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Article: Bell Buys Giro




Summary: Here is an article from Bicycle Retailer and Industry News (used with their permission).



Bell Buys Giro
Bell Sports Adds Giro To Roster

By Steve Frothingham

SCOTTSDALE, AZ-"If you're number one and you can buy number two, it's usually a good idea."

That's how one Bell Sports executive described the company's latest move, the purchase of archcompetitor Giro Sports Design.

Bell officials expect to complete the sale in early January, following a 3~day filing period required by the Securities & Exchange Commission. The price paid for Giro, which did $15 million in sales in 1994, is confidential.

"Giro's a great brand to add to our portfolio. We've always been a branded company," said Terry Lee, Bell's chief executive officer and chairman.

Lee is promising Giro executives that the Santa Cruz, California, company will continue to operate its sales, marketing and product development departments separately from Bell's other brands.

Giro also will have a separate booth from Bell Sports at this fall's trade shows.

It's a different strategy than Bell followed after purchasing Blackburn, VistaLite and Rhode Gear, which were lumped into Bell's retail division.

'The Giro acquisition was more strategic in terms of our longterm ability to lead the marketplace. Preserving the brand is more important than any dollars we could save consolidating sales and marketing," Lee said.

Lee also has no plans to sell Giro helmets in the mass market where Bell sells BSI, Bell and Cycle Products

brands. 'We don't need Giro there. It's a specialty brand," Lee said.

While Lee admits that Giro has been chipping away at Bell's market share lately, Bell is continuing to offer its Pro Series line exclusively to specialty retailers.

Staff at Giro's and Bell's specialty divisions will go head-to-head in the marketplace. "they'll be competing for bragging rights at the company picnic," joked Paul Thatcher, Bell's marketing communications manager.

Giro's founder, chief executive officer and largest shareholder, Jim Gentes, is continuing to work for the company, reporting to Lee. Bill Hannemann continues as Giro's president.

In 1985, Gentes left Blackburn, where he was a designer, to start Giro. The company's first product was an aerostyle triathlon helmet. In 1986 he introduced the ProLite, the lightweight, Lycra-covered helmet that built Giro's reputation as the most innovative, high-end helmet maker in the U.S.

While Bell never regained control of the upper high-end market, Giro was never able to follow Bell into the mass market

Two years ago Giro attempted to sell a line of LeMond helmets to mass merchants, but soon discovered it was unable to compete on price. And Giro's line of baseball cap-style helmets, the Fat Hat, also flopped.

"We realized what we're not It's not in our skill sets to go into the mass market. We're a highprice helmet maker," Gentes said.

After years of competing with Bell, Gentes is still adjusting to the situation. "Our industry is growing up. This is the way the business world works. It took a while to get over the competitiveness with Bell. I'm looking forward to working with Terry and learning about how a public company runs," Gentes said.

Competitors estimate Bell's and Giro's combined share of the specialty market at 50 to 70 percent. But they are betting that the two companies will be unable to maintain that market share now that they are together.

"I think Giro's product will go downhill," said Brent Knudson, who, as president of Epic Team Manufacturing, is in charge of Specialized's helmet program.

Specialized's research indicates that Specialized is ahead of Giro, but well behind Bell in specialty retail unit sales. But in dollar sales, Specialized is a close third behind Bell and Giro because of Giro's higher average price, Knudson said.

"We are really enthused about the opportunity this gives us to solidify our position," Knudson said.

It's easier to compete against one company than two, noted Al Stonehouse, president of Diamondback, which reentered the helmet market last year with its Avenir brand.

"As they consolidate, they will gain some efficiencies that will help them compete. On the other hand, they will have more commonalty in their product and in the way they approach the market with programs. That gives a company like us more opportunity to be competitive," Stonehouse said.

"The purchase will probably have the desired affect of reducing the level of competition in the industry, which will cause an upward affect on helmet prices, which we would welcome," he said.

Copyright 1996 by Miller Freeman, Inc, Santa Fe, New Mexico. All rights reserved.




This page was reformatted on: October 4, 2017. BHSI logo
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