You can see a pattern emerging all over Australia and New Zealand. When enticing new cycling infrastructure is built, such as a new mountain bike trail network or a rail trail, then businesses that embrace the new opportunities grow and prosper.
Australia is about to see unprecedented government investment in new recreational trails. We’ll share more details about what’s coming in a separate feature story to be posted soon.
Today we’ll focus upon a single bicycle store that has not only embraced the current and emerging opportunities in their area, but proactively driven them forward over many years.
Yarra Valley Cycles, as the name suggests, is located in the Yarra Valley town of Lilydale, 41 kilometres east of the Melbourne city centre. What was once a small town is now part of suburban Melbourne with a population of 15,530 at the 2016 census and growing fast.
It’s located on Lilydale’s main street directly opposite Lilydale Station which is both the end of the line for the electric suburban train station and the start of the Lilydale to Warburton rail trail, one of the first and most popular rail trails in Australia.
Andrew Swann who purchased Yarra Valley Cycles lives further up the Yarra Valley started mountain biking 35 years ago during the infancy of mountain biking, just as it was taking off in Europe and America.
His three sons Matt, Alex and Ash, grew up with mountain bikes and all are still involved, with Alex (General Manager) and Ash (Director) now operating Yarra Valley Cycles. Meanwhile Matt has started Life of Bikes at Packenham 54 km south of Lilydale.
Andrew bought Yarra Valley Cycles as a going concern 14 years ago. It was already a 31 year old business, first known as Manning Sports. When he bought Yarra Valley Cycles it was based on 130 square metres of total space. That’s grown now to about 600 square metres of retail space and in total about 1,000 square metres including storage.
What started as a typical family bike shop has expanded into high end mountain bikes and to a smaller extent road bikes. Now gravel bikes also have a strong foothold in the area.
Meanwhile staffing has expanded to 21 of whom 11 are full time and 10 part time or casual with more expansion planned. This has happened through an era when we’ve seen the rise of internet mail order, a flat overall bicycle market and the total number of independent bicycle dealers (IBD’s) decline.
So what has the Swann family been doing differently or better than other IBD’s?
When we interviewed Andrew Swann, there was no special secret sauce, but two themes emerged: proactive community engagement and decisively pursuing new business opportunities.
Proactive Community Engagement
“I’ve been involved in advocacy for at least 30 years,” Andrew explained. “I was very heavily involved in the Fat Tyre Flyers Mountain Bike Club and for quite a few years I was president. The Fatties pioneered mountain bike advocacy in Victoria and managed to get access to some decent land. For example, if you look at Lysterfield the Fatties had developed trails and held events there before it was expanded for the 2006 Commonwealth Games mountain bike events.
“Silvan, Doongalia, Dixons Creek, (MTB parks within about a 30 minute radius of Yarra Valley Cycles) all of those areas where there are now established trails, we started working towards many years ago.”
Although Andrew did not directly mention it, he’s also the President of the Yarra Ranges Mountain Bikers www.yrmtb.com.au which is a local group that has tirelessly campaigned for new trails and maintains trails once they are built.
“You’ve got to work closely with the land managers,” Andrew continued. “We’ve found that working with organisations like Parks Victoria and DELWP (Victorian Department of Environment, Land, Water and Planning) has been fantastic – people that know the land, know the regulations, because I think the face of mountain bike trail advocacy is going to change in Australia.
“It’s certainly changing in Victoria as we speak. In the past it had been relatively ad hoc based upon the relationship between the local land manager and the local crew that wanted to build trails in their area. Now there’s going to be a more overarching strategy for trail development.
“You’ve got to get a broader perspective on the trail use. It’s pointless to say, ‘I want these 35 kilometres of trails for me and my dozen mates to ride.’ There’s no way that you’ll get that across the line.
“You’ve also got to get involvement from the youth, the schools, the Councils, and the business groups. You’ve got to bring all of those people on board, so that they all have a vested interest in developing these trails and delivering for the local economy, the local people.
“It might be a slightly longer process getting all these groups on board. But it will be much harder if you don’t because governments and funding bodies will continually drive to get a return for their dollar. The return doesn’t just have to be a coffee shop selling more coffee. It could be a health outcome for local youth. And that’s what we’ve focused upon for the Yarra Valley, the social benefits and the health outcomes for everybody, not just youth, but the adult population as well.”
Youth and getting more young people riding was a recurring theme in Andrew’s comments. Once again, he’s not just talking about it, but every school holidays, along with a team of helpers he personally teaches school kids how to improve their cycling skills through a program he’s called Ride Don’t Slide.
“We’ve been doing this for probably seven or eight years,” Andrew continued. “We started doing it on an ad hoc basis when we got enquiries about kids wanting to go riding on their school holidays. The kids gain skills and meet a group of mates they can go riding with.
“About five or six years ago we started it as a core part of our business. Every school holidays we run these programs and in some instances up to four days of rides in a two week school holiday block.
“The kids wait for Ride Don’t Slide to be advertised on social media and normally they fill within three days maximum. We tend not to advertise them until quite late so we know what the long range weather forecast is and put them on when we have a reasonably good idea that we’re going to have good weather. I’ve been doing for so long now it’s part of my routine for the year, and we have other adults come along.”
Another community engagement area into which Yarra Valley Cycle invests heavily is social media marketing. One of their staff members works almost full time on this.
“Charlie’s a young guy, really enthusiastic, very creative and he does a great job,” Andrew said. “His time is 85% to 90% on doing social media, web content, web management and some photography. He’s just turned 18. Ash (Andrew’s son) gives him a lot of guidance, but also a lot of free reign.”
Pursuing New Business Opportunities
Bicycle Hire and Guided Tours
In early 2017 even though Yarra Valley Cycles was already a strong business and expanding, Andrew decided to invest heavily to start a new business two doors down the road called Yarra Valley Bike Hire. They were later able to take over the building in between and relinquish the original hire shop, so now the two business sit side by side in the same, expanded premises.
“It’s been fantastic,” Andrew enthused. “We’re in a great area for bike hire because we’ve got a trail (the Lillydale to Warburton rail trail) that starts only 100 metres from our store. But we’ve also got mountain bike trails that are evolving all the time that are only 15 to 20 minutes ride from the store.
“We’ve also got people who hire bikes who take them away to further places to ride. Even to Mt Buller and places like that on multi-day hires.
“We currently have about 130 bikes in our hire fleet. It’s completely separate stock to our shop. We try to keep bikes in the hire fleet for at least 12 months, with the exception of the bikes that we demo to potential buyers. The demo isn’t free, it’s charged so that we can qualify that they’re a genuine buyer.
“Our bike hire fleet is entirely kept in our shop. We have some occasions when they’re placed out on site for short periods.
“If you go by units our most popular hires are definitely trail hybrids and premium hard tail mountain bikes. But we’re seeing a very rapid growth in the hire of ebikes whether it’s for going out on the Warburton trail or whether it’s a dual suspension e-mountain bike. By number of hires it’s probably 50/50 now between conventional bikes and ebikes.
“We charge $50 a day for a standard trail hybrid, $70 for a hard tail mountain bike, which is a high grade bike that could be used for real mountain biking. Then we move up to our full suspension mountain bikes and ebikes for $100 and then for really premium bikes like Santa Cruz we charge $150. We’re more than competitive at these prices, certainly compared to places like Whistler Canada and the European mountain biking centres.
“At the moment we can run our hire business with one full time staff member. It’s not that demanding unless we get concurrent tours booked, which demand at least two people and sometimes up to four people to accompany the customers, for safety’s sake.”
“Mountain bikes in general and certainly e-mountain bikes are huge for us at the moment,” Andrew stated. “In an industry that’s growing rapidly – mountain biking – e-mountain bikes are growing even faster. It has become well and truly entrenched and will only get better, in our market anyway.
“We’ve seen every type of rider buy e-mountain bikes. For example, really experienced who are already fit are looking to have more fun just descending. But also guys who are just getting into the sport and don’t have the time to do the miles of training. There’s also a good market in dirt bike (motorcycle) riders who just like two wheels. With a dirt bike they have to drive miles out of town to get anywhere that they can get decent riding, but with an e-mountain bike they can just roll out from their back door and in this area, be on trails.
“Bikes around that $5,000 to $6,000 price point sell very well. But people are also keen to get on better bikes with the newest technology at higher price points.
“The bikes are expensive, no question. They will get cheaper, but at the moment there does not seem to be too much barrier to people getting on these bikes. From a business standpoint, we’d like to see better margin on these bikes because the margin in them is lousy.
“We’re looking at around 25% mark up on a bike. Once you start to negotiate to get sales that margin gets thin very quickly. It’s pretty ordinary and when you look at the time it takes to build and sell these things, there’s not a lot of fat left in selling an ebike.
“When the product first comes out with new technology that people are chasing it’s a little bit easier to get better margins, but once you get all the players out there and the bikes don’t have a huge differentiation, it gets tougher. People also wait for the end of year sales. But we know that margins will improve and the best thing now is it’s getting new people on bikes. Then they’re increasing demand for after sales products. There’s also slightly increased demand for service work on these types of bikes.”
Huge Future Growth Potential
As we will write about in more detail in future months, 33 kilometres up the valley from Lilydale, the nearby town of Warburton is about to see over $10 million invested in stage one of a world class mountain bike park.
The spectacular mountains and forests of Warburton have to be seen to be believed. From the top of Mt Donna Buang to the township of Warburton is a drop of over 1,000 metres and the planned ‘Drop a K’ trail will have far more vertical descent that anything on offer in Whistler, Rotorua, Moab, Derby and other famous MTB destinations.
“I don’t think there’s any doubt that the Warburton MTB destination is going to be the biggest thing in this region because it’s going to change the face of mountain biking in Victoria and probably Australia,” Andrew predicted. “Not just related to the people who come and ride here, but the land stewardship that is being set around this project is going to set a standard that will be followed all over Australia.
“It’s going to bring people from all over the world to Australia as a mountain biking destination. They won’t just do a couple of weeks in Warburton, they’ll look at other things that they can do around Australia.”
“It will have everything, even in stage one. There will be newly developed green to low level blue trails for the family rider. There will be intermediate to high level blue for the broad mass of rider who likes to go to places and enjoy the mountain bike park and there will be black level runs for the guys who a really looking for challenging types of trails.
“Our environment that you’re riding through will be something that riders will want to stop and look because of its sheer beauty. Then of course there’s Warburton itself. A magnificent little town located in a beautiful part of Victoria.
“Stages two and three will offer a different type of riding. More distance based, adventure mountain biking. Stage one will cover more 110 kilometres and stages two and three combined, another 60 to 80 kilometres.”
It would not surprise you to hear that the Swann family is already planning to take commercial advantage of this new world class MTB destination.
“We’ve always had the intention to have a business in Warburton,” Andrew confirmed. “It’s really been a case of waiting until the right opportunity is there. We will have a business in Warburton, but the exact size and type of business is yet to be determined.
“We expect that many bike companies will want to have some sort of presence in Warburton. But there are much broader opportunities within hospitality, breweries, distilleries and perhaps other food based tourism industries. Things like maintenance, shuttle bus services, event opportunities. All of these things generate income.
“The benefit that we’ve got over almost any other international location is that our mountain bike facilities will be available all year around. While the others have great mountain biking in their summer months, they snow in winter.”
Andrew is essentially correct in his comments about year round mountain biking. Although the summit of Mt Donna Buang, the highest peak, located about 5 km north of Warburton, receives snow in winter and is a popular place for tobogganing, the rest of the slopes are snow free. The park will also benefit from having both north facing slopes, that will be warmer to ride during the winter, and shaded, forest covered south facing slopes, that will be ideal for riding on hot summer days.
But it’s not just the Warburton MTB park that has received over $10 million dollars in confirmed funding so far. A similar amount has been granted to expand the existing Warburton to Lilydale rail trail. Construction started early 2019 on a northern trail from Lilydale to Yarra Glen, also following an old rail line route.
“The rail trail, once developed into a complete trail, linking Healesville and coming back into the eastern part of the Yarra Valley as a loop, will become one of the best cycling touring loops that you can probably do anywhere in the world,” Andrew predicted. “It will be a truly beautiful ride. We just happen to have very conveniently placed towns along the trail which mean that riders can ride out from the start at Lilydale and at the right distance there will be a beautiful little town where you can get accommodation. The local people will benefit significantly from the tourist dollar that will come in,” Andrew concluded.
Clearly, Yarra Valley Cycles have made the most of the admittedly above average cycling opportunities that their surrounding region provides. But it’s not rocket science. If you look at example after example around the world where improved cycling facilities are built, more people start riding there, which leads to more business opportunities, including bike sales, maintenance, hire, ride guides and instructors, event promoters, food, accommodation and more.
The good news is that Warburton, although possibly the largest, is not an isolated case when it comes to new facilities in various stages of planning, funding and construction all across Australia and New Zealand. In a future article, we’ll try to summarise as many of these new bike business opportunities as possible.