Last week, US-based Trek Bicycle announced its foray into the Indian market. Though the cycle maker already had around 27,000-odd customers in India, Trek Bicycle's Country Manager Navneet Banka believes that with the launch of its subsidiary operations the company will be able to offer a better buying and ownership experience to Indian cycling enthusiasts. The family-owned company, founded in 1976 in Wisconsin, USA, is planning to actively engage with those who may be looking to get on a bicycle. Trek bicycles will cost anywhere between Rs 25,600 - Rs 1,65,000 in India. In a conversation with Business Today, Trek Country Manager Navneet Banka shares Trek's vision for India and how the company plans to expand its footprint.
Trek had a presence in India earlier. Firefox bikes was your distributor. What is it that changes from today?
Trek is in as a 100 per cent subsidiary. For us as an organization, customer is the core to our company. We stand behind our customers. We take care of our customers and we do the right thing. So when Trek comes in, you see a Trek subsidiary, you see a Trek office, which is a 5000 sq. ft. corporate office. What changes is, you walk into the office, you see a technical training centre with all the tools. What changes is we are mandating all our dealers to have trained sales consultants, to have trained technicians inside their dealerships. We are mandating the dealers to have a dedicated service area inside their dealerships.
The reason why: If tomorrow if you walk into a Trek store to buy a product. The consultant should not be just selling you a product which is a cycle, but he should be asking or understanding what your needs are. There are 17 different lenses we look at when we want the right size of bicycle for anyone. That changes. When you are riding a bicycle and probably want to get it serviced, you are confident walking into a store and say... I know this guy has been trained by Trek and he will take good care of my bicycle.
You currently have dealerships at 11 cities with 13 stores, how much expansion do you see happening in the next five years?
So, we started talking to these potential partners three months back. As you see, we are already present in 11 cities through 13 stores. We have an online application process. Anybody who wants to be a partner with us. We work with them, explain what kind of business this is about. We will keep on expanding. If you ask me, we would like to double the current number before the end of this calendar year. Going forward, we would like to add 25-30 retail stores across India every year for the next five years.
Will those be exclusive retail stores?
All the stores that we have are a combination of multi-brand. Some stores could be exclusive. Some stores are what we call as a premium retailer.
Indian cities is currently grappling with air pollution, especially the metros. Where does the role of a bicycle manufacturer like Trek come in? Do you have a vision for India?
Trek has always been at the forefront of bicycle advocacy, globally. What that means is Trek gives 4 per cent of its profit every year. We support People for Bikes. We support something called as Dream Bikes in the US. For every full suspension mountain bike that we sell, we donate 10 dollars to an organization called the International Mountain Biking Association. This organization promotes cycling, and helps countries or helps organizations build trails, where you can ride a mountain bike. So, we already have a lot of programs which focus on promoting cycling, which focus on creating the ecosystem for someone to go out there and cycle. And as I said, we believe in getting more and more people on a bicycle and if we can do that. We talked about 7 billion people in the world. We still got work to do.
What makes Trek different from other premium bicycle brands?
Trek is known as the most technologically advanced bicycle company in the world. Talking a little bit about some of those technologies and I will specifically talk about something called OCLV Carbon. OCLV stand for Optimum Compaction Low Void. It is basically a process in which we use carbon fibre. Carbon fibre is actually a cloth. So, we are using a cloth like material to make shapes like that. How do you make shapes like that? So, you need to get orientation of fibres correct. You need to get the thickness of that entire tube correct. You need to get the right pressure and the right temperature to get that tube and that is something which we perfected in 1991. OCLV has been patented by Trek way back. We have been doing this for the past 25 years, The carbon that we use in these bikes is a defence-grade carbon that is used in satellites.
Around 60 per cent of Trek's sales come from overseas market and not the US. How much do you reckon will come from India after next five years?
That's a new one for me when you say some of those numbers. India remains a market, which we have been looking at to enter as a subsidiary for the past three years. So, India is an important market for us. We have been in India for more than 12 years. We were the first ones to enter India. So, definitely India is a very important market for us. Market size wise it is a huge market, you are talking of 25 million dollars of market size in the super premium segment. When it comes to revenue, I would say we have just started out, we are educating the dealers. We want to take the consumer experience to the next level. I would say numbers is something we could probably better talk maybe one year from today wherein we are spread out, we have more dealers, we are offering the right experience and we have an understanding of what the consumer needs.
Did the Lance Armstrong doping scandal have affect on the brand equity of Trek?
So, Lance was a part of Trek but that is only a part of the story. That's not the entire story. As of today, Trek's brand equity is the highest. We are the number one brand in the US.
What is the size of bicycle market in India and how much of it is for premium bikes?
The bicycle market in India is huge. Around 16.3 million cycles are sold in India every year. But when you talk of the entire segment, almost 97.8 per cent of the segment is regular cycle that a lot of people buy for commute and in rural areas. Premium, super-premium segment has a relatively smaller market size right now. The segment that we are operating in, the super-premium segment, that is almost 32,000 cycles a year. It is approximately 0.2 per cent of the overall cycles that are sold in India.
Which are the areas in India that you think will be key market growth drivers for Trek?
So, the Indian market over a period of time has matured. Currently, mountain bikes on an all-India basis contribute to about 45 per cent of overall sales. The hybrids have been really picking up. We see a lot of people getting on hybrids because they want to get fit, they want to use it as recreation, they want to commute to work, that's another 45 per cent. And the road segment we see slowly growing up at about 10 per cent.
In terms of the market itself - Delhi, Mumbai, Chennai, Bengaluru, and Hyderabad - they contribute to almost 50 per cent of the overall sales on an all India basis. And then of course, you have cities like Pune, Chandigarh where cycling is very popular. We hear of Bhopal where the government is working to have dedicated cycling lanes and where the government has already come up with a bike-sharing program. We see a lot of activity happening today in this segment.
Coming back to dedicated lanes for bicycles. Many Indian cities don't have the kind of infrastructure as yet. What is your appeal to the government?
As I said we are already super-excited to see a lot of work being done already by the government. You talk of the Smart Cities project, I have been to Indore which is one of the Smart Cities. I am just amazed with the kind of infrastructure that has come in. It has got wide roads, it has got certain areas which are dedicated to cycling. We already see the government doing a substantial part from their side itself to promote cycling.
The bicycle market in the country has evolved. The French group Decathlon has a strong retail presence in India. How does Trek plan to make itself more visible?
We are right now working at a very grass-root level. What that means is that we are looking to engage very actively with our existing consumers as well someone who is looking to get on a bicycle. First and foremost thing is to ride. Eventually we will start involving people who are not on a bike but want to get on a bike. That's where the demo-bike program comes in. That is when all our retail partners will be required to have a set of demo bikes with them. It is a step-by-step process where we get involved. Another thing we would like to do is start sharing the stories of professional riders through our social media pages. We would like to be someone who applauds or shares stories of these people and start engaging with someone who may be thinking to get on a bicycle.
As Indians, we have very fond memories of cycling. When I was a kid, I used to cycle like crazy. And then you get stuck in all the regular things that you do in your life. And the moment I get back on a bicycle it brings back all those beautiful memories.
Are there any Make in India plans?
Not currently. Our bikes are made in multiple places. We manufacture in the US, Germany, Taiwan and China. These are global products coming into India.
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