In the wonderfully warm afterglow of last year’s Olympic and Paralympic Games, Sky and British Cycling commissioned the London School of Economics (LSE) to prepare a report into the subsequent effect upon cycling participation.

The LSE brief was to “measure the impact of London 2012 on cycling in the UK across a number of key variables: participation, consumer spending and other factors inspiring the UK to embrace two wheels.”

The economists found that the greatest post-Olympic influence was seen among those who engaged in ‘social riding’, while acknowledging a 30 per cent increase in numbers embarking upon occasional rides for light exercise.

They also touched upon the burgeoning value of the cycle tourism market. Estimated to be worth around £635 million in 1997, the LSE put the figure nearer to £1 billion today and believe the European market could be worth £20 billion a year by 2019 as national organisations, such as Sustrans, continue to promote the benefits of cycling tourism to health and local economies.

It was evident the surge in cycling’s popularity was not simply a consequence of people who had always enjoyed the sport getting out on their bikes more frequently.

Instead, a greater number of people had taken up cycling, either as social or occasional riders, commuters or holiday cyclists.

Not surprisingly then, the LSE found that British Cycling has doubled its membership in the past five years, to 50,000, while ‘sportives’, weekend cycling races, have increased by 900 per cent since 2002 to over 300 a year.

According to the report, the marked upsurge in motivation to participate at whatever level has the potential to continue adding hundreds of thousands of newcomers to the UK cycling population and to persuade those in other sports to migrate towards cycling.

While the ‘Olympic Effect’ continues to be capitalised upon by individuals, retailers’ accounts have acknowledged the impact of both the Olympics and Sir Bradley Wiggins’ Tour de France victory has had on UK consumers.

Cycle Surgery, for instance, with 28 UK shops, reported a “record turnover week” for road bikes during the second week of London 2012, while online retailers, such as Wiggle, reported a 71 per cent surge in website traffic as another online store,, said sales of women’s bikes have leapt by 73 per cent since the Olympics.

Evans Cycles, one of the UK’s largest bike chains, announced that sales had increased by a third following Wiggins’ Tour de France success, highlighting a particular surge in bike sales in the £700-£2,000 range.

Halfords, the UK’s largest bike chain, reported significantly increased sales of its Boardman and Carrera Tour De France road bike during the run-up to the Games.

Given these perfect conditions for selling bicycles, one may have thought that retailers, be they on the high street or online, needed to do little else other than regularly replenish their stock before it flew off their respective shelves, virtual or otherwise.

Yet while the enthusiasm generated by British success in the Tour de France and at London 2012 fuelled much stronger demand for cycles and accessories, Halfords in particular suffered during the second half of its financial year as its disappointing year-end results, revealed last week, highlighted.

However, just how could a market-leading company fail to take advantage of what the LSE described as the UK’s “golden outlook for [cycling] participation”?

Halfords’ results suggested that their sales were affected by a poorer Christmas than anticipated for children’s and mainstream bikes, a disappointment compounded by prolonged winter weather, which ensured that sales failed to pick up during the company’s final quarter.

Last week’s annual results did little to cheer the company’s investors or the stock market as pre-tax profits fell by 22 per cent, retail revenues slumped and, most disappointingly, Halfords’ final dividend was cut by an eye-watering 35 per cent.

The problem, as Halfords recognise, is that while cycling is rightly considered a healthy pursuit, further up the food chain, among the increasing number of serious, high-spending cyclists, it’s also about riding the ‘right’ bike and wearing the ‘right’ kit.

Just as football fans have no desire to be spotted wearing last season’s replica shirt, or one displaying the ‘wrong’ sponsor’s name, so cycle enthusiasts feel similarly disposed to their equipment.

The recent announcement by Halfords that it has agreed a deal to stock the coveted Pinarello cycles is a move in the right direction for a company planning to spend millions consolidating its market-leading position while pursuing cycling’s highest-spending consumers.

Halfords already boasts a 20-25 per cent share of the total cycle market (worth around £700 million), yet while the market for parts, accessories and clothing has an estimated value of £725 million, Halfords’ market share is only 15 per cent.

The total cycling market, worth almost £1.5 billion annually, is expected to increase in size to £1.85 billion by 2018 and, as the largest seller of bikes in the country, Halfords is keen to capture as much of that forecast growth as possible.

The Redditch-based company plans to spend £100 million revamping its stores over the next three years, capital expenditure that will see the introduction of changing rooms (to facilitate the sale of clothing) and more floor space given over to cycle sales. Crucially, it will also invest heavily in staff training to ensure in-house experts are capable of competing with those one encounters in specialist cycle outlets.

Halfords’ new-ish chief executive, Matt Davies, spent considerable amounts of time and money overhauling staff training in his previous role as head of another specialist retailer, ‘Pets at Home’, where the investment proved extremely effective.

Yet Halfords needs to act fast because, by its own admission, profitability is being rapidly eroded by online competitors in particular.

Incredibly, the company’s retail like-for-like sales have fallen in ten of the last 13 quarters as revenues have plummeted from £812 million three years ago to £746 million this year.

As mass cycling participation programmes, such as Sky Ride, which attracted 200,000 lapsed, fledgling and existing social riders to more than 830 local events in 2011, continue to expand, it’s clear that demand for new bikes and cycling products will also increase. The LSE report estimates that around 700,000 cycling newcomers have been introduced to the sport as a result of Sky’s partnership with British Cycling, which began in 2008.

Clearly, newcomers’ ongoing spending habits are hugely important for an organisation such as Halfords. Should its transformation prove successful, the company can become the UK’s most dominant player in a booming market.

Its investors may not have been ecstatic with the savage cut in the final dividend last week, but if Matt Davies can make Halfords a more effective organisation, the longer-term benefits could follow in the form of a rising share price and an enhanced company value.