PROFILE: Scott USA - BikeBiz

PROFILE: Scott USA

Great Scott: The buzz phrase in the US bike industry is ‘static is the new up’. Bike sales are soft, but at least US firms know the numbers, as Scott USA’s Scott Montgomery tells Carlton Reid...
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SCOTT USA is not American, it’s Swiss. The company started life in Sun Valley, Idaho (as a maker of aluminium ski poles), but a few mergers later it came into private Swiss ownership and has stayed there. For many years, the firm had no representation in America until Scott Montgomery set it up five years ago.

Montgomery is not linked to the company name, and further adding to the confusion, he is not related to Scott USA’s US marketing manager Adrian Montgomery, either.

ALL MONTGOMERY
Scott Montgomery’s father founded Cannondale, and appointed him as second-in-command right through the glory days of the 1980s and early 1990s. He was involved in forming the richest ever MTB team, Volvo-Cannondale; and signed the pay cheques of the richest ever MTB racers, Tinker Juarez and Missy Giove.

When he established the Scott brand in the US, it gained a foothold in dealers with the top of the range CR1, Dura Ace equipped, sold on its lightness. The equally innovative Genius MTB could not be sold in the US because of a bitter patent dispute with Specialized (over suspension, naturally).

Now, the US branch of Scott USA has 30 per cent of the SKUs available, and is introducing new lines gradually.

Montgomery is happy to take the SKU expansion slowly, especially as the recession has seen a massive drop in sales for bike companies. He is upbeat about the future, and knows the exact dimensions of the softening. This is because US bike companies share their sales stats anonymously, via a third party. Something the UK bike trade has long talked about, yet never successfully actioned long-term.

SLOWING DOWN
Montgomery sits on the board of the Bicycle Products Suppliers’ Association, BPSA. He’s intimate with the aggregated numbers of what’s selling in the US, and what’s not.

“Since the end of September [2008], the consumer has been in scared mode. Anything considered on the discretionary or extravagent side has been soft,” said Mongomery.

“Sales of bikes below $3,000 retail have been good and stable, but what’s really surprised us is the drop-off in sales of $3,000 to $7,000 bikes.”

GOING GLOBAL
“Urban is the strong point. We budgeted for double digit growth and that’s met our expectations. Our sportster, the Sub series, has been a bright point for us.

“Global marketing benefits us a lot. New product development is more of a negotiation. Sometimes we go with a more Germanic spec, and sometimes with a more Anglo one. It comes down to the dominant category of the moment. If we have stronger Anglo sales – a good example would be riser bars on hardtails – then that’s the spec we go with.

“It’s also beneficial in other Anglo markets for the group: New Zealand, Canada, Australia and the UK. The balance between Anglo and Germanic is evening out, which is good for the group as a whole.

“The US branch of Scott is growing. We’re pleased to say we’ve gone from zero to 600 dealers in five years.

“Even though it’s a recession, we’ve been able to see modest growth. We added 11 dealers last month, and 15 this month. So, even though store sales are down for US companies, if you add quality distribution, then you can experience growth.”

Being able to measure the market is key. “I’ve been doing the calculations recently, and there are 76 ‘legitimate’ brands of bicycle available in the US. In Europe, there are well over 100, perhaps even as many as 130.

“Forty of the 76 are contributing their monthly statistics to the BPSA. We all send our numbers in to a third party auditing company, and they give us the numbers back as a whole. I don’t know what Trek sells, and Trek doesn’t know what we sell, but we have an aggregate total.

“We know that inventory’s up at the supplier level, by as much as fifty per cent. This is disappointing, yet understandable, because as the consumer pushes back, so does the dealer. So, for the first time in a long time, there’s more inventory than we’d like. On the bright side, the American companies have stopped the early introduction of product that had become commonplace for April, May, and June, and is going back to a more historical September and October.

“By the end of the summer we’ll see the excess cleared out, and a late start to the 2010 product year.

“If the consumer has money to spend, they are in a strong position and can ask for great deals. That’s hard on retailers and suppliers. This won’t change any time soon, at least not at the high-end.

“For urban products, where demand is strong, it’s different. I think we have a lot to learn from Europeans on our use of oil. When we do, this will be great for the bike trade.”

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