A Mike Ashley takeover of WiggleCRC would be a "real concern" for the bike industry, a leading retailer has said, as the future of the brand remains in doubt. Others have said that Frasers Group acquiring the stricken firm makes sense, judging by its previous business practices.
Last week, sources revealed to Cycling Weekly that WiggleCRC had now made nearly every member of staff redundant after entering administration last year.
It has been reported elsewhere that Ashley's Frasers Group is in pole position to take over the business. Frasers’ portfolio, led by Sports Direct, already owns Evans Cycles, which it acquired for £8 million in 2018, after the company entered administration.
Last year, Ashley agreed to purchase German chain SportScheck, a subsidiary of WiggleCRC's parent company SSU. It also took control of cycling retailer ProBikeKit in 2023. The acquisition of Wiggle would therefore not come as a surprise; last October, the retailer's administrators urged potential buyers to "get in touch without delay" if they were interested.
"I would say that it [a takeover of Wiggle by Ashley] would be a real concern to the cycle trade," Chris James, of the bike retailer JE James, said. "I’m not sure if he’s made any real money through the cycle business he has been involved in so far, but he has deep pockets."
Last year, the pre-tax loss reported by Evans Cycles deepened in 2022, accounts revealed. The firm reported a pre-tax loss of £5.2m ($6.5m) in the year to 25 April 2022, down from £2.7m ($3.4m) the year before.
"The Evans stores, you don’t always get the service [you get at independents]," James argued. "He changed the contracts there before, and there were a lot of good staff that left. I’m not always in agreement with the way he runs his businesses."
In 2021, Evans made over 300 staff members redundant as well as adding the remaining employees to zero-hour contracts.
However, Gavin Hudson of Butternut Bikes, in north London, said that traders should avoid criticising Ashley given the current state of the industry.
"He [Ashley] has, or his company, has purchased these brands that people didn't want to buy, and in many cases kept those brands going without running them into the ground and they haven't gone bust," he said, adding: "Whilst all of us in the rest of the trade might not like it, they are effectively rescuing and making the best that they can out of these things rather than letting those companies completely disappear."
Wiggle offered a range of major brands, but the retailer also had some in-house marques of its own, like dhb, Vitus and Nukeproof.
"It would be interesting to see the amount of money that Wiggle has actively invested in brands like dhb and things like that," Hudson added. "What happens to those? Because I don't think they've got much resonance outside of the trade."
James said that Wiggle's business model was always going to prove to be unsustainable in the long term.
"I know they were trying to do international sales as well, I just think it was too big," he said. "The problem in the cycle trade is that there isn’t as much profit as you think once you’ve paid everything out. It was a bit pie in the sky, really, what they were trying to do."
Achieving balance within the Frasers Group portfolio
Meanwhile, Dr Gordon Fletcher, the Associate Dean of Research and Innovation at the University of Salford business school, explained that he sees the potential acquisition of Wiggle by the Fraser’s Group as them looking to marry up high street stores and e-commerce, within its existing portfolio.
He said: "It's interesting because there's been a call for nearly 20 years about the death of the High Street and at the same time, what you're seeing here is potentially Frasers taking that head on, in the sense of what it has in its portfolio and what appears to be them trying to make a blend between bricks and mortar and the actual e commerce, virtual environment."
"The highstreets have taken a hammering"
Dr Gordon Fletcher
"The problem is that there are people along the way who are effectively losers in all of that," he added. "And that includes employees of companies like Wiggle because they're now out of a job, so there's the downside to it as well.
"That's been true with a number of these purchases, they've done things like they've only bought the brand name, they've only bought the IP and not bought all of the other elements.
"And I think that's a reflection of what is effectively quite a careful bit of business because they're looking at where the value really lies. And it looks like the assessment of Wiggle is that the value lies in the IP and in the brands, rather than perhaps its current way of retailing."
He concluded: "It's all quite challenging, the high streets have taken a hammering, we know that they’ve taken a hammering because of e-commerce. And then you have a company with the cash to make these purchases and it's clearly trying to do something with them.
"But it's benefiting from the failures of those existing businesses. So there are definitely ups and very definitely downs in the story."
Talent loss
Mike Rice, the director of London-based Balfe’s Bikes, said that he expects significant differences in terms of Wiggle’s online offering were Ashley and Frasers group to acquire the firm.
"Initially, I think it's very sad that the business has gone into administration," Rice said.
"In terms of the business being acquired by Mike Ashley, it feels unlikely that they would operate under the same manner that Wiggle and Chain Reaction have been operated, I guess, as a very specialist bicycle retailer selling a huge array of premium cycling products.
"So I'd imagine that the range and commercial offering would be significantly different to what is currently on the site."
Rice has previously said that he feels the bike industry is currently the most turbulent he has ever known it to be. He explained that employees recently out of work at Wiggle might struggle to find a way back in, leading to a 'brain drain' within the sector.
He said: "I think sadly, for a lot of people, they won't be able to find suitable vacancies within the cycle industry.
"As we know, the industry has been very challenged post Covid and many businesses have reduced their infrastructure and support team staff so that the opportunities are just not there in a way that they were three or so years ago.
"Unfortunately, there's probably going to be a large number of experienced people who will ultimately have to find alternative careers and will be lost from the industry, which is not a good thing, until it can return to growth mode."
Frasers Group were approached for comment in relation to this story, but did not respond prior to publication.
