“You must be the change you wish to see in the world.”
— Mohandas Karamchand “Mahatma” Gandhi
Clicks or bricks?
The internet: saviour or executioner?
Closed shops and bikes delivered by the postie? Is that the future of the motorcycle industry in Australia? Here’s what you think.
“There are two kinds of forecasters,” said J K Galbraith, “those who don’t know and those who don’t know they don’t know.”
There are few people I detest more in this world than John Kenneth Galbraith*. He blighted two years of my life when I was studying economics at university with his gigantic and appalling tome Macroeconomics. His multiple-page-long sentences and tenuous arguments put me to sleep on a regular basis in my carrel in the Fisher Library and in the end I switched to anthropology.
So can he be right this time?
Well, we asked you to predict what, in the light of the increasing use of the internet, the motorcycle industry in this country would look like in the future and I think you’ve done a cracking job. We received very long letters, showing just how much thought and time you put into them (I’ve had to cut most of them). We haven’t been able to use all your letters, either, but I think all your opinions are represented here. Eat your heart out, J K (if economists can be said to have such things). We may not know but we have some pretty good ideas and, hopefully, the motorcycle industry in this country will benefit!
Build relationships or perish
Let’s start with a very comprehensive response from Greg Boddy.
“For accessories, retailers will still exist (NB: mail-order buying did not kill shopfronts).
But stock will be reduced to maybe one example per item with an average size only. Bikers will look, try and examine the items for their personal potential. They will then leave and check out other stores and other items (including sizes).
“If a shop has done its marketing and customer relations well, sales will be made. But customers will order from the same shop at competitive prices but online. They may even do this on a mobile device while still out shopping between stores!
“Shops that aren’t strong on building relationships with customers will not get sales. Customers will go to other online suppliers for the same item if they feel no connection. The basic lesson here is that retail has to adapt to this customer expectation change … Single shops will no longer stock 1000s of items in a massive storeroom or warehouse. Speed of delivery (will be important), fast postage on purchases with 1–2 days (national) waiting at most.
“So there will be shops but they’ll have to change the way they do things.”
With bikes, Greg reckons, “We can’t fold a bike into an Express Postpak, so sales will still be in-person. But the nature of customer-building will need to change.
“Bikes are many and varied and choices can be confusing for people (especially newbies). Customers don’t necessarily have definite, pre-formed ideas about what they want. Bike shops will need to build relationships over time and, that way, the customer will think of them and come to them when they’re ready to buy.
“Shops will need to provide lots of information about their bikes online … with enough detail that people can cross-check.
“People will still have to deal with a salesperson (even though they don’t trust them). But they don’t want that salesperson to be the only source of information. Annual bike guides are a great tool for people to start this comparison (go RRider!).
“But they will still need to ride a bike to see which one fits them. How? I think we’ll see more events like TeamMoto’s brilliant idea in Queensland. Punters pre-register a 20-minute ride on up to two bikes of their choice. TeamMoto covers all major Japanese brands plus Triumph and Hyosung. On the day, insurance is covered and you ride in a large group with head/tail riders.
“Why is this so good? (Apart from the free sausage sizzle?) Because you can ride the bikes and walk away with no palaver from the salesperson. There is no obligation and you get two decent rides that give a great feel for the bikes. What does this do? It builds future customers! Over 400 this year alone!
“So when someone is ready to buy, they will be more likely to go where they felt comfy, and they will have done all the research and made up their mind in a way that makes them feel empowered about their own buying choice.
“That’s the way of the future.”
Get it right first time — in the shop
John Peffer has a different problem. Unlike Greg, he doesn’t seem to be seriously down on sales staff (and I do wonder if Greg hasn’t just been going to the wrong shops) but he misses the variety.
“Like a lot of people these days, I buy a lot of my items online,” he writes. “Why? The answer is that most shops do not stock what the public is after. I live in Perth and March last year I was after a waterproof over-jacket, however there were none to be bought in Perth. I had a short visit in Sydney and was able to buy one.
“If I had not been in Sydney, I would have had no choice but to buy on the net. The public is voting with their mouse.”
Obviously, John thinks the future belongs to the internet. But has he considered all aspects of the question? We asked you to concentrate on the way the future might look, not quote stories of money saved or deliveries gone wrong; Wayne Talbot couldn’t quite help himself, so I cut his letter mercilessly but I left some significant points that he made.
“Retailers should be aware, though, that if I wasn’t buying these parts overseas, I would have no need of buying batteries, tyres, tubes and other bits from them locally …” and “Australian retailers of used parts might start considering cashflow over profit margins — unrealised assets are, in fact, a liability in small business.
“On the question of clothing, I doubt that I would buy any over the internet without first trying on the exact same item, irrespective of price.”
Bill Dettmer suffered from the same problem as Wayne, but he did point out one very simple factor in buying all kinds of things — but especially clothing.
“The end result in buying motorcycles and gear will be a combination of face-to-face plus online … we can buy online, get it right, get it wrong, take a risk with product and safety in purchase or walk into the dealer, try it on and get it right first time. We have a choice now and will use it as we each see fit. The dust will settle. Change is good but we’ll always need the store for emergency repairs, impulse buys, genuine parts, servicing plus coffee and a chat.”
Better service = more instore sales
Choice is one of the factors that runs like a thread through many of your answers. From Dulwich Hill, Rob Brunetta raises the other point that several of you mentioned: service.
“Hi Bear,” he writes.
“This, for better or worse, will be an increasing way in which we purchase products and it falls to the stores themselves to ensure they offer products or services in the way consumers demand. No amount of arguing over GST or other issues is going to be enough to stem the tide.
“There are likely to be two ways this will play out. One is that our local stores will be more like convenience stores in that we will be prepared to pay a premium to have a product now; or the second, and one I hope retailers will pay more attention to, is that stores will need to increase their level of service and expertise.
“As with anyone who has purchased online, there is always a point where you would love to ask a few final questions before clicking the purchase button. Frustratingly, though, many shopfront (bricks and mortar) stores do not educate their sales staff enough on products to be able to offer any more advice than a blurb on the internet might also provide. This has been my gripe for years even before online purchases became an everyday occurrence.
“I have paid and will continue to pay more in-store if I am given the service and am speaking with a salesperson who is professional and well versed on the products they are selling — if they refer to the box for all information or do something else to indicate they have no real knowledge of the product, why then would I pay a premium?
“Anyone selling an identical product to another store (be they online or a retail shopfront) can only then differentiate on price or service — as online stores generally have lower overheads, price is a tough one to compete on.
“Lift your service and you will lift your sales. Even if there are the extremely tight buyers who will seek advice from a store then buy online, at least an opportunity exists to win that client over or have your store top of mind for the future.
“If bricks-and-mortar stores stay as they are and just complain about the online stores rather than recognise and work to their strengths, they will be gone for good.”
A grim thought, Rob, but a timely warning.
Service is the key for Steve “Homer” Smith from Esperance, too.
“I feel that to keep (motorcycle shop) service I’m more than happy to outlay a bit more for goods I might buy — it’s a two-way street. They can’t exist without your custom and, anyway, where would you go on a wet winter’s day for a browse around the new bikes and riding gear if the bike shops are forced to shut? Long live the friendly local bike shop.”
Support the people you trust
Kyle Roberts agrees and points out that, while internet shopping delivers choice and low prices, there are other considerations.
“I would rather go to my local motorcycle apparel outlet to buy things like jackets, jeans, leathers, boots, gloves, oil and chain lube because at my local store I can actually talk to a real person and get some quality advice on what I am looking at and buying so that, when I shop there, I walk out a hundred per cent happy with my purchase because I know it fits. I have none of the uncertainty that comes with online shopping and I always come out with more than I went in for!
“I have discovered from both experience and from older, more knowledgeable motorcyclists that the motorcycle industry is a relatively small industry; we are like our own small community. The guy who services your bike isn’t the first number you flick to in the phonebook; it’s someone you trust to maintain and care for your ride in the way it should be cared for.
“The way I think the motorcycle industry is going with people buying online and neglecting our smaller independent service centres, we will soon only have larger dealers set up and run by people wearing nice, crisp Gucci suits and driving new BMWs who have never ridden a bike in their lives.
“My point is: are you a motorcyclist or just some guy with a bike? If we don’t support our local businesses and band together with a sense of community, then the motorcycle industry as we know it will collapse.”
Mail order is not new
Bill Tindale from Muswellbrook gives us the rural view.
“I am retired, live in rural NSW and have just purchased a new motorcycle. As I had a motorcycle to trade in, I dealt with existing motorcycle outlets in this region. The dealer I purchased from was 248km from the first dealer I approached. If I was not trading a motorcycle I would have considered a web purchase. I knew exactly what I wanted, had visited the manufacturer’s website, was aware of end-of-financial-year offers and had taken a test ride of that model at a trade display.
“I will be purchasing the pillion backrest, rack, panniers, windscreen and towbar online, probably from outlets that advertise in Australian Road Rider. By using the internet I have access to a wide range of accessory options sold by the aftermarket both here and overseas (usually the USA and Europe). Purchasing online from overseas offers a wider range of accessories and significant cost savings. A problem that can arise is that bikes sold in Australia can be sold under different model designations in the USA and Europe, making selection of suitable accessories difficult, although outlet staff can often help.
“Online purchasing has been trouble-free and gives me far more choice than local bike shops can offer. While all motorcycle distributors have online accessory sales, I doubt they will capture much of the trade as their brand-genuine accessories are limited in style and not well priced. Clothing and protective gear is also readily available online with most outlets having good size information to assist with choice. Being stout, I find it much simpler to purchase online than to search for items in my size at bike dealers.
“The elephant in the room with online motorcycle sales is who will service and repair them? Locally, I have access to two independent service and repair shops . .. but that is unlikely to be wide spread and servicing and repair could be a problem if online motorcycle purchases become more common.”
Bill also points out that, while the worldwide web might be new, its style of shopping has some very respectable antecedents.
“I was born during WWII,” he writes, “and am old enough to remember when the big department stores sent out huge mail-order catalogues. We country people used mail order for just about all non-perishable items that were not readily available from the local store. Online purchasing is pretty much the same as mail order — we just use the web to select, order and pay. Maybe it’s not a new trend, just an updated return to retailing that was common 50 years ago.”
An interesting take on the matter, Bill.
Would multi-brand dealerships work?
Gold Coast reader John Murdoch, on the other hand, thinks size is the answer. What he’s suggesting isn’t all that different from the grand bazaars found in the great Eastern cities.
“The local bike shop provides friendly service, remembers your name and offers some good advicse (or at least a push toward the product that isn’t selling);, all nice touches but no replacement for a good product range — something sadly lacking in all my local shops. Why should I have to visit six different shops to see 10 different brands or styles of waterproof boots?
“Now, I know the woes of overstocking, dead stock, dead money, lack of storage/ expense of rents. (I have done my share of retailing.) But the problem is this: as a consumer I don’t care., Hharsh maybe, but thatthat’s what I think. Tthe dealerships just can’t seem to come close to the price or range offered [on the net]; not even catalogues for me to browse.
“What is the industry to do? In my opinion, get together to form large multi-brand dealerships, stop competing with each other and start competing with the real competition — the web — and then they may even survive.
“One big shop has more customers and therefore more buying power than four little shops. If the four big Japanese brands, for example, come together under one roof, maybe separate departments or franchises within that roof, they could combine their buying power for gear and accessories and offered me, the consumer, much more and therefore much more reason to go there and spend my hard-earned.
“Now they still can’t carry every accessory for every bike model … dirt- motocross, enduro, trial, road- sport, cruisers, road race, commuters, then all the different bikes in each segment, it’s endless. So provide customers with an easy way to see what’s available and what it costs; virtual shelving, if you like.
“I still use my local shop for clothing because for me, I like to try it on rather than risk internet international sizing. I ride an XVS110 so don’t mind adding a bit of chrome to my ride — for that, the internet is the place.”
Split your business
Another Queenslander, Alex Shkar,doon, splits his business.
“I have always believed in supporting local business,” he writes. “As a consequence, when I bought my current bike I could have saved by buying the bike in either Rockhampton or Brisbane. However, the bike is serviced locally (Gladstone) and I feel that, although there shouldn’t be, there is better support from the local Suzuki dealer because I bought the bike through him.
“I have had the bike serviced twice in Brisbane (and the service was fine), however I was just a number, not a personal customer. Who is going to service our bikes if the local dealer doesn’t? He / she is the one with the technology / knowhow and parts to SAFELY service our machines.
“As for bike accessories and clothing, I always buy over the internet (except for helmets). Not so much for cost savings but for variety.”
Steve Evans agrees.
“The local bike shops will survive because they can provide services that cannot be provided over the net,” he writes. “The ability to try before you buy, have a place to return defective items, the ability to provide service and repairs to your bike … Their survival in my humble opinion will be pivotal on their ability to provide exceptional customer service at a reasonably competitive price.”
Why pay for the middle layers?
There is a problem with that, though, as Ross Halpin points out.
“Business is expensive in Australia. It’s the price we pay for our security and high standard of living … If dealers were reduced to selling bikes only and doing repairs, the cost of those repairs would skyrocket.” So what is likely to happen? “Online will continue to grow until publicity about shonks and other dissatisfaction sets a level. There will be some downward pressure on prices, assuming there is margin for such movement. The big, impersonal dealers might do worst out of that because they really can’t tap into the relationship aspect of a sale in the way a small dealer can. I could see that the basic salesperson-to-customer, over-the-counter transaction we can get from any shop will/ ought to be enthusiast to enthusiast to keep customers loyal. Engagement will have to be a lot more personal and that takes time, so more staff might be needed … bit of a two-edged sword.
“I reckon the industry as it is now will be quite recognisable for many years to come because we — motorcyclists — are different. We have a better appreciation of cold, hard reality than many others. If we don’t, we die. To that end, we know which side our bread is buttered on and will continue to support local dealers because we can’t afford to bite the hand that feeds us or we’ll all wither on the vine. I hate mixed metaphors.”
So do I, Ross, but I’ll let it go this time seeing you’ve been so eloquent. But not everyone agrees with your predictions.
Take Michael Gear, for example, who gave us an (abbreviated by me) rundown on the way the internet works for him before drawing some quite different conclusions.
“Internet shopping is here to stay and will only get bigger,” he writes. “Internet transactions are the ultimate adoption of free-trade principles. All this activity is driven by the consumer, not government or business, and provides a powerful view of consumer sentiment. The current business model used by suppliers/retailers is at least 20 years out of date. People have woken up to the simple fact that they are supporting multiple layers of handling that add absolutely no value at all.
“The internet is a brilliant research medium that enables consumers to evaluate various products, see what other people’s experiences have been and make informed decisions. With some notable exceptions, the service standard (informed assistance, product knowledge and a genuine desire to assist) in most bike shops is appalling when compared to the better internet providers. Finally, the majority of internet purchases arrive on my doorstep within a week and usually faster.”
What about local internet distribution?
But Michael doesn’t think this means the end of the Australian industry. “Factory-supported regional first-class dealerships will thrive. These will also be the home base for an efficient local internet distribution business.
“Small local bike shops will disappear in their current form. They will need to reinvent themselves as franchise satellites of the major dealers and would provide servicing facilities (including bike delivery), basic consumable parts, a sizing and display point for internet sales, a proper tyre fitting service etc. In short, they would become the after-sales distributed shopfronts with minimal overheads and minimal stock inventory.
“The opportunity exists for local businesses that align themselves with large overseas internet firms as local distributors of the product.
“The industry will need to get cracking at a political level. Why are we paying import duty when we have no local industry to protect? If the distribution model is simplified, unfair taxes reduced and the products consumers want supplied at a price that is comparable, the industry can not only survive but thrive.”
Australian online shopping
Darren Yates makes a couple of points that nobody else seems to have considered. He buys engine oil, coolant and so on in his local bike shop but “you can get better prices at your local car shop … I can see it getting to be like Coles. Online shopping for motorcycles — click on the ‘add to shopping cart’ logo and proceed to checkout instead of getting a warm handshake and your free keyring. That bloke who just spent two weeks showing you the latest gadgets and getting you on the way will be gone forever. But if you buy online at least at the point of sale you will get a message saying ‘have a nice day’…”
Darren reckons that to survive, “It’s by no means the dealer who has to do this; it’s their suppliers who have to reduce the mark-ups to sell at a price that can create the demand, which in turn will cut/reduce online buying.”
Bike department stores
Down in Tasmania, John Davidson has come up with what looks like a pretty novel solution.
He writes, “I’m ignoring all the issues such as compliance etc that might be required for purchasing something like a bike, assuming these will be sorted out to suit the sales model.
“Vendors set up ‘inspection’ stores: locations where you can see, touch, ride the current-model bikes. Essentially, multi-vendor showrooms, like a department store for bikes. Once you select one, you can choose one of several options:
-• Have the bike delivered to a pickup location where extra services such as pre-delivery might be carried out. This is much the same as the current retail model.
-• Have the bike delivered to a closer location. This might be a service centre or a local mechanic, where similar extra services could be provided if required.
-• Have the bike delivered to your door with no extra services.
“Some consideration shows that this is really not that different from the current situation. The only difference is the choice of how the bike is delivered and the fact that there are no stores with stock of the new bike you want. Every purchase is ordered as required. It’s not really different; how often can you walk into a showroom and walk out with exactly the bike you want? Either you make a compromise to get it immediately or wait for delivery of exactly what you want. The big thing here is a focus on the delivery process. Make this fast and convenient and it just might work.
“Mechanical services become even more decoupled from the retail arm. This has pretty much already happened for cars. How many mechanics sell cars?
“Smaller items such as accessories become available only from internet stores. I noticed recently that a site in the US that I have purchased some items from now has an “Australian” website, where everything is quoted in Australian dollars and shipping is handled from an Australian perspective.
“Everything still comes from the US but the level of convenience has been raised by ‘localising’ the site. They even have a local Australian phone number, which diverts to the US, as they quote phone operation times that match US east coast business hours. I suspect many other websites will follow this model. The technology to do this and keep prices in sync with the US site is not too hard.”
Get big, get small or go broke
Peter Stryzelecki weighs in with a bit of a background in this prediction business.
“Bear,” he writes, “I had the misfortune some years ago to be connected with some research into the ‘globalisation’ impact on Australian industries. I suspect there are a lot of parallels with the future for the MC industry …
“Anyway, the upshot is, with globalisation (ie internet) the traditional bell curve of industry players (few small, few big and lots of medium players) gets inverted and skewed over time so that you end up with almost no medium-size players, more big players and more smaller, niche players. In short — get big, get small or go broke.
“ A good example of a big player would be, say, MCAS and its large mall-type stores. Another example might be the Frasers upmarket all-in one shop (which also taps into niche marketing, see below). A good example of a small, niche player would be, say, Terry Hay (a few blokes, a shed and a niche skill that will always be in demand).
“Of course, for many medium players it’s death by a thousand cuts; it doesn’t happen overnight. A lot of them won’t see it coming: sales gradually drop off, costs increase, competitiveness falls away and eventually it’s too late to adapt.
“Getting big often means going down the highly capital-intensive route and thus the megamart approach. Alternatively, buy every other player you can get your hands on. The other avenue is a strategic alliance, which I suspect has not been utilised well in the motorcycling industry. Here, similar players band together to improve buying power and generally get some of the benefits of size without having to invest huge amounts of capital. An example of this might be TeamMoto . Theory is: find good partners and work together.
“Getting small has just as many challenges. It’s not just a function of size (ie lower overheads) but also supplying a niche. That might be location (the only Triumph dealer for 200 km) or a specific product or service (just luggage or just servicing). It really comes down to identifying a competitive advantage that you have and delivering it well.
“The other consideration on this front is identifying non-traditional income avenues that can be accessed, particularly upselling (or cross-selling) while the customer is in your grasp. It could be simply selling products from your cafe (Fraser’s) or bundling sales (buy a bike, get leathers and boots). One thing the internet cannot replicate is expertise (a service), so selling that expertise in a non-traditional manner has potential — teaching people how to ride and service their bikes, organising tours, functions with attractions and talks … heck, why not a ‘ medical conference’ … etc. If you have knowledge, it has value — you just need to get it to market (professionally).
“So customers will buy things that are cheap on the internet and will pay for expertise or a niche product/skill or a value proposition (bundled products, for example). The trick for retailers is working out what of that they can deliver and make money doing it. I hope that helps, Bear. I’m confused.”
Well, no shame in that, Peter. Join the club. But I do feel that all of the above has given us all something more to think about.
I’ll leave the almost-last word, for now, to “Bruce” Jones of Marrickville, NSW. He may be right and he may be wrong, but to me it looks as if he summarises one version of the argument pretty well.
“Bear, mate,” he writes, “video didn’t kill the radio star and the internet isn’t going to kill bike shops. What we’ll get is a reshuffle of market share and at the end of it we, the riders, will be better off.
“Pompous pricks in big bike shops who reckon they’re doing you a favour by even looking at your credit card will die. No loss. The little local bloke who does good service work and has time to talk to you will thrive. He’s part of my community.
“You should know this. Cruiser and ARR are part of my community as well and that is not an accident. You made that happen. The big guys (magazine publishers) who thought they had it sewn up lost sales. Just like the big shops will.
“Obviously, the price differentials between countries will have to be reduced. I don’t know how that will happen but maybe what I’ve heard of the KTM response is an indication. After asking its US dealers repeatedly to not sell parts etc into countries with higher prices, a request that was ignored (as it would be), they’ve increased wholesale prices to those US dealers. Fewer KTMs and parts sold, but more profit on each one — I understand that the net effect is positive. In other words, KTM is making more money and doesn’t have to listen to dealers in Oz and Unzud and so on whining about being undersold by the Americans any more.
“And, blokes, don’t keep carrying on about Harley prices being so much lower in the US. Do you want to work for $7.35 an hour? If you do, prices here can drop. This whole relative price thing is a me-me-me whinge by the Baby Boomers, who are used to getting everything their own way. Check the relative prices of Harleys in Russia!
“And you want really serious price differential? Try $7000 (app) for a base-model Royal Enfield in Oz, when the same bike costs less than $2500 in India. Is that a rip-off? Dunno — but I bet base hourly pay in India is even lower than in the US.
“The only thing that’s certain is change. You’re always quoting people and I used to think that was a bit pretentious. But now I don’t mind because I have discovered many writers who make my life richer (who knew about Catullus?). So here’s a quote for you, from one of your favourite writers, I think, about what will happen: ““A shadow of cloud on the stream/Changes minute by minute.””
“Can you say who it is without Google?”
Yes, I can, Bruce. The quote is from Yeats, Easter 1916. But I can do better, I think. How’s this from Robert Louis Stevenson: “Sooner or later, we sit down to a banquet of consequences.”
*I’m not the only one who wasn’t keen on Galbraith’s formulation of ideas. Lyndon Johnson once said to him, “Did y’ever think, Ken, that making a speech on economics is a lot like pissing down your own leg? It seems hot to you but it never does to anyone else.”
Are we calculating our costs correctly?
Steve Evans (you can read his other comments in the main story) is interested in the real costs: “Maybe a worthwhile comparison would be the cost of selling an item via the internet versus the cost of selling an item through a bike shop,” he writes, “taking into account all the direct costs associated with each sale. Gut feeling says it would easily justify the higher price paid in the bike shop for the personal service provided.”
The best I could do in the Leaving Certificate (yes, I’m that old) was a B in General Maths, Steve. Does someone else feel like having a go at that calculation?
The inside view
Stuart Strickland, until recently Honda MPE’s Managing Director, reckons there’s trouble coming even without the internet …
Right now, motorcycle dealers are “under the pump”. Manufacturers want them to retain showrooms that are capable of exhibiting their full model line-up, colour and technical variants. Add to that attractive displays of accessories, storage and retail facilities for parts — and let’s not forget spacious workshops with separate reception area.
All this is quite reasonable and in context of professional representation in what is an intensely competitive market for consumers’ recreational dollars.
But cost escalation in day-to-day living has been eating away at dealers’ profitability for quite a while. Rates, taxes, rent, power and water, maintaining competitiveness with technology and costs related to staffing have all risen significantly. Manufacturers’ margins to dealers have not. Intense competition within each market sector has seen manufacturers setting lower retail prices as consumers express dissatisfaction with the lack of global pricing policies. Price parity between the USD and AUD has escalated consumer ire about the disparity of pricing between the Australian and US markets.
The collapse of developed-country markets, US and Europe in particular, has impacted significantly on manufacturers who rely on production volume to achieve reasonable cost-per-unit efficiencies. Japanese factories are a long way off covering their overheads at existing market volumes.
Sure, motorcycle sales are huge in Asian markets but manufacturers long ago established production facilities in Asia to build models specifically for those markets. Japanese production was earmarked for large-capacity, hi-tech models. American dealers (and unofficially distributors) and finance companies are offloading inventory as fast as they can at fire-sale prices. Anecdotal information suggests that some parallel importers are landing models at a lower price than the Japanese subsidiaries can!
Back to the dealers. Many are close to retirement age (how many young dealer principals do you see in bike shops?) and are looking at their superannuation nestegg, in many cases linked to their real estate, read dealership location, read valuable property.
Selling the business remains an option, but the financial ratios don’t add up to a viable business in capital-city areas where real estate cost per square metre is way above what a motorcycle business can generate.
Traditional retailing across all sectors of the community is changing as online alternatives are being embraced, especially by generations X and Y. But that’s not the only direction from which the pressure is on motorcycle retailers, especially in the accessory market. Costs are also up in metro shopping centres, thanks to their high rentals.
And what about the workers? Scores of unskilled workers who are currently employed in retail businesses will need to be let go as retail turnover deteriorates further. This will be a challenge for governments and the overall economy.
So what’s going to happen? Will motorcycle manufactures buy real estate in capital cities, as car manufacturers have done, or introduce a different marketing approach?
An option could be smaller, “boutique” showrooms, but with no availability of demonstration models. What about workshops? Will small, specialised tech centres thrive? What will be acceptable to consumers? What will be the effect on the brand strength of the various marques?
Interesting times coming up.