Rapha cashes in on classy clobber for the chain gang

Simon Mottram was so fed up with the quality of cycling clothing he set up his own businesss to do better. David Prosser reports

(KI PRICE)

Simon Mottram founded Rapha, purveyor of top-end cycling clothing, just six years ago, but today the business finds itself in a sweet spot. Mintel, the market researcher, says the cycling market is freewheeling downhill with the wind behind it. Sales of bikes in the UK last year hit a record high and the 2010 figure will be even higher. Mintel reckons Britons will spend £700m on bikes alone this year – and half as much again on associated products, from lights to clothing.

Even better for Rapha, much of the growth is coming from what Mintel describes as the "mamil" market: older men with good disposable incomes who have discovered cycling much as they might once have discovered affairs with their secretaries. Mamils – middle-aged men in Lycra – are brand-conscious, happy to spend serious money and mad about their bikes.

"Mamils, cycling is the new golf, I've heard it all," says Mottram. But he recognises what Mintel is talking about because he's part of the demographic. Indeed, this is what drove him to set up Rapha six years ago.

Mottram started out as a chartered accountant, training at what is now PricewaterhouseCoopers, but never practised. Instead he joined Interbrand, the branding consultancy, where he worked in the valuation team. Eventually he went freelance, spending several years travelling the world advising luxury brands.

When at home, however, Mottram never missed an opportunity to get out on his bike and spent an unhealthy amount of time in his local bike shop. "I used to go in with my wallet open and come out with a new bit of kit for the bike," he says. "But the soft goods were deeply disappointing – badly designed, poor quality and inevitably with a colour scheme of screaming neon."

And so the idea for Rapha was born. "I was my own target market," Mottram says. "I wanted to target 30- to 50-year-old men who were time-poor,affluent, brand conscious and keen on the sport." What he had in mind was cycling clothing looking more stylish than anything else available, produced to a higher standard, and sold athigher prices than conventional wisdom suggested cyclists would pay.

Conventional wisdom would be proved wrong. But Mottram did not find his proposition an easy sell to financiers. "We were raising money for an online retail operation selling high-end clothing in a market where cheap had always been the norm," he says. "The search for finance in a period following the collapse of the dot.com boom was always going to be tricky."

Eventually, Mottram scraped just enough cash together from privateinvestors to get Rapha off the ground with what the fashion industry would describe as a "capsule collection", and a small one at that. At the beginning, there was no money for advertising. Instead, Mottram drew on his experience of luxury brands to build a reputation for Rapha: "We set out to sell a romantic view of the sport."

That meant a focus on event-driven marketing, particularly around the "sportives" that have become so popular in recent years. Rapha targeted these endurance events for enthusiasts – especially the annual blue riband of the sportives, the "etape du tour", in which amateurs take on a stage of the Tour de France shortly before the professionals – in the knowledge that they were a magnet for the target market. "We said to those people, 'look, this is the best cycling jacket on the market and that is why it is 40 per cent more expensive'," Mottram says.

The kit sold quickly, but Mottram admits now that investors in at least the first two fund-raisings parted with "risk capital" to take a punt on a business that might well not repay them.

Today, the company is owned by around 15 shareholders, who stand a good chance of making a handsome return on their investments. Rapha appears to be in rude health, on target for sales of £7m this year, a 70 per cent improvement on last year's £4.3m, itself a 70 per cent gain on 2008.

For Mottram, who now heads a team of 30 or so, the question is where to take the business next. At the moment, it sells in 25 countries around the world, and the US – where the mamil phenomenon is equally apparent, particularly in states such as California – has just become Rapha's biggest market.

One option would be a broader distribution network. Four-fifths of sales are online, though Rapha does now sell direct in high-end bike shops in the UK, such as Condor in London. Mottram could choose to forge more of these deals, or to move into department stores, though an experiment with Selfridges has been discontinued.

Another option would be a diffusion range for those cyclists who can't afford to pay what Rapha asks. For though Mottram is defensive about price – "We never wanted to be the most expensive and we're not," he says – much of Rapha's gear is undeniably dear. Its jacket, for instance, costs £240.

For now, though, Mottram wants to concentrate on "building out the top of the pyramid", which means pushing further into the existing market segment occupied by Rapha. "We want to keep this thing as pure and aspirational as we can." There is room for that in the UK, Mottram believes, but international markets will be important too: he has just hired an executive from Adidas to target continental Europe.

The brand, above all, is the asset. Collaborations with the designer Paul Smith, who is himself an enthusiast of the sport, have added to the feel of exclusivity conveyed by Rapha. And Mottram has not been afraid to expand beyond clothing cyclists would wear while turning the pedals. The latest collection features a bomber jacket and a range of jeans. There is even a range of skincare products including Rapha's Mont Ventoux soap (the fragrance is sampled from the olive groves that grow in the shade of cycling's famous summit, not from the sweat of the poor souls who labour up it).

In time, the temptation will be to sell up and cash out. But for now, Mottram is too busy having fun. It's difficult to imagine where else he might work where the whole company has regular days out of the office on the bike. Still, maybe it's time to stop hiring younger employees. "There is supposed to be an unwritten rule that as boss I get to go over the top of the climbs first," Mottram says. "In practice, I spend too much time these days watching my staff leaving me for dead."

Simon Mottram

* Lives: Mottram, 44, lives in Queen's Park, north-west London, with his wife and three children.

* Rides: It all depends how he's feeling – either a rather beautiful EPS road bike made by the Italian company Colnago, or his natty number from Independent Fabrication, the cult American bike builder.

* Works: Managing director of Rapha Racing, the business he founded in 2004. The company's name is derived from the St Raphael cycling team of the 1960s, which included stars such as Jacques Anquetil and Britain's Tom Simpson. Its feeder team – the reserve squad, if you like – was called Rapha.

* Career: Qualified as a chartered accountant before moving into branding consultancy, initially working for companies including Interbrand, Circus and Sapient, before setting up as a freelance consultant.