Pedal pushers

TI Cycles is wheeling up a new strategy to tackle a slack market
22 February, 2005, Business Standard

It's difficult to imagine urban, high-income professionals switching off their televisions and hopping on to a pair of wheels. But the scepticism doesn't stop the Chennai-based TI Cycles from trying. Better known for its flagship brand BSA, TI Cycles is launching a bicycle targeted at 30-something urban audiences.

An uphill ride? Perhaps. In India bicycles are either a mode of transport for lower income groups or a toy for children. There's no market here for cycling for pleasure — an increasingly popular leisure activity in the West.

There's a good reason why TI Cycles is trying to create a market for leisure cycling. Over the past few years the air's been seeping out of the Indian cycle market: industry estimates place the total organised market at 9.6 million units in 2004, down from 12 million units in 2001. And the decline has been largely due to a shrinking rural market (urban sales have stagnated at 3.5 million units). Until the mid-1990s, close to 90 per cent of bicycle sales were from rural areas, with the rest coming from bikes bought for children and people from the urban, low income groups.

"The major problem ailing the bicycle market, especially in the rural areas, is cross-market competition," says S K Rai, director, Hero Cycles. According to an auto industry analyst, since 2000, there have been at least 17 or 18 motorcycle and scooter launches a year compared to just four or five in the 1990s. Then, thanks to easier financing of two-wheeler loans and increased cementing of roads, the potential rural customer has a choice to upgrade to a moped or motorbike. That's impacted urban sales too. S Pandit, the owner of Jaihind Cycle Agency, one of the biggest cycle shops on the outskirts of Mumbai, seconds this. After all, he's seen sales of adult-size bicycles dwindle from around 60 a month to under 30 a month since 2001. The saving grace: children's cycles are moving marginally faster.

The road ahead of TI was, therefore, clear. "We had two choices," explains Mohit Khattar, vice president, sales and marketing, TI Cycles. "Keep focusing on the rural and children's markets. Or tap the latent opportunity in the urban market." TI decided on the latter, putting in over six months of research and development to come up with an offering for urban adults. The result is the BSA City, a cycle that TI claims is ergonomically better suited for the 30-plus rider. For instance, the distance between the handle bar and the seat is comfortable enough for an adult whose body is not as flexible as a teenager's or a child's.

Still, the biggest hurdle for TI will be the blind spot about cycling in the minds of urban adults. According to industry sources, internationally, over 60 per cent of the sales of brands such as Crack are to adults who cycle for leisure or exercise. Admits Khattar, "Adults in India don't want to get on a cycle. So changing mindsets and sensitising adults to the concept of cycling is going to be tough."

One way of doing that is customising the product to customers' expectations. Apart form paying attention to the comfort factor, TI has also taken into account that an adult will not want to be seen riding something that resembles a teen's bike. "The bike has to appeal aesthetically to an adult," says Khattar. The BSA City will be available in grown-up colours like maroon and black, and will be adorned with fewer graphics than a typical teenage riding machine. Also, compared to the standard bikes, this model has more moulded plastic components, making it look sleeker.

Will that be enough to tempt the yuppies? TI is taking no chances. It's planning a mass media campaign next month that will rope in celebrities from the target age group to endorse the City range (it will also launch models for women and older teens). "We need to glamourise the bicycle for urban adults," concedes Khattar.

That also means paying attention to the point of sale. In May 2004, TI launched its first company-owned retail store in Chennai, called Cycleworld. Two more stores will be opened in the city, followed by stores in the other four metros by June 2005. The spacious, air-conditioned showrooms are a world removed from the typical cycle markets, which are dingy, crowded places with little room to walk, leave alone try out a new cycle — in contrast, the TI showrooms include test tracks for trials. To encourage sales of the new model, TI is offering an exchange offer that is being widely advertised locally by pamphlets and banners. According to Khattar, exchange schemes on other models account for 10 per cent of the Chennai store's revenues at present. Other schemes to woo customers include after-sales service and doorstep delivery.

Meanwhile, the competition isn't sitting idle, either. Market leader Hero Cycles, for instance, has also launched four models targeted at the urban adult, including an aluminium, all-terrain bike Thunder last month. To get closer to its target customer, Hero is looking at opening stores at high footfall locations such as malls.

It may seem like an uphill ride right now, but could this also be the beginning of a new business cycle?