Rapha reports over €21 million in losses in 2023. This is the 7th year of losses for the business.

I′m not normally one to share bad news, however this is a shocking result. Rapha has always been an inspiration for me personally, being British and really positively impacted by the early work by Simon Mottram and his team. They finally made us cyclists "fit in", even be fashionable! Rapha made cycling cool in the UK.

I find it shocking that this is where the brand has gotten to after such success. So what has happened to Rapha?

It's just the evolution of a cycling apparel brand

From my perspective Rapha was a boutique brand at the start and would have been fighting for market share, or more likely Rapha was creating the market! As they got bigger and more popular they recruited bigger teams including expensive directors and also set up distribution like warehouses in different parts of the world to globalise. Stock levels increased exponentially. The brand became more mainstream. Enter heavy competition from new cycling apparel brands. Online shops discounted the kit, even the brand itself started discounting the kit constantly to cover overheads. How many times have you heard “I only buy Rapha in the sale” the last few years. I refused to stock Rapha in my cycling shops for several years because it is heavily discounted on its own online shop. Margen that was made before cut into pieces to sell more.

So the inevitable is happening in my opinion. As a cycling brand gets bigger, the brand is devalued. Rapha is finally in the downturn part of its life-cycle and if other cycling brands like MAAP and PAS Normal follow the same pattern the same will happen to them. Perhaps the key is not to grow too much and too fast and absolutely crucial is the control of distribution and discounting.

Rapha can′t be like other mainstream sports brands like Nike

I am stipulating but I would have thought that Rapha and other popular kit brands like MAAP aspire to be like Nike, a household sports brand. Why are cycling brands not able to achieve that same status? It may be because sports brands like Nike cover all sports and whilst one sport has a down period another is having an up. It is clear that right now cycling is in a dip so cycling dedicated brands are being hit hard. If you just make cycling kit and people buy less cycling kit, well you can guess what happens. But if you offer services or alternative business streams (like Rapha did originally - see below on Rapha Travel) you can protect yourself more against market conditions.

Rapha got too big

From what I can see, larger cycling businesses have been hit much harder by the current dip in the cycling market. As well as the stated larger overheads, they are slower to adapt and change to a quickly changing market. As one example. it is likely that Rapha lost market share to smaller newer kit brands in the gravel clothing sector which has taken the market by storm. I also think that smaller businesses, those not owned by large investors with deep pockets, need to make the business work. Smaller businesses just can not afford year on year losses so the tough decisions are made to make things work and limit losses, especially over consecutive years.

Rapha Travel and the community

Since one of the Eat Sleep Cycle main business streams is the travel business, when Rapha Travel closed we were shocked and disappointed. Their travel leg was also an inspiration for us and we compared our high quality cycling tours to theirs. The Rapha travel business was closed when Walmart acquired Rapha since it was not making money and also to focus on the core business of making kit. That doesn't seem to have gone too well for Rapha if they have lost money 7 years on the run.

At the start of Rapha, the community piece; the club, the rides and the activations were a huge part of the brand. I would say that Rapha has shown us all what to do. But over the years that has clearly reduced and has contributed to the wearers of Rapha moving over to other brands that invested in this type of community activation.

All in all it's not good news for the cycling sector and it's a warning to other kit brands to consider their strategy!