Sen. Pete Domenici, who is asking the Consumer Product Safety Commission (CPSC) to adopt Snell's standards as mandatory, is no Washington D.C. rookie.

Domenici, R-New Mexico, is chairman of the Senate's powerful Budget Committee, with oversight of CPSC's funding. When Domenici speaks, bureaucrats listen.

Domenici, who assumed the committee chairmanship as a result of the Republican's sweep in to power last November, also is a recognized expert on federal budgeting and finance.

Legislation passed in 1994, the Children's Bicycle Helmet Safety Act, required the CPSC to adopt interim mandatory standards by March 15. The CPSC named seven different standards, including Snell's, as its interim standards.

The act also requires the CPSC to develop or adopt a national helmet standard within two years.

Domenici contends that a decision by the CPSC to permanently adopt Snell's standards, currently the most stringent in the industry, would save taxpayers money.

How? The CPSC could avoid the cost of developing its own standards and it would place enforcement of a national standard in the hands of a non-profit agency, Snell.

"This proven enforcement mechanism could allow the CPSC to reduce expenditures on enforcing standards. I encourage the commission to consider Snell's long history of Dedication to safety and take into account- its proven compliance program when it determines the final standards," Domenici said.

Such a decision would make ASTM and ANSI standards irrelevant. It also would require that all U.S. helmet manufacturers pay Snell to test and certify their helmets, a cost that would be passed on to consumers.

Snell has seen its market share decline over the past year as Bell Sports Inc. and others began using the ASTM standard to certify helmets. By using an ASTM standard, companies are cutting costs by eliminating the more expensive testing procedures required for Snell certification.

So why is a senator from New Mexico so interested in bicycle helmet standards?

Dr. Hal Fenner, president of the Snell Memorial Foundation, practices medicine in Hobbs, a small, southern New Mexico community best known for oil and high school football.

Fenner has been acquainted with Domenici for years. "I've known him for a long time, but we have not been close. I'm not what you would call a politician," Fenner said.

So call it constituent service. Or as Agnes Cecile Oczon, an aide to Domenici put it, 'It's much easier for someone from New Mexico to see the senator than it is for someone from outside the state.'

Last November, after Domenici had met with Fenner and several others from Snell, the senator sent a letter to the CPSC. The letter urged CPSC commissioners to immediately adopt Snell's standards as interim standards until the CPSC adopts its permanent, mandatory standards by 1997. He also urged the CPSC to make Snell's standards mandatory.

A CPSC official declined to comment on Domenici's letter or Congress's plans for the CPSC.

"I never comment or make predictions about what Congress is planning to do,' said Ken Giles, a CPSC public affairs officer. Currently, the CPSC has a $42 million budget and is responsible for overseeing enforcement of hundreds of federal regulations. The agency's entire enforcement budget is approximately $14 million. Last year, Snell spent more than $2.2 million just testing and certifying helmets.

Asked if there were sufficient funds to oversee independent testing of helmets and enforcement of guidelines, Giles said the CPSC has various mechanisms at its disposal.

If a helmet fails to meet mandatory standards, the CPSC can order a recall. It also can levy fines up to $1.25 million, although Giles acknowledges fines that steep are rare.

As Fenner points out, Snell is the only organization that requires, as a condition of certification, that manufacturers participate in aftermarket testing.

"Senator Domenici was very interested in the fact that we have the most stringent testing standards available and that we require aftermarket testing," Fenner said.

"If the CPSC adopts the Snell B-95 standard as the mandatory standard, they don't have to look after anything else. The senator also was impressed by the fact that we are a non-profit organization and that we support research,' he said.

As for cost, Fenner said manufacturers must pay Snell 30 or 35 cents for each Snell sticker, depending upon credit. The numbered stickers allow a manufacturer to track potentially defective helmets and the stickers self-destruct if removed. Manufacturers also must pay for helmets purchased at random from retailers and for the tests. Bell estimated that its total cost to participate in Snell's testing program came to about 63 cents per helmet

Snell has testing facilities in Sacramento, California, St James, New York and in Great Britain.

Copyright 1995 by Miller Freeman, Inc, Santa Fe, New Mexico. All rights reserved.

While Bell has long sold its BSI brand to discounters, it has reserved the Bell name for specialty retailers. Bell executives are bracing for an angry reaction.

To stem that anger, Bell is developing a new line of helmets strictly for the specialty retail channel, calling it the Bell Pro Series. It will be introduced in mid-July.

Bell also will sell the lower-priced Bell and BSI helmets in addition to the Bell Pro Series to specialty retailers. And Bell will offer retailers its lowest volume price on BSI models, even for those who buy in small quantities, said Terry Lee, Bell's chief executive officer.

In the past, some retailers have asked to carry the BSI line, but Bell reserved it for mass merchant sales only

"We're doing this to make a point. The IBD channel of trade is important to us. If they want to compete with the mass merchants, they can, although I don't think that's really what they should be concentrating on," Lee said.

Bell will continue to use specialty retailers to introduce new, value-added technology through its Bell Pro Series. "This business is very product-driven and specialty retailers remain the best place to introduce new technology," Lee said.

To sweeten the policy change, Bell also is offering additional dating incentives and discounts to retailers who increase their annual business with Bell by 20 percent or more.

Jay Graves, who owns the Bike Gallery in Portland, Oregon, is taking a measured view of Bell's decision.

"If the mass merchants are selling at retail prices, which has been the case around here, it won't be much of a problem. If they sell at a discount, then we generally don't carry the brand," Graves said.

Still, Graves, like others, wonders whether Bell's decision will cheapen its brand name.

"I wonder, if by doing that, whether it will make the helmets less popular? And a company sells through a mass merchant, I wonder how viable their product will be in the future?" Graves asked.

Bill Marengo, at the Bicycle Emporium in Auburn, California, shrugged the decision off. "Big 5 has Bell Sports stuff. So it's nothing new," he said.

Bell's decision reflects what is increasingly becoming a commodity-driven market. Hyper-competition from low-cost producers, price pressure and flattening sales are slicing deeply into manufacturer margins. And Bell's stock piece continues to show little sign of improvement, a fact not lost on shareholders.

However, its pending merger with American Recreation, another major supplier of helmets to the mass market, would make the company a formidable competitor when it comes to pricing helmets sold through discount outlets.

And Bell's decision reflects--to some degree--the pressure mass market buyers are putting on companies like Bell, which has a strong brand name, to put that name in front of their customers.

"It doesn't come as a huge surprise. Mass merchants are demanding brand names instead of off-brands. This is an acknowledgment of that market," said Katrin Tobin at Giro Sport Design.

Giro also has sold lower price-point helmets through mass merchant outlets. "The helmet market is becoming a commodity market and it's dependent upon volume," Tobin said,

Bell helmet sales, like others in the industry, have been stagnant. That slow- down is due, in part, to the delay in passage of mandatory helmet laws in some states, Lee said.

As demand has flattened, price pressure from new suppliers is turning the market into a battle over pennies. "We're watching it turn into a commodity market and, as the market leader, we feel we have a responsibility to try to stop that and give the pubic a choice between a low-priced helmet and a value-added, brand name product at a higher price," he said.

The average retail price of a helmet is now $15, down from $30 five years ago, analysts estimate.

Although Lee said his company is avoiding a head-to-head price war with suppliers like Headstrong, Bell is continuing to offer its mass merchant customers BSI helmets that wholesale for less than $10 per helmet.

Its new Bell-branded mass merchant line will start at $30 and is being positioned as a high-end mass merchant product, Lee said. The line will focus on infant, children and youth models.

To help spur demand, Bell plans to spend at least $8 million during its 1996 fiscal year, which begins July 1, on advertising and promotion. The $8 million campaign is Bell's largest.

"And that's a minimum. We may spend more. It will be enough to make a difference," said Lee, who predicts that the campaign will push customers into specialty shops as well as mass merchant outlets.

"The TV ads won't tell someone where to buy a helmet, but they will push the Bell brand. People who shop at specialty stores will go there to get them. People who shop at mass merchants will go there. I can't justify a national ad campaign like this without mass distribution of the brand," he said.

Goodby, Silverstein & Partners, formerly the advertising agency for Specialized, is preparing the campaign. It will include television spots on major networks and cable outlets like MTV and ESPN.

Bell also is planning to increase its advertising to enthusiasts through consumer magazines. Some of those advertisements will include listings of Bell retailers. Bell's other brands, Rhode Gear, Blackburn and Vistalite, will continue to be sold through specialty retailers only, Lee said.

Copyright 1995 by Miller Freeman, Inc, Santa Fe, New Mexico. All rights reserved.

While other suppliers hustled to meet Headstrong's low prices, the company kept staying one step ahead of the price curve.

Now, for Headstrong's competitors, there is some good news and some bad news.

The good news is that the company's chief executive officer, Dale Friedman, has declared that the mass merchant price plunge is over.

"It's clear that in the mass market retail prices have bottomed out. Retailers perceive no difference between $7 and $10 at wholesale prices," Friedman said.

But Friedman's other news could send a chill down the neck of some suppliers.

"For the second half of 1995 and for 1996, our focus is on growth in the specialty side of the business. We believe a typical retailer should have a helmet at $12.95. They can compete with a mass merchant who sells the same helmet for $9.95 because consumers would rather buy from a specialty store," he said.

Besides offering helmets at $12.95, Headstrong is delivering two new licensed brands, the Ironman and BodyGlove. Those products are being sold only to specialty retailers, he said.

The company's specialty market helmets will sell for more than $12, but not much more. For example, one combo pack includes Headstrong's new sports glasses and a helmet for $34.95.

Other specialty retail suppliers are holding the line on retail prices this year, after watching price points slip for the last two seasons.

Suppliers like Bell, Giro, Troxel and Specialized are reluctant to offer helmets with suggested retail prices much under $30.

"We don't think there's a need for us to make a $25 helmet and its not good for retailers to sell a $25 helmet. There's still a consumer out there who will pay a lot of money for a technical product," said Greg Shapleigh at Giro.

While maintaining the same price points as last year, most companies are offering better products. Even Giro is joining in, Shapleigh admits.

"Our Roc Loc system used to be just a high-end feature, but now it's on all our adult helmets," he said.

Suppliers are adding visors, back-of-the-head retention systems, better packaging and more venting on lower and lower priced models.

The newest trend is for matte-finished helmets. Giro, Bell, Troxel, Specialized and others are offering versions of the new, yet much duller colors.

Photo Captions:
Specialized's Mountain Man has a new BrainLock retention system.
Avenir's 1996 Corsair DX.
Bell's Psycho Pro has a Full Nelson fitting system and a SandBlast finish.

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

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 arch-competitor 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 long-term 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 high-price 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 re-entered 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 1995 by Miller Freeman, Inc, Santa Fe, New Mexico. All rights reserved.

Terry Lee, Bell's chairman and chief executive officer, said the company was forced to take back $2.5 million worth of helmets from a major mass-merchant retailer. The return, coupled with lower sales due to the soft retail environment, contributed to the expected loss.

Bell's third quarter will likely take a hit from lower production volumes resulting from the inventory return, Lee said.

"Despite the current sales environment, we continue to execute against our strategic objectives, streamline our organization and reduce our operating costs. Our goal is to be well-positioned when the retail environment improves," Lee said.

"On a positive note, the state of New York just adopted a children's helmet law for in-line skaters. This reinforces our belief that the world-wide helmet market will continue to grow," Lee said.

Copyright 1995 by Miller Freeman, Inc, Santa Fe, New Mexico. All rights reserved.

SCOTTSDALE, AZ - A weak retail market and an expensive investment in television advertising helped send second quarter revenue at Bell Sports spiraling downward as the company posted a $985,000 loss.

The loss does not include consolidation costs and an inventory write up associated with Bell's merger with American Recreation last summer.

When those costs are included, Bell's second quarter loss hits $7.7 million. Sales also dropped 6 percent to $56.2 million, compared to $59.6 million the previous year. Bell's second quarter closed at the end of December.

Despite the losses, the company's gross margins for the period increased to 28 percent, a point higher than the 27 percent posted a year ago.

Terry Lee, Bell's chief executive officer and chairman, blamed the poor performance on a weak retail market and Bell's investment in television advertising.

"Despite the difficult retail environment, we continue to execute against our strategic goals, which include diversifying our product lines and building the Bell helmet brand," he said.

'We are pleased with the progress we have made to date on the consolidation of American Recreation's operations into Bell Sports and we continue to build a strong foundation for future growth," Lee said.

Lee also pointed out that the introduction of Bell brand helmets into the mass market has been a major goal for the company.

"The introduction of the Bell helmet brand across all trade channels was largely completed by the end of the second quarter, with the remainder expected during the next three months. The initial response to Bell brand helmets in the mass merchant channel of trade, and the television advertising campaign, has been positive and we are pleased with the results to date," Lee said.

Bell completed its acquisition of Giro Sport Design Jan. 22. Giro's financial information will be included in Bell's third quarter report. That quarter ends March 30.

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

The company's profits totaled $624,000 in its third quarter, which ended Mar. 30.

During the same quarter last year, Bell lost $231,000. This year the company posted net sales of $67.4 million in the quarter, up 8 percent from last year.

"Fiscal 1996 has been a year of transition and foundation building. The strategic actions have begun to produce the desired results-profitability," said Terry Lee, Bell's chairman and chief executive officer.

In the last 12 months, Bell has merged with American Recreation, introduced the Bell helmet brand into the mass market, bought Giro and SportRack, embarked on an aggressive advertising campaign that includes television spots, and began consolidating its U.S. operations in Northern California.

Bell also restructured its Canadian operations, ending its 12year relationship with Norco, a Canadian distributor.

Bell products, including those sold under the Bell, Blackburn, Rhode Gear and VistaLite brands, will be distributed by CycleTech starting Aug. 1.

Norco will continue to sell and service Bell products until July 31. CycleTech recently moved its corporate office from Calgary to Bell's new Canadian headquarters in Granby, Quebec.

American Recreation bought CycleTech in 1994. When Bell merged with American Recreation last year, Canadians said it was only a matter of time before Bell pulled its products from Norco and gave them to CycleTech.

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

Bicycle Retailer and Industry News

Vol 5, Number 10 June 15, 1996

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

This page was last revised on: April 17, 2009.

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