Business

Pedal Power: Toplines from Rapha CEO Simon Mottram’s latest interview this week.

LONDON — No doubt thrilled to be talking about something (anything!) other than whether the LVMH deal is still hot or not, Rapha CEO Simon Mottram sat down with cycling trade publication Cycling Industry News this week to discuss hybrid retail and Rapha’s approach to building out a multi-pronged business centered on community (not just apparel).

The toplines from that conversation (bolded by us for emphasis)…

On never treating retail as a purely transactional environment:

“When we started Rapha back in 2004 we ran a month long exhibition called the Kings of Pain. At the time we’d have lots of parties to introduce people to the concept, but even then our product sat quietly in the corner of the room. We’ve never driven Rapha within a selling environment and I think that’s been crucial to how things have turned out and evolved over the years. As it turns out we’ve always enjoyed an excellent sales per square foot ratio, despite the low pressure sales approach.”

Some examples of the changes Rapha’s clubhouse model brought to the cycling retail world (you can surely expand this beyond cycling too):

The [cycling] environment [since Rapha arrived] has changed from the dreaded sea of wheels to what we often hear described as a community ‘hub’. Cafes in store, sofas, customer wifi and books to read – all of these would have been alien in the bike retail experience of ten years ago.

He’s also introducing a changing room fitted with a biking simulation for customers test out gear in true cycling conditions:

Doesn’t get much more consumer-centric than this. And no, this isn’t some gimmicky tech thing either. The concept name: The Vault. The idea, according to Simon: “When we came up with the Vault at the Spitalfields location the thinking was to give the customer as close as to a real life riding experience in store as possible. . . . We’re selling incredibly technical products with big claims, but how are you going to feel what it’s genuinely like before you purchase?” The features: A bike seat plus fluctuating headwinds and temperatures.

Looks like Rapha’s tiny margins will continue to be squeezed this year:

“We’re opening seven more locations in 2017 which will take us up to 20 worldwide, employing around 150 of our 400 staff globally.”

The company also has a themed travel business that quietly brought in £1M last year:

“We can’t scale our travel ambitions too rapidly, but the indulgent experience that we create is exactly the kind of product we want to deliver to our fanbase.”

Rapha’s £135 club subscriptions are a growing part of the business:

“Our memberships have really accelerated and we’re pulling in about 100 more per week around the globe. . . . I think the subscription model is the ultimate customer relationship and probably the most strategic thing we do here at Rapha. By the end of 2017 I’d really like us to have 15,000 on board. [Right now they have 9,000.]”

Far from just money grabs, club subscriptions offer real benefits to customer:

“As part of that subscription fee members gain access to product exclusives, free bike hire on Rapha Travel Trip’s, as well as 10% off, lifetime crash replacement on the RCC Race Jersey, support at races and sportives and a multitude of other benefits. . . . [Plus] exclusive access to the content-rich Rapha app.

Said Mottram: “Through the app we connect over 150 rides every week around the globe, meaning that wherever you are you can meet like-minded individuals, benefit from local knowledge and make connections. It might be that we decide to expand availability to non-members in the future.”

We repeat — when thinking about Rapha… it’s critical to think about them in the following way: as a clubhouse network rather than just a clothing brand. This piece helps to articulate that notion further. And as we reported last month, this network aspect about Rapha is one of the biggest reasons why LVMH has been in hot pursuit.

Curious to learn more about Rapha’s potential acquisition by LVMH? Catch up by read our ongoing coverage of the deal.

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TLDR: The toplines from Kirsten Green’s stellar NYT profile.