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Halfords principally operates in two broad markets: Motoring and Cycling.

Around 67% of Group sales are generated from products and services that are principally motoring-related with the remaining 33% coming from cycling.

67%

Group sales are generated from products and services that are principally motoring related

Category split of Halfords Group revenue (between motoring and cycling)

car icon Motoring Market

Halfords Group addresses two distinct areas of the UK’s highly-fragmented motoring market – car parts, accessories, consumables and technology; and car servicing and aftercare. From the perspective of the former, there is no single equivalent competitor selling all of our product ranges. In respect of the latter, there are over 30,000 garages in the UK, an estimated two-thirds of which are small independents.

Car Parts, Accessories, Consumables and Technology


Key Facts

£3.5bn

Market size

20-25%

Our share

Forecasted Market Growth

Our Approach

Car Parts, Accessories, Consumables and Technology

Our strong heritage and brand mean that Halfords is a destination for consumers who want inspiration and support with their vehicles. We continue to make progress in our markets through investment in our stores and colleagues to help deliver innovative products and services to our customers when and where they want them. Whilst some of the traditional motoring product markets are in decline, there is opportunity for innovative, unique and differentiated products to be brought to market. Halfords is also seeing an increase in service-related sales as more people are preferring to have an expert fit or install products as opposed to performing it themselves.

Car Servicing
and Aftercare


Key Facts

£9bn

Market size

2%

Our market share

Forecasted Market Growth

Our Approach

Car Servicing and Aftercare

The automotive servicing market is large and highly fragmented
with no clear leader, and with only 2% share, there is significant
opportunity for Halfords to grow. Increasing car complexity,
accelerated by the transition to electric, is expected to drive
growth in this market. Our goal is to operate from 1,000 service
locations in the UK and ROI, whether a Retail store, a garage or a
mobile van. This will enable us to deliver customers the services
they want at a location convenient to them.

We will continue to invest in equipment and colleague training in
order to remain at the forefront of technological changes. This
will give us a competitive advantage in this fragmented market
dominated by independent operators.

Specifically, we have made significant progress in providing
industry-accredited training to Autocentres colleagues in the
servicing and maintenance of hybrid and electric vehicles, with
the majority of our centres now capable of servicing hybrid and
electric vehicles.

Motoring Market – Competitor Landscape

Car products and related fitting

  • Limited number of specialists but a highly diverse and
    competitive set of retailers (e.g. Amazon) selling generalist
    product ranges
  • Limited retail bricks and mortar competition
  • Wholesalers and generalists moving into specialist retail
    markets with strong omnichannel offer
  • Supermarkets and garage forecourts continue to sell a limited
    range of high-volume, high-margin products
  • • Independent garages offering car parts and associated fitting

How is Halfords Group different?

Our heritage of over 125 years has established Halfords as a
household name, with over 90% of the UK population living within 20 minutes of a Halfords store. We have many outstanding strengths
that differentiate us, notably our exclusive product ranges and
our colleague expertise. Significantly, we have an established and
growing ability to provide services on demand in-store.

Car Servicing

  • Technological advancements limit scope for effective delivery
    by small independent garages
  • Car dealerships expanding into used car servicing
  • Some evidence of sales aggregation (e.g. My Car Needs A…) and mobile services entrants

How is Halfords Group different

Halfords has a unique ability to offer automotive services from a
variety of locations – our retail stores, garages and mobile vans. In
our accelerated strategy, we announced an ambition to increase
our services footprint to over 1,000 locations in the medium-term,
including 550 garages, 200 vans and our existing Retail stores. Via
our Autocentres, Halfords Group offers great value and convenience
for UK consumers of car servicing, repairs and MOT compliance. The
strength of our brand and the scale of our store, garage and mobile
van estate enables us to invest in the most up-to-date equipment
and technology with the majority of centres now equipped to deal
with electric and hybrid vehicle servicing. Our Halfords Mobile
Expert vans deliver elements of car fitting and servicing, such as
battery replacement, tyres and diagnostic checks, direct to the
customer at their home or workplace.

Long-term Market Trends

As UK motorists become more engaged with issues affecting their impact on the environment, they are seeking ways of mitigating their carbon footprint. The COVID-19 pandemic is forcing motorists to avoid public transport due to health concerns, but this means there will inevitably be an increase in the number of cars on the road - something that many are keen to avoid. Despite the Government putting emphasis on commuting by walking and cycling this is not going to be possible for many people, meaning a car will be the only option for those wishing to avoid public transport. This is likely to lead to higher car usage in the medium-term, potentially increasing the size of the car parc and the requirement for servicing, maintenance and repairs.

Electric vehicles continue to rise in popularity with registrations up 144% for 2019, however they still only represent 1.6% of the total car parc. The country is gearing up for electrification, with more charging points being installed nationwide, however the small share of the car parc shows there is a long way to go before we reach the 50–70% share targeted by the Government in the next 10 years.

Long-term trends show that cars are becoming more complex. Alongside advances in engine technology, cars are being equipped with an increasing number of intelligent features in order to meet the rising expectation of consumers. The long-term expectation will be that all devices will offer an integrated ‘always-on’ flow of information.

Autonomous cars, whilst a futuristic concept, are the focus of significant investment by global innovators such as Google and Tesla. Many new cars are now partially-autonomous, providing lane change assistance, parking assistance and adaptive cruise control. There is a high probability that children born today may never need to drive a car.

The scale of these disruptive changes means it is becoming less likely that car owners will possess the knowledge or equipment to replace worn parts or service their own cars in the future, increasing the demand for a ‘do it for me’ offering. It will also be difficult for small, independent garages to invest in the technology and training required to service and repair cars, giving an advantage to a wellinvested national chain such as Halfords.

Bike icon Cycling Market

The cycling market is highly fragmented, with an estimated 2,500 bike shops in the UK, the majority of which are independently owned. Our research shows that these shops are closing at an average of 10% per year. Halfords Group is the market leader, with strong brand awareness in bicycles, parts, accessories and clothing.

Cycling
Overall

Key Facts

Overall

£2bn

Market size

20-25%

Our market share

Forecasted Market Growth

Our Approach

Cycling

As the market-leading retailer in mainstream cycling, we are well positioned to serve the needs of the consumer. We will do this by continuing to bring unique and innovative products to market, whilst also providing great value and convenience to customers. As an example, Halfords was the first major stockist of E-scooters and is leading the market with product range and nationwide service capabilities.

As the UK’s leading cycling retailer, we are well positioned to serve the mainstream market, encouraging more people to cycle for leisure, exercise or commuting.

Performance
Cycling

Key Facts

Overall

£700m

Market size

6%

Our market share

Forecasted Market Growth

Our Approach

Performance Cycling

As the cycling market continues to grow, we know the importance of keeping pace with the latest trends. We have invested in the growing popularity of E-bikes, growing our proposition through targeted marketing and by offering products and services for which we know strong demand exists, such as the Brompton E-bike and E-bike servicing plans.

As a result, we are one of the UK’s leading retailers in the emerging E-bike market and have trained colleagues in every store to deliver E-bike servicing and maintenance.

As people start to return to work from the COVID-19 lockdown, we expect there to be a significant rise in the number of people choosing to commute via bicycle. Cycle-to-Work schemes will be important and Halfords, as the market leader, is able to help consumers get to work in a healthy and sustainable way, whether that’s on a mechanical bike, E-bike or E-scooter.

Cycling Market – Competitor Landscape

Mainstream Cycling

  • Predominantly generalist competitors with own-label bikes
  • Limited online penetration in mainstream bikes
  • Physical service locations are important
  • Cycle-to-Work continues to be an important driver
  • Major sports retailers starting to diversify into cycling e.g. JD Sports / Go Outdoors

How is Halfords Group different?

Halfords Group boasts the biggest and most popular cycle brand in
the UK – Carrera. In total, approximately 80% of our bikes are ownbrand, covering both children and adults at a wide range of price
points. Our stores are conveniently located, and our online platform
provides support and information to help customers choose the
products and services they want. Our bike build proposition is
leading the market with free 6-week checks and bike care plans to
make sure our customers continue to stay safe whilst enjoying the
great outdoors.

Many customers take advantage of our Click & Collect offer, placing
orders online via our website and picking up from a designated store
at a time which is convenient to them. This also drives positive store
footfall. Additionally, we are the market leader in the UK’s Cycle-toWork scheme, supporting sales and introducing new customers to
our brand.

Performance Cycling

  • Predominantly branded bikes
  • Traditional specialists and independents struggling
  • Big brands starting to go direct to customers
  • Online pure-play continuing to grow and consolidate
  • Physical service locations are important
  • Cycle-to-Work is an important driver

How is Halfords Group different?

Through Tredz, Halfords has a strong and increasing foothold in
the performance cycling market. Offering products and services
of particular appeal to performance cyclists has contributed to
growth in the overall number of customers and provided many with
bikes and exercise equipment during the COVID-19 pandemic.
Cycle-to-Work vouchers can also be redeemed through Tredz which
contributes significantly to the ongoing success of that partnership.
Tredz has a strong online presence which differentiates it from the
independent cycle shop community and helps the brand to stay
relevant and competitive in a challenging market environment.

Long-term market trends

A likely impact of the COVID-19 pandemic is a significant increase in demand for bikes and scooters, as the public explore clean and cheap alternatives to public transport and look for ways to stay healthy. The Government’s £2bn package to put cycling and walking at the heart of transport policy will provide significant investment in infrastructure and subsidies to encourage people to cycle.

E-bikes and E-scooters are continuing to grow in popularity, which will only be boosted by the response to the COVID-19 pandemic. The Government has supported this through an expansion of the Cycle-to-Work scheme, as well as infrastructure investment. Though still a relatively small proportion of the bicycle population, if the trends continue to mirror those experienced in countries such as Germany and the Netherlands, we would expect E-bike sales to double from the current level of approximately 10% of all bikes sold, to 20% within the next few years. The Government is recognising the growth and increasing popularity of E-bikes and has raised the limit on Cycle-to-Work accordingly, from the previous £1,000 to an employer-set limit, meaning that employees are now able to purchase the more expensive E-bikes.

Finally, existing participants in the cycling market are willing to spend more on their cycles and accessories. As a result, we expect higher spend per person to complement volume growth, via demand for more expensive E-bikes, for cycle and accessory upgrades, or additional cycles for a different style of riding.

Whilst the unpredictability of the weather will continue to impact the timing of purchases, the overall trends in the market are positive and show that scope for growth remains.