Raleigh lowers prices

[Jules]

Got this e-mail today:

 

 

 

 

 

The global economic slump has delivered a right jab to the SA bicycle industry?s solar plexus leaving some players gasping for air and grasping for ways to continue selling bikes to a cash-strapped target market.

 

Raleigh, one of South Africa?s dominant bicycle brands, has been mindful of the current financial crisis, the effects of which are starting to be felt as 2008 stocks dwindle and are replaced on shop floors by more pricey 2009 model ranges.

 

 

 

?In June last year we published an article in our newsletter to our more than 2000 Raleigh stockists, predicting sharp price increases in 2009,? said Brandon Els, CEO of Probike, the owner of the Raleigh brand in Africa and India.

 

 

 

?That was prior to the start of the global financial crisis and the devaluation of the Rand, which added more pressure and pushed up prices of bicycles and components further.?

 

 

 

Probike warned its retail network in mid-2008 to expect a tough 2009 as material prices, increased transport and packaging costs and raised minimum pay for factory workers in the Far East would have a knock-on impact that would sting the retailer and consumer.

 

 

 

Most bicycles and bicycle components are now made in China and Taiwan. And never has a model range been as sought after as the 2008 one. Most bicycle brands report that their 2008 model range, with pricing set in late 2007/early 2008, as still being popular despite the arrival of updated, improved 2009 model range stock.

 

 

 

The reason? Price. Bicycles across all categories have seen a 20-40% increase in price from the 2008 range to the 2009 range. Even brands that have downspecced certain less conspicuous parts in order to try and keep their pricing low have been forced to relent and raise prices in order to stay in business.

 

 

 

Raleigh?s next batch of 2009 stock arrives in the country in mid-May and Els, who has spent months planning a strategy to combat the recession-weary market believes it?s going to fly off the shop floors.

 

 

 

?Raleigh is setting the pace again by working with our Raleigh Elite Dealers to bring South African consumers bikes with the best spec at the lowest prices. Raleigh is the first brand in the bicycle industry to pass on to consumers the benefits of an improved Rand/US Dollar rate and falling commodity prices through our Raleigh Beat the Recession Campaign,? explained Els.

 

 

 

?For the past 10 years, Raleigh has set benchmarks in the South African market, mostly as a result of our strategy to continually provide value-for-money bicycles while at the same time clinching wins in all high-profile SA bike races. We know that it is difficult for any other player to do the same and for that reason I believe we?ll hit a sweet spot with our Raleigh Beat the Recession Campaign which launches 21 May 2009 at a Raleigh Elite Dealer near you or at www.raleigh.co.za.?

 

 

 

The campaign is aimed at delivering 2009 model year bikes to consumers through 60 Raleigh Elite Dealers around the country with no reductions in specifications or quality and small increases in the 2008 price.

 

 

 

?It?s been wonderful to see how Raleigh?s value-for-money offering over the past 10 years has made cycling more affordable and accessible in South Africa. It?s forced other brands to adjust their strategy in order to compete and that?s resulted in more people buying and riding bicycles. I don?t want that to change, recession or not,? said Els.

 

 

 

 

 

 

[barrykm]

Good news indeed.

[Jules]

If you look at this link you will see that the RRP of a number of models has been significantly reduced, which leads the cynic in me to wonder if they were taking the p1ss just a little to begin with...

 

 

 

What I'm saying is, if the rand and everything else was to blame to push the price of an RC1000 to R6 800, how is it now possible to sell it at R4 700 without making a loss?

[Overlord]

 

If you look at this link you will see that the RRP of a number of models has been significantly reduced' date=' which leads the cynic in me to wonder if they were taking the p1ss just a little to begin with...

 

 

 

What I'm saying is, if the rand and everything else was to blame to push the price of an RC1000 to R6 800, how is it now possible to sell it at R4 700 without making a loss? [/quote']

 

Yes it makes one wonder. Not just them but all the other brands too.

 

[LOUDMAC]

All bull...cages have been rattled with the uncovering of the price fixing crap!

[Daxiet]

I visited my LBS today and heard that Raleigh had been struggling to sell with the recent price increases in a market that just doesn't have the liquidity. I equally am doubtful of the story behind this sudden decrease in pricing, I firmly believe prices were driven up on the wings of high demand for well priced bikes. The 2008 range of Raleighs were just that, good spec at great prices.

 

Just a thought from the sceptic within, but I do recall when the 2009 prices were released there was a huge discussion on the hub about it.

 

Allow me to quote myself as it seems my prediction has come to pass a bit sooner than expected:

On the positive side if you're looking to shop late 2009' date=' Probike should be having a huge clearance sale
[/quote']

Extracted from: https://www.bikehub.co.za/forum_posts.asp?TID=38170&KW=probike&PN=3

 

Daxiet2009-04-29 11:19:02

[rory21]

eish can you imagine you just forked out R40k for a RC8000? and now its R30k

[beren]

Good news, but it just goes to show how we're getting ripped off from the start.

 

Now if only Merida or Silverback would follow suit ...

 

[paulvs]

what a joke! Are we suppose to see these people as honest proffesional business men? I think not. . .

[porky]

Its a a very bad marketing move in my opinion, however as the economy tightens, credit becomes less available and disposable income for luxury items reduces the SA cycle industry is reeling - and winter hasnt even begun yet.!!

 

Firstly, dont believe the story about setting landmarks in the industry etc, the fact is, in general, luxury lines are seeing a 50% plus drop in sales as opposed to 2008, this is dramatic and if they hope to survive they NEED TO SELL BIKES, its that simple, and if it means having to slash profit to simply stay in business, well so be it, they arnt the only ones doing it.

 

Secondly, there is a glut on all luxury markets now, manufacturers / distributors are desperate to offload stock at any price, money in the bank is far better than standing on the floor - the problem is, if the market is not buying because they lack the disposable income, they wont buy at any price. 

 

Then theres SENTIMENT and EMOTION, many manufacturers / distributors / retailers have lost customer support just this way, people dont take kindly to been charged 20% more this month as opposed to next, especially when its a luxury item they have saved and planned for.

 

Good luck - they are going to need it.!

 

 

 

 

porky2009-04-29 12:46:17

[Karl Beaton]

porky is 100 % correct ... they need to sell bikes and do not give a stuff about us the end user

[Jaco Botha]

Someone is ripping us off big time.

[linnega]

As with all things, it has input price has very little to do with what customers will pay.  Prices of bikes are driven by the price a customer is willing to fork out.  Once the selling price is established the, Raleigh then need to establish a cost price by negotiating with manufacturers, changing specs.  Rand devaluation etc are simply marketing mechanisms to get you to decide that you will need to pay more.  However, like ever industry where durable or even semi-durable goods are being sold, since around March shops have been stocked, but customers have not been buying.  The recent Easter season, usually a bumper retail season, has been among the worst in years.  So Raleigh have to make a decision regarding whether they stick to their prices and risk carrying stock they cannot afford to hol, or cut into their margin and try and clear as much of the stock they have on hand until they can reduce order levels.  They chose the latter I suspect because 60% of R0 sales (zero quantity) is still zero whereas 35% of anything at least enough to cover cash flow in the short term although probably not enough to cover their overheads.  Lets hope for the industry that the recession is short and they are able to keep their heads above water.

 

[porky]

  Lets hope for the industry that the recession is short and they are able to keep their heads above water.

 

Hmm, winter is a traditionally bad time for cycle sales and its barely begun (notice the timing of the reduced price) and the recession still has a while to run from all accounts I have seen - so there will be attrition, no doubt in my mind, Pro bike will probably survive, but like most others in a seriously weakened state.   

porky2009-04-29 13:08:05

[vanniri]

Raleigh will pick the fruit for this early bird move, if many more follow it could result in deflation pressure which will have all wait for a better price when tomorrow comes.

Realistic prices are good, zero profit margin (or cash burning) prices are not good in the long run since people (you and me) will loose our jobs.

 

Let?s hope this recession thing turns quickly.

[Willehond]

porky is 100 % correct ... they need to sell bikes and do not give a stuff about us the end user

 

Why do they need to care about the end user/customer?  They are supplying a solid bike at a price realistic in the current market.  Sounds like good business to me.  The price was too high for the current economic climate so they dropped the prices.  Simple.  Get over it and be happy!