Rapha is to scale back on discounting as the upmarket cycle clothing business looks to get back on track following its acquisition in a £200 million deal in August 2017 by Steuart and Tom Walton, heirs to the Walmart grocery fortune.
Founder and CEO Simon Mottram revealed the change of strategy in an interview with the Sunday Telegraph, ahead of Rapha filing its first accounts since the takeover with Companies House.
While the newspaper did not publish precise figures for the year to January 2019, it did report that in previous 18 months, sales had dropped and pre-tax-losses totalled £50 million.
> Rapha records £20m loss in six months after being bought by Walmart heirs
Mottram admitted to the newspaper that at the point of the takeover, the company was suffering from its growing focus on discounting as well as expansion into new categories.
“We’d taken our eye off the ball,” he said, adding that Rapha had become “incredibly complex,” in the decade and a half since it was founded.
“We developed into so many product categories. It was fuelled by ever-increasing product ranges and product purchases, with discounts to clear the products.
“There’s a point at which the discounts at the end of the season become mid-season discounts and early-season discounts. And then Black Friday and it ends up being far too much of your business.
“We realised after Tom and Steuart bought the business that we’d been doing too much of this,” he admitted, explaining that the Waltons injected £30 million into Rapha after their takeover to help it avoid defaulting on a £20 million bank loan.
Since then, Rapha has undergone what Mottram termed “18 months of pretty interesting challenges in the business” including making a number of staff and management redundant, reducing international operations and closing the company’s cycling holiday arm.
He said the company is now headed in the right direction, and expects it to break even during the current financial year and to repay £10 million in bank loans.
A large part of the turnaround is attributed to retreating from the discounting culture that the company had come to rely on to drive sales at the expense of profits – something businesses across the retail landscape have experienced to their cost, and hits businesses with a luxury positioning particularly hard.
Mottram explained that scaling back the discount offer, which had grown to account for a third of sales, would not take place overnight to avoid losing customers, but added: “It’s about having proper quality sales at the right margin.”
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42 comments
Say what you like about Rapha but as far as women's cycle clothing is concerned they've done a lot more than all of the big brand retailers have and have invested in good, female-specific design. I will gladly pay the price for something that fits me properly, provides a pad that's actually made for long-distance cycling, and isn't always pink! Their women's Brevet bib shorts are the best.
I've got a decent job and earn a decent wage - but I've also got kids and a life beyond spending stupid amounts on cycling kit. I'd never pay 'premium' prices for a brand like Rapha. Some of the other premium brands have more of a cycling heritage than Rapha - but a £20 top from decathlon is just as good. I've got a Brevet jersey and it is great...but I bought it off Ebay for £20!
I really like Rapha and many of my recent purchases have been Rapha. I get them quite cheap through from a wonderful site called ebay. They don't have the full range but I am patient.
No really, it is quality stuff and although I like to clean and rotate my kits so the more the merrier. Cheap short sleeved tops are fun, but in the winter a quality long sleeved or jacket is worth the extra money. And I don't go in for all that snobbery, I am glad to wear a flash of pink and if you think I am a trust fund wanker and not prudent with my money that is your problem. I revel in the irony of people denying themselves nice things they can afford because they don't want to look like they can afford it. Class perverts they should be called. You don't want to be seen wearing Rapha but you and your orange faced missus are off to Dubai again; give it a rest.
Seems to me I'm doing it wrong. I set myself an amount i want to spend, read reviews and buy what came out top. I'm not loyal to a certain brand as the chances of them changing suppliers year to year may mean today's brand may not be the same quality as yesterday's.
Wow; some of the brand squabbling on here would put a teenage girls playground to shame!
Rapha have been around for a while and not as niche as they used to be; some other brands (eg Velobici?), seriously expensive, have moved into that space.
Yep, this is true. I'm an idiot for getting sucked into it!
The best thing about Rapha apart from the great kit (bought in the sale of course!) is the fact it pisses off the moany old losers who hate anything different to what they have/can afford.
It's a wonderful thing. Think about it...instead of wasting your time talking to someone who turns out to be a moany old bigoted prick...they avoid you due to what you're wearing and hey presto!!! YOUR TIME ISN'T WASTED!!! This is a great thing. Enjoy it while it lasts Rapha fanboys!!
Er yeah I think people avoid you for a few reasons.
/
Could see this coming a mile off. They launched a more affordable 'core kit' aimed at the aspirational, to play in the £70-£100 space.. the kit looked smart but virtually everyone else makes better performing kit in that space, so they limit themselves to an odd customer base of people who just want to own a £70 rapha jersey because it's rapha. They moved to selling via larger etailers, but they have to agree with larger etailer rules which usually involve reduced margin somewhere along the line, or in their case, agree to sell off old kit at discounted pricing, to a much wider marketplace. Their kit has frequently been marketed at the young and incredibly skinny demographic for a year or two now = This is not the demographic which rapha was built on. Annoyingly their 'fit sizes' also changed a while back.
If a product is high end and exclusive it needs to be produced in numbers which make it so, not available to everyone and probably ending up in a sale somewhere two months later.
I sort of like what they are doing now with those 'carpet clothes', y'know weird looking niche use tracksuit for a gazillion quid, god knows who'll buy it, but if they're aiming for the wealthy insta/rap/kadashian demographic, them I think they've nailed it. This puts them back on track to be an 'exclusive' brand who can command high end money.
I think Rapha has lost their brand identity. I think some of their marketing people have a narrow view on the world which revolves squarely around generation Z. far removed from the Gen X and Gen Y people who spent the money to build the brand in the first place.
I think part of the problem is there are a lot of other brands doing the rapha style thing but possibly doing it better and without the marketing crap and backlash. Back when they started there wasn't a whole heap of well made stuff that was understated but with a little bit of design flare. Now there's a whole bunch of brands making kit that doesn't look like italian pro continental replica, is made pretty well and isn't likely to have people turn their noses up at you for wearing it.
The thing that has always separated Rapha from the newer premium brands (e.g. MAAP) is having a physical shop location. Being able to actually try on cycling kit is a huge bonus. Ordering a load of stuff online only to have to send half of it back is a real pain.
I don't know what the split between their online and physical sales are, but they don't have many store locations so I can't imagine it's a huge advantage to them over many brands, especially when they then have to support the cost of those stores, whereas a lot of people buying online now are used to the idea of potentially sending things back.
Just like all of the other premium brands discounting really doesn't work as it devalues the product. No one wants to pay full price if they know that next month someone else will turn up on the club ride with the same jacket that they paid half the price for.
Reducing the frequency of sales will really help them here. The products are quality and the range covers a wide variety of budgets and styles.
I have a few Rapha items that work for me (e.g. the Brevet jersey and the extra zipped pocket), I also have cheaper kit from other retailers. I just don't get the 'casual wear' but as others have said, we all get to choose how we spend our own money.
To the anti-Rapha brigade, sadly there is still no shortage of cyclists who believe they have a monopoly on authenticity.
Once the weather warms up I don't think the level of kit matters as much and is fashion. When you see the pros riding with jerseys wide open you know the wicking, cooling etc. is all bollocks. Ride hard and you will sweat.
So true.
I think most of the advertising claims are up there with wifi cables and wines - most of it is made up hype and can be objectively demonstrated to be so. However, the subjective element is powerful, and if it scratches an itch for you maybe it's money well spent. Other people get a different satisfaction knowing their Aldi/Lidl purchase performs just as well.
Nobody would buy Rolex if it was always cheap, but I might buy a cheap one if they are almost always expensive.
For discounting not to break the prestige it has to be rare, and associated with a valid reason, like end of line stock, store closure, etc.
Did you mean hifi cables? Or have I been doing wifi wrong all this time?
Yes, hifi cables. That's what I said. Now, where's my wine glass....
No one pays full price when discounted product is available. You are either a premium, exclusive brand or you are not and you cannot play at both the premium and discounted ends of the spectrum for long.
Discounting hints at over-production and this in turn suggests that production (and quality) have dropped. I wonder how much of this is down to expanding the range beyond road cycling into casual wear, etc. together with the accompanying decline in quality.
I've bought some Rapha pieces over the years, mainly for reasons of quality, or their no quibbles repair policy. I have some Castelli and some Assos stuff for the same reason.
My main gripe with Rapha has always been that their white arm band is on the wrong arm for UK roads. My main fear is that financial leverage and over-expansion will lead to the demise of this brand. As a rule, financial leverage fucks fashion businesses, eventually.
***Buy one get one free***
Getting your ordering and stock levels right to meet demand and prevent the need for discounting must be devilishly difficult. I hope they don't go down the route of some fashion brands who, in an attempt to protect their premium pricing strategy and brand image, destroy unused stock rather than sell it at clearance.
Getting your ordering and stock levels right to meet demand and prevent the need for discounting must be devilishly difficult. I hope they don't go down the route of some fashion brands who, in an attempt to protect their premium pricing strategy and brand image, destroy unused stock rather than sell it at clearance.
I have a couple of Rapha items that I bought ages ago off Ebay for a fraction of the RRP partly to see what all the fuss was about. I found them well made and excellent quality, however, I wouldn't pay full price, but then again I don't have a beard, tattoos or a top knot and drink craft ale. Just a joke before anyone gets offended!!
Interesting how the branding has become a bit "Marmite" to so many people, yet they wear Assos/Castelli which is of a similar price point and quality.
Each to his own, live & let live. If you want it and can afford it then the choice is up to the individual.
I think they're getting on top of things. Within the last year or so it's been much harder to be sure of picking up what you want at a reduced price: there are still good discounts to be had but it's more often only for odd sizes and colours.
Also the range is simpler. A couple of years ago there were Pro-Team jerseys that were flyweight, lightweight, midweight... In the shop there were clearly differences between them and money being no object you'd buy them all and always have the right outfit. In practice you suffer analysis paralysis and end up not getting any of them.
I have a couple of Brevet jerseys that continue to serve me well: comfortable, versatile and ... ahem [checks mirror] ... smart looking. If they vanished tomorrow I would happily pay full price for a replacement in an instant.
I have a few bits of Rapha - some great, some disappointing. The cost makes the disappointing items feel like a really bad buy but that can be said about anything. It is my choice to buy it though.
What I struggle with is the anti-Rapha sentiment - sometimes it feels like it is more a criticism of anyone that got into cycling recently and likes being part of the segment that Rapha inhabits.
I have a lot of Pearl Izumi clothing. In my opinion it is just as good as Assos but without the ridiculous prices. I fancied some Rapha clothing once or twice but the prices put me off.
The range has got too complicated. Too many variations on a theme and the stuff is generally very good and lasts well so it needs a constant influx of new customers - problem is that there's a lot of competition in the market and that cycling is simply not growing at a the rate needed to bring in that number of new customers.
Existing customers neither need nor can afford to keep buying new stuff every season, many people simply wait until the sales and that's not a sustainable model either.
I always thought the cycling holiday market was a good one - once you've bought all that kit, a nice holiday to wear it all, talk to some of the people behind it and so on seemed a logical move but obviously the margins weren't there in that either.
I'd strip the range back completely, simplify it and reduce the overhaul rate as well, it would keep the range fresh for longer.
It gets people into the shop, increases awareness of the brand and gains a lot of publicity. Rapha have hosted some amazing talks over the years; everything from pro riders to authors & photographers, women's racing, mental health and historical cycling stories.
So, according to the Rapha guy, their overpriced stuff has not being sold expensive enough. Say what?
Premium products that actually last are problematic. If Rapha was good enough to last a long time then why would anyone keep buying it.
The price excludes a degree of expansion as general Joe can't afford it and how many pairs of bib shorts or jerseys and jackets do you need? Even the well-heeled aren't going to keep buying endless variations on a theme.
To a degree but then that expectation of longevity holds within all levels of the market nowadays, the less expensive brands are often going for greater sales/lower margins but people soon get peed off if their £40 jacket only lasts a couple of years so doesn't meet expectations in terms of performance/fit/wear.
So they're more likely to trade up, that's when the mid range stuff starts to pick up but then expectation shifts again. The (hopefully longer laster/better wearing) higher end product gives customer faith & loyalty in the brand, you're more likely to self promote the product to others, this is what these brands want. You promote the product as worth the money, that it's an investment financially whilst giving you all the benefits of the high end product. If you've a £250 jacket that lasts you 5-7 years with all the benefits of a higher end product then actually that's not a hard sell as great VfM, you are more likely to buy again and tell others.
I'm not a top end buyer myself and I don't ride enough or train/compete to the max (which is when performace products are more likely to benefit) to justify buying but I can see the value of a high end product to some people IF it meets what they sellers say it does AND has a good longevity to it.
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