Following last Tuesday's story about the re-entry of Scott USA into the American bicycle market, US industry execs have been chewing on the significance of the move. One thing is agreed: the re-launch has been made much more significant because of the hire of Scott Montgomery. The ex-Cannondale boss brings credence and contacts (and, no doubt, some shackling restrictive covenants).

Scott, meet Scott: one week on

Scott USA was founded in 1958 by Ed Scott and was a ski pole and goggles brand until the 1986 introduction of its first MTB and the production, in the same year, of Greg Lemond’s Tour de France winning aero-position handlebars, loved by triathletes, hated by the UCI.

A European HQ for Scott was opened in 1978 and by the mid-1980s, Scott USA’s centre of gravity had moved to Switzerland.

The Scott Sports Group is still headquartered in Switzerland and owns all of its European and US subsidiaries. The US company is based in Sun Valley, Idaho – where the 1958 company was founded – but new offices are being fitted out in Boulder, Colorado. Scott USA’s CEO is Tom Stendahl.

The US subsid pulled out of bikes ten years ago.

One US industry exec said, unlike in Europe, in America Scott USA always played second fiddle to the other ‘sexy’ US brands, and could never gain a foothold in urban IBDs, although was well represented in ski-area bike rental fleets.

Another US bike trade exec – a high up in a US manufacturer – welcomes the re-entry of Scott USA:

"The feeling here is that there is a big hole in the market as Trek are on top and no one else is really able to come close. Scott has the product line and the pricing to make it work as long as they do some aggressive marketing and are able to deliver product.

"Cannondale’s strength has always been its marketing and Scott Montgomery was a big part of that.

US industry consultant Jay Townley said he was surprised at the news of the Scott relaunch.

"My initial reaction upon hearing the news that Scott was re-entering the US bicycle market was, why? Scott remains relatively successful in the European market.

"Tom Stendahl knows the US market from his days at Scott Sports Group in Boulder, Colorado. While he has not experienced first hand the last six to seven years of consolidation and intense competition, I credit him with being above average when it comes to managing supply companies in our industry, and I therefore have concluded he has a sound strategic reason for re-entering the US bike market in 2004. What we must ponder now is exactly what that strategic reason is.

"The US specialty bicycle retail channel is crowded with bicycle brands. In addition, the top tier bicycle brand suppliers were, as reported by the Bicycle Product Suppliers Association (BPSA), down 18 percent in unit shipments and 12 percent in dollar volume in their sales to bike dealers in 2003. The dealers, on the other-hand, were down an estimated 6 percent in unit sales of bicycles at retail and 5 percent in retail dollars.

"The gap is explained by three things. 11.5 percent of total dealer unit sales and 13.7 percent of total retail dollars in 2003 were from sales of 2002 and older models. Second and third tier bicycle brands like K2, Marin, KHS, Fuji, Rocky Mountain and Jamis gained market share from the top tier brands; and 375 bicycle dealer locations went out of business during 2003, requiring all bicycle brands to sell more units through a smaller number of store locations in the market.

"This situation does present some apparent vulnerability among the top tier bicycle brand suppliers, and perhaps this is what Scott sees as a strategic opportunity.

"Scott Montgomery, as I understand it from my limited questioning of dealers, left the industry well respected and with most dealers thinking positively about him.

"His quick return to the industry as president of Scott will probably be well received. I would call Scott’s hiring Scott Montgomery a very smart and sound strategic move."

Montgomery officially joins Scott USA on April 1st. Until then he is gagged by restrictive covenants imposed by Cannondale as part of his severance package.

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