anyway, because Customs Australia doesn’t differentiate between a bicycle and a power-assisted bicycle! It was a costly exercise for nothing.
RCTA’s wholesale sector counterpart, BIA, has also been frustrated by members not sharing information with them. The upstream aggregation of sales information could be enormously beneficial for all industry stakeholders to know where to focus. Would retailers participate in information sharing with RCTA?
The bike industry is… well, there’s limited trend towards working together. The CPF overcame that because it is funded on a percentage of turnover. It was done with a blind effect through a third party. Data was consolidated at the end of the quarter, so nobody knows what was coming from each wholesaler. But yes, it would be useful to find out. A while ago, I was getting calls from a regional council in Queensland. They had great public demand to build a BMX track, but wanted to know how many BMX bikes were sold in their area. We couldn’t tell them. If we had been able to tell them, it may have lead to that council investing in a BMX facility. And we’re all trying to get kids on bikes!
The Productivity Commission report (Economic Structure and Performance of the Australian Retail Industry) is due for release this November. What key recommendations is the RCTA hoping to see from the report?
There’s three main parts to our submission. Firstly, we supported the recommendation that the government gets more data on retail. Secondly, we support the recommendation – but want them to speed up and firm up the language – that the government look at the low-value import threshold (where GST, Australia’s value-added tax on imports is incurred) and the cost of collection. The Commission said in the draft report that the government should move in the interest of tax neutrality and towards a lower threshold, providing they can do it without costing more than they can recover. That means that Customs Australia needs to become more efficient. It’s one of the most inefficient customs agencies in the world, as I understand. Thirdly, the report didn’t pay any attention to standards, and yet we need to see firming up of the policing of Australian standards. For example, if you want to certify a helmet to Australian standards, it can cost up to 30% more than having a helmet that’s not certified. So the overseas-based online helmet re-seller has an unfair advantage. On the other hand, in the enquiry itself, the Commission did ask us to consider what the relevance and necessity was for helmet standards in Australia – it’s such a specific market. We’re hoping to put together a standards forum at the end of the year, with all stakeholders, that apply to standards for bicycles and bicycle-related products.
With the noticeable impact on Australian bicycle retailers by offshore e-commerce giants like Wiggle and Chain Reaction Cycles, what aren’t retailers doing that could help address this?
Well, everyone wants a bargain but research has shown that a customer will spend around 10-15% more to buy from an Australian-based business. People are also saying retailers need to have an online presence. So, it’s not totally about cost. Even if a shop doesn’t have an online store, they could have an online catalogue – they need to have an online presence. I might just point out that the RCTA and BIA – we think – were the first bicycle industry associations in the world to have a website. We were early starters!
The sentiment on popular bicycle forums has, for some time, generally been that Australian consumers are being “ripped off”. Initially, this was directed at retailers. Now, those same people are complaining about distributors. They seem to understand retail margins have eroded due to price deflation. How much responsibility do wholesalers have to truly partner with retailers to help address this price imbalance that exists?
It’s very important. From a wholesaler’s point of view, if they don’t get into the stream and work together, some retailers are going to start bypassing them. That’s a worry that some distributors have. They will be sliced out of the mix, because shops can take advantage of the low-value threshold. They know they can import up to AUD1,000 without paying GST, so they can buy a cheap box of gloves from “wherever” and instantly have an advantage. Some wholesalers have altered their pricing downwards, but it’s interesting – I don’t want to get involved in forums, a lot of ill-informed information exists. Some of these people have never run a business, they don’t know the real costs of running a business in Australia. We’re one of the most expensive countries to do business in globally. Cost of wages for example; it’s nice to be paid AUD17.50 per hour, isn’t it, but if you’re doing the same job in the USA it would be AUD7.50 per hour, with no healthcare, and only two weeks annual leave. We’re also at the end of a very long food chain. How Wiggle do it, with free freight over a certain amount, I don’t know.
We’ve seen bike brands like Specialized and Trek go direct to market, setting up their own vertical supply chain. Are they still engaging with RCTA? Does their involvement in the retail landscape benefit your organisation or not?
It’s mixed. For instance, some IBD’s that have become Specialized dealers have stayed, some haven’t. It’s very much down to the individual owner. Those brands may do similar (retail program aspects) to what we do, but they don’t participate on a state and federal level, in terms of speaking to government. They’re not doing standards control, but they’re doing the things that benefit their group of stores. In other ways they complement us, for example in providing employee training systems. Hopefully we all end up on same page with the same, qualified, people coming out at the end.
Cycling Promotion Fund*
Bicycle Industries Australia
Productivity Commission report
*both discontinued since publishing and rolled into Bicycle Industries of Australia website