A SCOTTISH chain of bicycle shops is hoping to take on private equity-backed rivals by cashing in on a boom in leisure and commuter cycling to double the size of the business.
Edinburgh Bicycle Co-operative, the member-owned firm that dates back to 1977, will this week set out plans to reach £20 million in turnover by 2017 and create 140 jobs.
The co-operative launched with a single store in Edinburgh but embarked on a steady growth plan in 2001, which has seen it open shops in Aberdeen, Leeds, Manchester, Newcastle and Sheffield.
A number of private equity players have recently entered the market, attracted by the growing fashion for cycling. Last month Bridgepoint paid £180m for Wiggle, while Cycle Surgery and Evans Cycles are also private equity-backed.
Jeremy Miles, managing director of the 160-employee Edinburgh firm, wants to acquire struggling independent shops. The co-operative, whose income last year hit £11.5m, will also look to open further stores, he said, and invest in its growing internet business.
“There are a lot of changes going on at the moment, there are a lot of private equity firms coming into the cycling industry. The traditional bike shops that everyone would think of are finding it quite difficult and are disappearing,” he said.
“The growth in the market is very much the weekend leisure cyclists and the commuter. The internet is also driving a lot of this and we want to be part of it, but we want to be a business with a slightly alternative view.”
So far the firm’s expansion has been restricted to Scotland and the north of England, as its distribution centre is situated on the outskirts of Edinburgh, but Miles said many of the major growth areas are in the south.
“The real opportunity is in places like London, Birmingham and Bristol,” he said, adding that distribution problems were not “insurmountable”. “We would have to see it as a bigger cost in the business,” he said.
Miles will unveil his plans at an event in Edinburgh on Thursday to mark the start of the United Nations International Year of Co-operatives.
He hopes the business will develop along the same lines as the Co-operative Group’s food business, which nips at the heels of the big four food retailers.
“That’s an interesting model and something we would aspire to, especially in the shadow of these large powerful corporates that are coming along,” he said.
The co-operative, which has been working with Scottish Enterprise on its growth plans, expects to fund the expansion through a combination of its own funds and bank lending.
Employees are invited to become members of the co-op after a year’s “apprenticeship”.
Sarah Deas, chief executive of Co-operative Development Scotland, which is co-hosting Thursday’s event, said: “Edinburgh Bicycle Co-operative is an outstanding example of how a business can grow and prosper when the ownership is shared by the staff.”