If you talk of family businesses, Rose are the epitome as far as mountain biking is concerned. Established in 1907, they are now into their fourth generation as a business. Thorsten Heckrath-Rose is the son-in-law of Erwin Rose who oversaw the brand's evolution from a local shop to a catalogue sales business in the 1970s and 1980s. As the CEO today, Thorsten is the man who is driving the business through the ever increasing rate of change that the modern world requires. We sat down and asked him about what that heritage means for a business, how the German mountain bike market has evolved and where he sees the future of the business heading.






Where did Rose come from? You say it's a fourth generation business?

So, 1907, it has been a family business since then. It used to be the smallest bike shop in the city. It used to be the bike shop slogan: in the smallest shop, you have the cheapest prices or something like that. Of course, it has changed over the years.


What was the development in the business, from the smallest shop in Bocholt to what you have today?

The main step was in the 70’s when sporty cycling became popular to the public. There used to be road races at that time that were really popular, we also had a huge outdoor cycling track with thousands of spectators coming to watch and some famous racers from the city who participated in the Olympics, they even won some medals. I mean, cycling was really popular at that time and in the 70‘s it became attractive to the public to ride their own road bike. My father in law, Erwin, decided to push the more sporty bicycles from our shop; he was looking for opportunities to import them directly from Italy. He had really good relationships at that time with people from De Rosa and Colnago. He also started to import from Japan at the same time, because Japanese road bikes were really popular at that time. We started with a brand called Nishiki and in the late 70’s we had to import them from Japan. We were developing the reputation of being a specialist for that, but because we ordered quite big numbers from Japan we needed to do more advertisements outside of our city. At that time, cycling shops were usually just a local thing, but we needed to develop something to reach outside the city borders and that was when the catalogue was born. The first step was just a leaflet, then we got a catalogue, printed with a typewriting machine and copied. They did that after finishing the daily sales, they would close the shop and do the catalogue during the nighttime. That was really when the core of today’s business started. A little after that, mountain bikes became very popular, so we started with mountain bikes too.


So you started to brand the imported bikes?

In the beginning, it was still other brands and we started to do our own brand in the late 80’s, I would say. At that time, we tried a couple of brand names and we also had at that time, for the German market, the brand named Redbull. It was our brand name at that time for bicycles, but obviously, the drink got so strong that you could not develop your own image, so we decided to change that. It was probably one of our best decisions in the late 2000s. Seven years ago, we decided to switch the brand name from Redbull to Rose. We started with the mountain bikes, and then the road bikes and trekking bikes followed. The good thing with that is that we could put a little bit of the heritage in the shop. We could show the people that we are a real family business, not driven by any investment companies or something and that we have quite some experience amongst us.


It must have been the 100th anniversary when the Rose bikes came out?

Yes, it was almost for the 100th anniversary right here.


With the mountain bikes, you are here on the Dutch border, it is not the prime location for mountain biking.

For cross-country, it works quite well because you have an active scene here. It is partly cross-country mountain bikes and now also a very strong cyclocross scene. That is very popular in the winter time because we have a lot of areas with loose sand that are a little muddy in the winter, so it is perfect to do some more endurance type mountain biking. But nothing like gravity style, you have to go to places two hours from here in order to have some more serious gravity mountain biking.


Looking at your DH bike from 2012 and the one from today, it is a completely different one. It seems really obvious that you have learned a lot in that period.

For a very long time, our main range was more cross-country and maybe touring or what you call trail bikes nowadays. It was clearly in the centre of our work and we started with our first freeride bike in 2008/2009 and since then we have learned a lot. We did a lot of sponsoring in the meantime, so we were sponsoring a lot of the grassroots scene, to collect as much experience and feedback as possible. And now we have quite strong racers who are well known on the world cup circuit. Like Katy Curd, for example, she is one of our best riders in the DH scene. This year we won the DH German championship for the ladies, with Sandra. That clearly shows us that we have arrived in there as well.


One of the big things with direct sales brands, there is a lot of negativity from a traditional bike shop. They feel that brands like you are killing the bike shop. Yet Rose comes from that same background. The way you have spec'd the bikes, it seems to me that you have kept that influence.

It was always one of our strengths, to build the bikes individually for our customers. It was probably always the biggest difference compared to normal bike shops. Most of them carry a brand and they make some adjustment for their customers and for the rider but it is not really customised bicycles. I think the biggest “conflict” was with mail order companies at that time, was a new distribution channel and people were not used to it and probably felt threatened and not be a normal piece of the market. That has changed a lot.


Outside of Germany it is still like that. Do you think in Germany, where brands like yourself and Canyon have been established for a while, do you think the market has settled down? In the US certainly, it is quite a sore topic at the moment.

Of course, a normal dealer thinks that they are regular businesses and are somehow interrupted or disturbed by companies selling by mail order or online. However, I think many of them have to recognise this is part of the world and nobody will be able to stop the internet, for example, and you have to deal with it somehow. Most of the retailers have adopted this idea and they have changed, they run their own web shops and they started offering services for mail order bikes. I think they also recognize the great achievement of today, with big players of that scene, like us or Canyon. We are doing really good jobs developing high-end bikes, I think the level of development and engineering is much higher for this kind of bike, compared to many traditional bike brands. I think many dealers are starting to appreciate it all somehow and they are not thinking the old way. I think that has changed a lot.


For a brand with direct sales, do you have something to prove in terms of quality?

When the business model of direct sales started for sure the price/quality ratio was a clear focus at that time, it was not about engineering or having a really superior kind of product compared to normal retail outlets. It was more like price, service, and quality ratio. For sure, it has partly changed, many aspects are still valid if you buy parts or clothing, and the price is one very important topic. But for bicycles, in the range we are working on nowadays, which we consider to be medium to high-end, the focus is not on the price itself anymore. The price is still important but the level of engineering has become much more important.


From what I understand, the German consumer likes high-end bikes, but I do not see German bike companies producing €10-12,000 bicycles.

If you see €10-12,000 bicycles, and if you compare it to the price level that we could put it on the market at, it would be 6, 7 or €8,000 maximum. We do that from time to time. It is more like an image product and you will have a couple people buying that, but it is more marketing and we have not been putting this as our focus in the past. Our focus was not to be able to sell bike worth €10,000 because you cannot make a living out of it, the clear focus is the price range between €2-4,000. It is really where you can sell quantities and where also the biggest demand from the customer comes from. We are able to build those bikes and when you are going to Biketown [Rose's shop in Bocholt], you will also see some of them, but I think it has not been requested in the past. I think in the future, it might be different as customers buying from direct sale companies will ask for even higher end bikes. But I think that they will still cost less than from the traditional brands. It will be maybe €8-9,000.


There is a joke running at the Lake Garda trails, that you get the map and you run it backwards as it is initially designed for the Germans you like to go up steep trails and down fire roads. Is it still like that? I am curious to know. There is very much a perception. The German market is quite unique, the customers want specific things, they like adjustments, they like having all the features. Has the German market evolved? How do you see that?

I think that the market has evolved. If you add your features to bicycling, then customers need some time to adopt this new standard, especially the single chainring that is really a big trend and it has been adopted by the customer quite quickly. Of course, you still have people asking for 30-speed bikes, but it is more for the entry-level, like the €1,000-1,500. I think that the people seriously dealing with trail bikes, and enduro riders know that the single chainring is a better solution which offers you much better ride comfort and performance. I think this has changed for sure.


One thing I noticed in your gravity offering – you have the very complicated carbon road and TT bikes, so obviously you have the experience working with carbon, but in the longer travel bikes they are all aluminium. Is this a conscious decision?

There is still a demand for alloy in the higher travel bikes, it is much bigger. It might change within a couple of years when people get more used to carbon as a standard material. I think they are still all very cautious as they know carbon can be damaged a little bit more easily than alloy and if you have a crack, you have a serious repair job ahead or maybe even have to replace the frame. This is for sure one of the biggest reasons why alloy is still so strong. We are developing our first trail bikes made of carbon fibre now. The Pike’s Peak, we launched it during last year's press camp and we presented it as a new carbon fibre bike and we have some great tuning options on the bike, we can adjust the progression and the geometry on this model. I think for this kind of ride, it is really a good thing. When we launched that, people were asking: “I would like to buy this, but as an alloy version.” We stepped back and are now thinking about adding an alloy version as well. We wanted to adopt the technology to the alloy version anyway, now the discussion is to know if we have to put the carbon version to the market first or the alloy version. That shows that there are still people who prefer alloy in this segment and also for downhill bikes, it is possible to build really good ones from carbon but still all of the producers have to collect more experience because the frames are still comparatively heavy and I think when the technology advances, the use of carbon for full suspension bikes will be bigger in the future and will for sure be the standard someday.


As direct sales, when you have a small business, good customer service is really easy to find but as the company grows you have obviously more customers, it gets harder to maintain that same quality. How has Rose tackled that?

We are a family run business, so our target is not to double turnover within one year, it is to grow steadily and also in a sustainable way. One thing is that we want to keep the same level of engineering and also production quality and services quality. Services have always been important to us; it is also what we are famous for. In Germany, Rose stands for exceptional services and we would not sacrifice that to grow more. If you grow in a moderate, double digit way, then it is ok, you can still handle it, but there are also times where we were growing 40/50% a year and you feel it is more difficult to offer service on the same level. Now we have more than 30 people working in the service department, and I think customers really appreciate that they can talk to people and they get fast replies from the service and we can get almost any kind of service sorted. That is something we will never sacrifice just to grow bigger.


In Germany, the general business approach is very different from the US, where there is a lot of bank finance, a lot of rapid expansions, acquisitions. In Germany, family-owned businesses are coming into the light of international market and Americans do not seem to realise what is behind these companies, what the foundation they have built is, they are growing their business in a completely different way than the most Americans tend to.

It is a question of philosophy, a family business is something completely different than when you have investors and they look at the figures and they want to take out their own profit and maybe at the end of the day, they even sell out the company to a competitor or some other investor. This is why we see so many companies come and go over the years. If you compare the scene to 10 or 15 years ago, the market was completely different, you had completely different brands, a completely different structure, also in Germany for example in the wholesale scene, they do not exist anymore or they have taken a completely different approach nowadays because they were not able to make their own decisions. This is why I think family business always have some kind of advantages as you can make your own decisions, adapt yourself to the market more easily because you do not have to ask the investors or look for the figures to be right for the investors, that is also why we have been able to invest a lot in developing new bikes and investing a lot in the logistics, it may be one of the most advanced logistics in the cycling industry, and also in the configuration process. One of our strengths is that we can combine all the sales channels in quite a good way, so as a customer you are able to start configuration online, then you go to one of our stores and you continue the configuration on the screen with a sales person or you go back home and ask a friend and continue with them. For the customer it is possible to use all the channels quite naturally, this is also something to invest in. It is a lot of investment to combine the channels, to offer the customers these kinds of options. From an economic side, you would not do it because it will bring you a setback in profit or turnover but it helps you grow the business more sustainably, so you would just skip this idea and continue selling otherwise. This is the biggest difference from investor driven to the family business. This is why I think on the long run, many family businesses who follow this idea and stay prepared to invest and to always go with the time and improve the services will be healthier than many other companies.


There is definitely a longer view then. How far ahead do you tend to look, 5, 10 years?

It is impossible to plan for such a long period. More realistically, it is better to think long term brand strategy, if you go into details, it is almost impossible to plan more than two or three years ahead. If you talk about development and engineering, you can for the next one or two years and maybe have some visionary projects but these are not always realistic, it is not really planning. Financially it is really difficult to predict what is going to happen, also, here you can do it for the next two or three years, but you have to be flexible enough to adapt any new influences and sometimes things change in a couple of months. There is a new technology to the market, with the “digital revolution” to the market, nobody can predict how it is going to be in our business and it is one of the strongest influences in our business yet.


You started as a shop, catalogue and then online. Every step has evolved.

You have to evolve, these steps or periods are getting shorter. From starting as a normal retailer to doing mail order, it also took us 70 or 75 years. There was a really long period for retailing. Of course, the assortment we had in the shop has changed since then. In the past, bicycles were not sold in the winter, so you had to have products for the winter; it used to be ovens to heat up the house or sewing machines. The assortment or the ranges have often evolved over time but not the way you do business, it was always retailing. And then you had a period of catalogues -25 to 30 years where the catalogues were really strong, but it was half the time of pure retail and now the catalogues are almost gone and the whole print strategy has changed, it is not a catalogue anymore, it is more like print or web format. We try to gain the interest of the customers and bring them to the web shop, the store and you can see that the whole digital technology is changing so fast, for sure there will be something new in the next couple of years, which will again change the way we do business. Nobody could have imagined when we internet started, I think we had the first web shop in 1996 and we put 1,000 items from our whole range into the web shop, which was only 5% of the range because we had to try it out and see if it worked or not. Nobody had any experience with it, and after we had to bring all items to the web shop. You have to be prepared to make these decisions quite quickly because you have less and less time because if you do not decide within a short period, you may lose a lot of business or be out of the market.

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MENTIONS: @ROSEBikes

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