Halfords, a retailer that sells everything from car parts to bicycles, is feeling the impact of consumer nervousness about the upcoming Budget. The uncertainty surrounding Chancellor Rachel Reeves’ plans for the Budget, set to be unveiled on October 30th, has only added to the challenges Halfords is facing due to inflationary pressures in the economy.
Despite a recent easing of inflation, consumers are still cautious about their spending habits. Halfords CEO Graham Stapleton noted that consumers are holding back on discretionary spending, especially with uncertainty looming over the Autumn Budget.
In the first half of the year, Halfords saw a decline in sales of car parts and bicycles. The company mentioned that sales of tyres were particularly challenging, with customers opting for more budget-friendly options. The leisure cycling sector also faced difficulties.
This decline in sales of consumer tyres and cycles is not a new issue for Halfords. In fact, the company reported a significant drop in these sales in its annual results announcement earlier in the year. Market volumes for cycling and consumer tyres have been on a downward trend, with bike volumes down by approximately 30% and tyre volumes down by around 14% compared to pre-Covid levels.
During the pandemic, bicycle sales saw a surge as more people turned to cycling for exercise and transportation. However, Halfords has noticed a shift towards more enthusiast customers in recent months. The company’s ‘performance cycling’ business has been performing well, thanks to the positive reception of new premium bike ranges.
While Halfords continues to face challenges in its core markets, such as cycling and consumer tyres, its services and business-to-business strategy have been supporting growth. The company has been focusing on increasing its service-related revenues, offering services like mobile tyre-fitting from vans and operating autocentres.
In an effort to offset the impact of inflation, Halfords launched a cost-cutting initiative and aims to deliver £30 million in targeted savings for the full year. Despite a slight decrease in total sales in the first half, the company remains focused on growth and innovation.
Looking ahead, Halfords is investing in its Fusion concept, which aims to optimize its service offerings across various operations. The success of the Fusion concept in trial locations like Colchester and Halifax is expected to support the company’s growth in the future.
