If you’re in the bicycle trade, in Victoria in particular, chances are that Nigel’s name has a familiar, but perhaps slightly distant ring to it.
That’s because Nigel Letty was in the bicycle retail business for three decades, building up the Bicycle Superstore retail group to a peak of a fourteen stores, some owned by franchisees, across Victoria and southern NSW. But then he decided it was time for a change.
It’s often been said that the bicycle industry is a life sentence, and sure enough after sitting out his required ‘non-compete’ period, Nigel is coming back, with a new concept.
“I sold Bicycle Superstore on 30th June 2013,” he recalled. “I had a three year bike industry embargo, but the settlement of Superstore didn’t happen until 6th December 2013, so to make sure that I’m clear with anything I do in the future, I’ve waited until after December 2016 to start putting a new bicycle business together.”
“In the three years that I’ve been out of the bike industry I’ve been working as a business coach and worked in every other industry that you could name. I have learnt an incredible amount over those three years about other business models, other industries and how opportunity is available in all of those industries.
“I know now that there is opportunity available in the bicycle industry, whereas before I sold Superstore, I became very jaded about how difficult the bike industry was.”
Nigel is going back into bicycle retail, but with a key point of difference to almost every other bike store in Australia.
“My new business will be called Alchemy Cycle Trader,” he announced. “It’s a rebirth of the Alchemy name which I started in 1991. We manufactured Alchemy bikes for 10 years. I still have a lot of passion for Alchemy as a brand.
“Alchemy is a word that means to change pewter into gold. When we were manufacturing aluminium frames we were taking aluminium tubing and manufacturing it into top end racing frames that were expensive but really high performance frames.
“Our real forte was building hand built custom bikes in Australia. Three per week was about the maximum we could handle. There’s probably 500 Australian made Alchemy’s out there today plus about 250 after-market Taiwanese built Alchemy bikes as well.
“Now the new Alchemy business model takes your old top end bikes that aren’t being used on a regular basis that you’d like to sell and converting them into cash, so we’re playing the alchemist again.”
Nigel has secured a long lease on a premises and is currently busy fitting out the brand new empty shell from scratch.
“We’re receiving stock into our new premises from 1st Feb to 1st March and we’re going to have a grand opening on Saturday 4th March,” he revealed.
“It will evolve over the first two years, where we understand the market, understand what consumers want, how the financial model will be built, how to market and build the business and recruit the right people for it.
“Our premises are in Knoxfield (an outer eastern suburb of Melbourne). They’re just under 400 square metres. It’s definitely a destination location.
“We want to be extremely agile and the only way you can be agile is to ensure that your overheads are as low as possible. So instead of being in mainstream, high rent locations, we’ve gone for a beautiful, large, new factory building, but in a factory area where the rents are far lower.”
“We’re not selling new bikes. We’ll have ex-demo fleets, ex-team bikes and we will have second hand bikes that the public bring to us to sell.
Our unique selling proposition is that if you have a bike in your garage that you’re looking to sell you can sell through us and get 80% of the proceeds put directly into your bank account. We take away all of the problems normally associated with advertising your second hand bike.”
Nigel is hoping to build mutually beneficial relationships with bicycle shops throughout Melbourne who he hopes will see Alchemy as a useful service for them, rather than as a competitor.
“Often bike shops don’t want to take trade-in,” he explained. “They want to have a pristine looking store and I totally recognise why they would want that.
“But they also face the resistance of the purchaser to buy a new bike until they sell their old one. So what we offer is that the dealer can refer their customer to us. We will sell their second hand bike for them. They then have the ability to sell that customer a new bike.
“Alternatively, they could take a deposit on the new bike and then refer the customer to us to sell their second hand bike for them.”
Nigel has a long term vision to take his Alchemy Cycle Trader model Australia wide, but plans to start small and learn from experience first.
“Initially, as we test the model, build the business and understand what the value proposition is not only for consumers and ourselves but for potential retailers who would like us to help them, then we’ll be dealing with a close network, which is Melbourne,” he said. “I certainly hope that we’ll be leveraging into other states in the future.”
Whilst there are few specialist bike shops in Australia that sell second hand bikes, there are hundreds of Cash Converters and other pawn shops or second hand dealers with a row of cheap bikes out the front. Nigel intends to avoid this market entirely.
“There’s nothing that we’re going to be doing in low end bikes,” he said. “If you describe a road bike as being a Shimano 105 quality bike or better or a Shimano Deore or Deore LX mountain bike or better, that’s the sort of bike we’ll get into. If the bike didn’t sell for at least $1,000, or maybe $1,500 new, then we won’t be selling it as a second hand bike.
“It’s purely quality bikes. We want to present them beautifully and make sure the experience for the customer is fantastic.”
Of course, many higher end second hand bikes these days are sold via eBay, Gumtree or other online forums. But Nigel has also come up with a point of difference that he can offer that these channels do not.
“We’re developing a ‘Roadworthy Certificate’ so that a potential purchaser understands exactly what the condition of the bicycle is,” he explained. “We will have a workshop within our premises, so if a seller of a bike says, ‘I want my bike to be sold as roadworthy bike,’ then we can do those mechanical repairs.
“In some ways we’ll be functioning as a normal bike shop. We will sell new clothing, helmets, shoes and accessories, because often when someone is buying a second hand bike, they have the same needs as a new purchaser.
“If someone comes into the store and needs mechanical repairs we will be open to helping them, whether they’ve bought the bike from us or not.”
Perhaps these initiatives may give existing local shops in the area cause for concern but Nigel is adamant that all the bikes for sale will be used.
“We’re not going to be a dealer for any new brand,” he said. “We’ve already considered the question of whether we would sell ‘brand surplus’, in other words run-out stock of a model that a wholesaler has too many in stock.
“But as soon as I put any of this stock on the floor, I would be competing against every second hand bike sale. I have to work out where my loyalties lie. That is with selling the second hand bikes. That’s what makes the business unique. If we start selling new bikes, then we can’t expect retailers to support us.”
Read more at http://www.bicyclingtrade.com.au/news/retail/nigel-letty-to-open-unique-new-store#RxGDlY6WiIrdXk3J.99