Raleigh balances nostalgia with pragmatism in going electric

At the ‘Experience Raleigh’ store in Nottingham – the UK’s eponymous bike brand’s main showroom – enthusiast Julian Horsfield spoke enthusiastically about the company’s past.

Horsfield, who owns a 63-year-old Raleigh, described the thrill of tracking down rare versions of Chopper children’s bikes from the 1970s and 1980s. “I’m all for original productions,” he said.

Despite this great cycling heritage – Raleigh was founded in 1887 and at its mid-century peak produced 1 million bicycles a year in Nottingham – the company staked its future on a niche and premium segment of the market.

Owned by the Netherlands Accell group, Raleigh still makes some vintage-style machines and children’s bikes. However, the decision to focus on e-bikes – which have an electric motor to assist pedaling – and cargo motorcycles with a large front hopper for children or goods appears to be paying off.

Accell, which bought Raleigh in 2012, shifted its strategy towards e-bikes and cargo motorcycles about five years ago.

The company expects to sell more electric-assisted bikes than purely mechanical machines this year for the first time. While it doesn’t disclose its total sales, industry figures show that 40 percent of the roughly 45,000 machines Raleigh sold in 2022 had electronic assistance.

The challenge now is to convince consumers who associate the brand with very different models to spend £1,000+ on new offerings. Adding to the difficulty is a sharp drop in bike sales after many bought them during the lockdown.

Raleigh’s Lee Kidger: “Electric bikes and electric trucks are the future” © Cameron Smith/FT

“We feel this is the next evolution for Raleigh as a brand,” said Lee Kidger, UK managing director of Raleigh. “We believe that electric bicycles and electric cargo motorcycles are the future.”

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According to Carlton Reid, a sustainability journalist specializing in cycling issues, the move to more practical machines made sense for Raleigh. But he warned that bike sales in the UK had fallen sharply after a boom during the Covid lockdowns. “It’s a turbulent market,” Reid said. “The crash was bigger and probably steeper than people thought. The bicycle trade has not recovered.”

Models at the Nottingham showroom included an Array e-bike for £1,199 and a Stride cargo bike for £4,395. Still, Raleigh’s new niches have so far withstood the market downturn.

In the UK, e-bike sales were 4 percent lower in 2022 than the previous year. annual market report professional organization is the Bicycle Association. But that compares with a 22 percent drop in sales of purely mechanical bikes to 1.88 million units. After two years of rapid growth, the 155,000 e-bike sales in 2022 also exceeded the 2019 level by 74 percent.

According to Kidger, Raleigh has around 11 per cent of the UK e-bike market.

The company is banking on its name recognition among UK consumers to compete with a range of competitors including the Taiwanese giant and big US brands such as Trek and Specialized.

Accell is listed on Euronext when it bought Raleigh, but was taken private in 2022 by a consortium led by KKR, the US private equity firm. Pursuant to the deal, the company’s equity rose to 1.56 billion euros.

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Meanwhile, the Bicycle Association estimates between 8,000 and 10,000 cargo bikes were sold in the UK last year, with some retailers reporting year-on-year increases of up to 40 per cent.

According to Kidger, Raleigh will account for around 5 per cent of UK cargo bike sales in 2022, while Babboe, another brand from the Accell group, will account for 10 per cent.

The Cycling Association estimates that 8-10,000 cargo bikes were sold in the UK last year © Cameron Smith/FT

While Accell does not publish separate results for the Raleigh brand, figures filed with Companies House show the company made a pre-tax profit of £2.82m on sales of £74.5m in 2020, the latest year , for which data was submitted.

According to Kidger, the Raleigh brand has an advantage in selling e-bikes and cargo bikes because the brand has particularly strong associations with the over-50s, who are most likely to buy e-bikes.

“The Raleigh brand can take us further, especially when you look at the age of people buying electric bikes,” he said.

Focusing on the two niche areas felt like Raleigh. A Dutch rider, Joop Zoetemelk, won the 1980 Tour de France on one of his bikes, and generations of British cyclists grew up unaware that other brands were available. The quality of its racing and touring bikes has earned it a good reputation in the United States.

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But according to Kidger, a review of Accell several years ago decided there was no prospect of the company competing to sell “mass market bikes.”

“In 2017-2018, we examined it thoroughly. . . and that has now evolved into a much narrower strategy around premium electric bikes,” he said.

Like e-bikes, the company’s cargo bikes also have electric assistance. While Raleigh retains the design function in Nottingham, the bikes are now manufactured at Accell’s land-based sites, many of them at a specialist e-bike factory outside Budapest in Hungary.

Michael O’Reilly is enthusiastic: “I think it’s fantastic that Raleigh has finally recognized the heritage element” © Cameron Smith/FT

But Raleigh doesn’t feel like he’s completely neglecting loyal, nostalgic fans.

York-based Horsfield and around 20 other fans were at the Nottingham store to preview a new retro product, details of which remain confidential.

Kidger admitted that the margins on such models are “not huge.” “We do these as brand activations rather than money-making,” he said.

But this nod to the past was a joy to another Nottingham enthusiast, Michael O’Reilly, chairman of the annual Raleigh Chopper Show, which celebrates a famous type of children’s bike.

O’Reilly said he recognized that Raleigh’s retro line wasn’t the be-all and end-all.

“Obviously, I appreciate that e-bikes and cargo bikes are necessary and essential for active travel,” he said. But he added that he’s glad the brand is respecting its past. “I think it’s fantastic that Raleigh has finally recognized the heritage element,” O’Reilly said.

Source: https://www.ft.com/content/c6660a89-af98-40e9-880a-295c5fa898ae