2011. What a year for cycling. What a year for Australia. ‘It couldn’t get any better’, is the sentiment out there. But wait. It does.
Whilst we continue to rejoice in Cadel’s historic victory at leTour, Australia is gifted with it’s first pro-team in GreenEdge. Right now optimism in cycling is at a high, but so is the pressure to back up the performances to prove that we are not one hit wonders. GreenEdge will have a great year and will continue to flourish into a bigger and better team drawing from Australia’s deep surplus of talent being groomed for the professional ranks. However, running a team is not cheap and this is the only shadow that will cast over any team let alone GreeEdge.
Moving onto the industry at large, independent Australian market analysts predict industry growth of 3.4% over the next five years. This is great news for the Australian market in particular the retail sector. Whilst¬†‘Australian consumers have been talking themselves into a recession’¬†(as quoted by www.news.com) cycling brands will start taking ownership of their distribution channels and rectify the online price wars being fought worldwide. The premium Swiss brand Assos has reverted back to a boutique strategy by taking back their distribution to deliver a premium offering to the market. Online retailers have been slashing prices to attract customers to transact on their sites, which ultimately impacts on the brand value of premium brands like Assos etc. More and more boutique stores are opening across Europe to rekindle the quality credentials of such brands and to manage the online pricing conundrum.
eTailing¬†will become more sophisticated and brands will choose to deal direct with customers through a hybrid eTail/Retail offering. This strategy will ensure a price parity of their goods and removes the online cannibalism, which we have all experienced over the last few years. Brand experiences will be on the rise with more brands investing in connecting with consumers with more experiential activities. Online has forced brands to be quite introverted in their approach, but consumers are wanting to feel and touch the products and know what they are buying.
Content¬†is king. With brands doing more through social networks, entertaining consumers has become the strongest form of brand engagement. Boutique English brand Rapha are famous for producing beautifully crafted films about their journeys abroad. The social networks will become even more important in collaborating with customers to develop products and gain insight into future trends and customer needs.
Retail¬†will bounce back from what has been a dismal performance over the past two years. Whilst cyclists are keen for a bargain, they also have a relationship with their local bike shop. However, retailers will need to shift their mindset and also enter the engagement race. Consumer behaviours have changed from conventional habits and are much more astute towards value and service. Retailers must harness the notion of experience and leave their customers feeling satisfied and offer more value beyond discounting.
Design¬†has always been associated with cycling and with Leopard Trek and Lotto-Belisol taking a leap of faith with a less than conventional looking kit, style is on the rise in pro circuits. Babici launched their Cycling Design Project this year to offer the industry a much needed injection of branded design. This offering was created by the industry asking Babici for help in creating a look that was much more stylish opposed to the complex and quite dysfunctional custom kit offering out there in the market.
Innovation¬†will be a key differentiator in the market with more science being utilised in the development of equipment. Whilst most consumers are happy with a generic offering, product and brand differentiation will continue to evolve through new technologies and materials. Babici is launching its HiBrido Winter range in April 2012 that has been developed to help cyclist’s acclimatize to the ever-changing weather patterns.
Hues¬†play a big role in the pro ranks as they are mostly derived from sponsor identities. However reds, blues and blacks can only be sought after for so long. Bravery in palette choice will be on the rise with more colour choice and fresh palettes brought to the mix. Babici introduced a fresh lemon pastel to the Campolongo Corsa Jersey, which is one of the Corsa Collezione’s most sought after items. 2012 teams kits will be a talking point in the peloton with more teams opting into design and style rather that conventional looking kits.
Manufacturing¬†plays a key role in the affordability of products from both a brand and consumer perspective. Obviously the industry is commercially based and business profitability is critical to ensure ongoing product development and market survival. China plays a big role in the majority of cycling commodity manufacturing and have launched their assault on the world through direct strategies. Open mold frames, cheap custom kit, illegal team replicas are all part of the offering. These offerings will not go away, in fact they will revolutionise the industry and path the way for new entrants into the market. The Chinese have mastered the art of carbon fibre manufacturing and are producing products on par with the best. This quality improvement has seen the industry grow from a copy-cat mentality to a genuine production facility. Cycling clubs can have their kits and bikes all matching and can raise some decent revenue through the process.
Social¬†does not belong only on the internet. Hoards of weekend warriors congregate in groups and set off for their weekly rides followed by their preferred cup of coffee. This behaviour is not new but it is on the increase. Online Social Networks like Facebook & Twitter do play a role here in organising groups rides but new applications like¬†bunchridefinder.com¬†and¬†strava.com¬†are reuniting the group ride spirit and motivating individuals to get out and have a crack.
Mamils¬†are a part of Australian fauna and now our roads. The Middle Aged Men in Lycra segment is a growing movement and a much welcomed one. Whilst these mamils are keen to rip up the roads, the benefits they receive from their new found quest is an exponential health kick. Whilst these mamils enter the sport quite late in their lives, they are great ambassadors for their kids and younger generations taking up a sport, which is fuelled by nostalgia and passion. This enthusiasm benefits the industry and helps to grow individual categories, businesses and brands.
Online¬†is now the primary content distribution channel for cycling brands. Whilst online makes it easier for brands to compete in global markets, it also devalues the category through a discount mentality. The challenge for premium online brands is to retain a sense of exclusivity and premiumness through value propositions exclusive to each brand. This year saw Babici commence the Familia Loyalty program that is aimed to reward Babici customers to continue to support the brand directly. More premium brands will start to adapt a connection strategy and will continue to increase their exclusive value to their customer network.
Start Ups¬†will enter the market through fresh thinking and a new business model not seen before in the cycling industry. Online eTailer¬†joe-pro.com¬†is a concept created to sell off ex-pro team gear dircetly to the public at affordable prices. New brands will enter the market place and start to build a following of passionate cyclists that want to invest their money into a brand that is will grow organically and be a part of building its success. However, success in today’s market is measured by the interactions that customers have with brands through user generated content and community collaboration. The more salient a brand’s community is, the more valueable the brand becomes.
So there you have it. A manifesto of thoughts and ideas collected over the past twelve months that will shape the future of the industry over the next twelve. Babici is an avid innovator and will continue to path the way for the industry and keep the Australian cycling industry exciting.