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20 percent return in the bicycle business:
The managing directors of Storck Bicycle,
Markus Storck
(l.) and
Todor Lohwasser
(here in front of the “Grix.2 Pro” gravel bike) are driving expansion abroad
Photo: Storck Bicycle
Storck Bicycle has clearly set itself apart from the market in 2023 with double-digit growth rates.
The small premium manufacturer also owes this to a radical step by founder
Markus Storck
(59).
In the team double interview with co-boss
Todor Lohwasser
(35), the unlikely leadership duo talks about the break in the business model in 2018, the recipe for success, the proximity to the auto industry and the markets of the future - one is currently based in Idstein in Hesse, the other in Cape Town.
As is usual among racing cyclists, Storck greets everyone with “You” – everyone agrees on “Hamburger Sie”.
manager magazin: Markus, you are currently in South Africa. They say they are on vacation. It's hard to imagine not stopping by the Cycling Friends sales partner in Cape Town. Why South Africa?
Markus Storck:
With the exception of Antarctica, I have cycled or raced on every continent in the world.
What many people don't know: The region around Cape Town is a cycling stronghold - and for me personally, a cycling paradise.
There is a cycling-loving community in South Africa?
Storck:
Oh yes, and it's growing
gigantic.
Up to 40,000 racing cyclists set off for the Cape Argus once a year on two routes of different lengths.
This makes it the largest cycling race in the world.
All potential Storck customers?
Storck:
(
smiles
) Our partner Cycling Friends with the owner Stefan Lohwasser is doing good business here, offers cycling trips, rents out more than 150 Storck bikes and of course also sells the bikes.
Not least because of the cycling events, the market here is growing rapidly and is very interesting for us.
Todor, your father Stefan Lohwasser not only owns Cycling Friends, but since August 2020 he has also owned almost half of Storck Bicycle. They became co-managing directors at the same time. Who is now in charge at Storck Bicycle – the Lohwassers or the founder?
Todor Lohwasser:
I haven't actually asked myself that question yet.
In fact, Markus and I knew each other before I took office and quickly realized where everyone had their strengths.
I am not a designer, creator and creative spirit like Markus is.
I like working with numbers, drafting contracts, communicating with suppliers...
...so an equal relationship?
... and a partnership at the same time, which also applies to operational issues.
If I need an assessment, I ask Markus for it.
After all, he has decades of commercial experience.
Storck:
Todor was and is my preferred candidate.
We run the company together and we complement each other excellently in many ways.
And yes, there are topics where experience with design and development plays a big role.
Here, too, we have strengthened the team with which we are steering the company into the next growth phase.
Nobody can do everything, and certainly not everything alone.
Markus Storck is considered a design and technical perfectionist who has not only collected many awards for decades, but also constantly comes up with new ideas. Todor, did you ever have to slow down your co-boss?
Lohwasser:
As mentioned before, Markus is also an experienced businessman.
When we discuss as sparring partners, there is usually a quick consensus about which ideas can be easily commercialized and which ones were nice to philosophize about and which we don't pursue further.
Storck:
Together we always find the right solution
.
Quality, design and innovation play a major role for Storck Bicycle.
We now have 118 design awards, we are proud of that.
Ultimately, however, everything has to make commercial sense, and so far it has.
Storck has been bringing bikes onto the market under its own name since 1995 – with success. Nevertheless, in 2018 you are completely changing the business model to direct sales with great risk. Why?
Storck:
That wasn't a risk...
…Sales and profits collapsed for three years in a row.
Stork:
We knew that we would initially lose sales; after all, with the switch to direct sales, the dealers' pre-orders no longer existed.
But I also knew that the starting position would be better later.
What made you so sure?
Storck:
At this point, we were already a well-known brand with a solid customer base.
We knew the market, but at the same time we saw that it was changing, that D2C - i.e. direct sales - was gaining market share and business was becoming more difficult in specialist retailers.
Having grown up in a bicycle retail family, I knew the importance of service, advice, test rides and the in-store shopping experience.
So we created a hybrid.
That means?
Storck:
We brought the bikes back into our own store, expanded additional stores and online retail and retained a few specialist retailers as partners.
Customers needed some time to understand that they could buy directly from us online and offline at an attractive price-performance ratio.
It was a process and the risk was manageable from our point of view.
But the banks didn't really understand that.
Their South African sales partner and financier Stefan Lohwasser at least believed in Storck Bicycle, and the new business model provided saving liquidity in the middle of the pandemic
.
Lohwasser:
The corona pandemic certainly came as a surprise to everyone.
However, his entry was not a lifeline, as it might seem at first glance, but rather provided us with the financial power to stock up on parts in a timely manner and to grow even stronger.
Nevertheless, after 2017 and 2018, Storck Bicycle tapped the private capital market for a third time in 2022 via crowdfunding, and at that time also offered a high interest rate of 6.5 percent for subordinated loans. So why crowdfunding?
Storck:
With an optional non-cash interest option, investors and customers even received an additional 50 percent if they converted their claim into a voucher for the purchase of a bicycle, for example.
For us, it was and is less about money and more about retaining customers and acquiring new ones.
Would you do it again?
Storck:
Absolutely, we have had very good experiences with it.
If we take into account the costs of customer acquisition in D2C marketing, crowdfunding is actually cheap in comparison.
Together with Porsche, Storck launched the high-priced e-bike brand Cyklær. There is an e-gravel and the e-urban bike – how did this cooperation with a car manufacturer come about?
Storck:
We have as designers and developers
has also designed small series for Aston Martin and McLaren.
There was cross-contact with Porsche Digital.
This gave rise to the idea for a sporty bike with digital safety features such as a digital front and rear camera.
The first models not only won prizes, Porsche and we also learned a lot from each other.
Are further models planned with Porsche?
Lohwasser:
Us
want to bring a cheaper basic version of the Cyklær onto the market that has fewer digital features and that we can only offer with a digital rear camera as an option.
We are proud of this cooperation because we have laid the foundation for a well-known car manufacturer like Porsche to now become more involved in the e-bike segment.
Are collaborations with other car manufacturers planned?
Storck:
We are open to all topics.
If it's exciting and interesting and the shared goals are right, then anything is always possible with us.
E-cargo bikes have recently been the fastest growing bicycle segment. When will Storck bring the first e-cargo bike onto the market?
Storck:
We developed it, it's ready.
However, the cargo bike is not coming onto the market under the Storck name because it does not fit the Storck brand.
It is intended to reach a broader range of buyers under the new Upland brand, which was created from an e-bike joint venture with our Chinese sales partner.
The cargo bike is currently in the testing phase and is scheduled to go into series production this year.
Storck now earns along the entire value chain, at all levels and in different price segments
Storck:
That's a good idea, but not exactly accurate.
We do not carry children's bikes and remain in the premium segment with prices starting at 2000 euros and up.
In 2023, Storck Bicycle increased sales by 28 percent to around 14 million euros, and the result more than doubled to 3 million euros. In an information letter to crowdfunding investors in the summer of 2022, you formulated a sales forecast of around 100 million euros for 2026. How does Storck Bicycle plan to achieve this?
Lohwasser:
We made the forecasts at a time when bicycles were in short supply, the key interest rate was just moving away from zero and the war in Ukraine had not yet escalated to that point.
All of these parameters then changed rapidly.
That wasn't foreseeable.
From today's perspective, we have to push back the 100 million target.
Nevertheless, the last two years in particular show that we are on a good growth path and are generating a very good return of 20 percent in the bike business.
Nevertheless: When and how does Storck Bicycle want to reach the 100 million mark?
Storck:
Before that
Conversion
Based on direct sales in 2018, we had an export share of 70 percent.
We achieved most of our most recent growth in Germany.
Now comes the next step in growth with the increased internationalization of the business.
We will probably reach 100 million euros in sales before 2030.
We have made significant gains in a number of European countries, but further partners are needed to achieve this goal.
In China, for example, last year we found a strong sales partner in Golden Wheel and at the same time founded a joint venture.
China is one of the most exciting future markets in the world.
Exciting and risky. There are countless bicycle manufacturers in China, and many companies are considering withdrawing due to the political tensions over Taiwan and fear of an embargo. How important is this market for Storck Bicycle?
Storck:
We have known the Chinese market for a long time because we also have parts produced there.
China is one of the fastest growing markets in the road bike sector.
Our partner is currently building its own stores in large cities at the highest level.
In March I'm flying to China and will open the next store with our bikes there.
We have a big fan base in Asia.
We expect a lot from it.
The ongoing conflict with Taiwan, where Storck also has production, doesn't worry you?
Storck:
(shakes his head)
I have been dealing with Chinese businessmen for 35 years.
If there's one thing they like to do, it's trading.
So there is no need for Plan B if the conflict escalates and Taiwan is isolated from the world or if China is subject to sanctions?
Storck:
The pandemic has shown us how interconnected the world is, and the Chinese have no interest in a collapsing economy either.
Our partner Golden Wheel operates assembly plants for e-bikes in the Czech Republic and Bulgaria and is currently expanding in Western Europe - so there are already fallback strategies.
In any case, for us there is no alternative to having frames manufactured in Portugal and building up ten years of know-how in order to achieve a quality that we already have in Asia.
What are the prospects for the current year 2024?
Lohwasser:
We continue to expect a strong oversupply in the e-bike sector and price wars - especially in the entry-level segment.
We certainly won't take part in the price wars.
Thanks to our sales concept, Storck will continue to grow in international markets.
We do not expect a sustainable recovery from the tense situation until the end of 2024.
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