After two years of upheaval in the bicycle world, we took stock with one of the heavyweights in the sector, Shimano. We were able to speak with Philippe Guillaume, marketing manager at Shimano France.
The bicycle may be a centuries-old means of transport, but it seems to be experiencing a second youth, especially in a market like Europe. The health crisis that has shaken the whole world since the start of 2020 has slowed down production, or even stopped it, while being a source of particularly strong demand for bicycles, whether electric or muscular. Added to this is a geopolitical context that complicates the supply of raw materials and a demand that is maintained, driven by climate issues and the changes they impose.
At the center of this tumult, the Japanese company Shimano, world leader in cycling components, finds itself both victim and beneficiary of this context. The company, present in 31 countries around the world and which celebrated its centenary in 2021, achieved a turnover of 2.9 billion euros in 2020, driven by extraordinary demand. The challenge of the past two years for Shimano has been to respond to customers from all walks of life (individuals, bicycle manufacturers or even bicycle dealers).
In France, the bicycle represents 42% of the means of transport sold each year. The VAE has experienced very clear growth in recent years, with in particular a 28% increase in sales in 2021 compared to 2020. A market in which Shimano is well represented by its components (derailleurs, cassettes, brakes, chains… ), but also with electric motors from its Steps range.
During a visit to the Shimano Experience Center, located in the south of the Netherlands in Valkenburg, we were able to speak with Philippe Guillaume, the brand’s marketing manager in France. The opportunity for us to discuss these past few months so special and how the Japanese giant has adapted.
Philippe Guillaume, Shimano France marketing manager — By adapting. The first point is the health crisis which has impacted production sites in Asia and even more permanently than what happened in Europe. A year ago, in 2021, we had production sites that were not yet running at 100%. There were confinements a little longer and a little harder in Asia than in France. It handicapped us in terms of supply.
At the demand level, it was a follow-up with customers of all types, whether bike brands or the network after-market, therefore the network of stores, bike shops and retailers. We had to make sure to work well with them on the planning and staging, timing, of their deliveries, because we were unable to deliver at the moment “t” such and such a type of tape or such of chain. So we tried to distribute the quantities according to the customers and to distribute them over time, above all, and that led to order anticipations of several months, 6 months, or even a year in some cases.
No, it’s very simple, at Shimano it’s “first come, first served”. So it’s fair and unfair. This may be unfair to larger customers who may feel that at some point they need to be served earlier or first. On the other hand, it is fair compared to the one who is able to plan his needs, perhaps better than the others, in any case who knows what he wants and who knows when he wants it. This is how it works today at Shimano. There were some fantasies at one point where we read that Shimano favored its big customers to the detriment of the small ones when that was not the case at all.
So, it is a request that is maintained. The first consequence was to review our production systems. Not necessarily opening new factories, but working on productivity, improving productivity in existing production sites and that has resulted in a very strong increase in what we have been able to deliver to our customers. The fact is that it was not enough compared to what was requested, but we made a very, very big effort to produce more and produce what was requested.
Today, we are still running behind this history of demand. We know that it will drop a little bit, but we don’t know at what level. It’s true that there was a very strong enthusiasm in 2020. And 2021 was in the same vein. We think it’s stabilizing today, even if we are still chasing deliveries of everything we have in our order portfolio. We think it’s slowing down, even if everything is relative. It’s “slowing down” compared to 2021. On the other hand, if we take 2019 as a reference, which is the last normal year in the world of cycling, we are quite honestly above it. But the whole question will be to know: are we going to be at +100%, +80%, +50%? Today, it is taking shape.
No, it’s really the timing: what was requested, what was produced by each factory according to its production specialty. The production sites are not interchangeable, so each has produced according to the arrival of orders and to the best of its ability to satisfy customers. We didn’t have any reasoning like “we’re going to do all the entry-level because it’s volumes, or else do all the high-end because it’s image”. Shimano has tried to move forward in the most in tune with its customers.
Yes, the Covid has greatly disrupted the supply of raw materials. For example, today everyone wants semiconductors and there are quite a few of them in the bicycle, there are even more and more of them because there are electronic transmissions, electronic assistance systems … So we know that it is a limiting factor today for production.
Added to this are transportation issues. You should know that straddling 2020 and 2021, the price for transporting a container from Asia to Europe was multiplied by 10. And everyone wanted it at the same time, so that had an effect on the price, but also on capacities. Once all the containers are installed in a boat, there is no more room. You have to wait for the next one and wait for your turn or succeed in passing in front of the others, and it is not easy. Add to that the event of the Suez Canal, which was blocked; Admittedly, it was a microphenomenon, but that didn’t help matters.
Innovation continued at Shimano. Even over the last 2 years, we have continued to launch our new products. There is a market that is in demand and from an economic, innovation and image point of view, it is not desirable to pause its innovations. They come at the same time as the rest. So the launches were done as well as possible under the circumstances. The schedules were respected in accordance with what our customers asked us, because the slowdown affected everyone.
Today, the French market in particular is driven by the electrically assisted bicycle. In France, one in four bicycles sold in 2021 was a VAE. There have not necessarily been more bikes sold overall compared to the previous year, on the other hand we have moved upmarket and in price with an undeniable “VAE effect”. It is estimated that France will follow the trend of its neighbors such as Belgium, the Netherlands or Germany. We are still at the beginning of the VAE; we are still far from the top of the wave. Our efforts at Shimano France will focus on making our systems for VAE better known, whether in mobility or e-MTB.