_Jan/TheEvolvingStateOfRetail.jpg "The Evolving State Of Retail")
By David Gould
With the recession altering the way consumers spend their discretionary income, the rules of buying and selling are changing
A customer entered the Eagle Ridge pro shop in Gilroy, California, last fall and was sold a golf shirt without one word being spoken. Rick Smith flashed a knowing look as he held up the limited-run Cutter & Buck shirt to reveal its San Francisco Giants World Series championship logo. The customer, a Giants cap on his head, announced, “I don’t need another golf shirt.” Closing the deal with a reminder about the Giants’ long dry spell, Smith said, “You need this one—you waited 56 years for it.”
Golf retailing is not the revenue generator it was during the loose-money era of five or 10 years ago. For many course owners, the process of ordering, stocking and selling merchandise is their least favorite part of the business. But to Smith, general manager of Eagle Ridge, pro shop retailing follows the same dynamic it always has.
“It’s part of your relationship with the golfer,” he says. “The merchandise is one of the things they enjoy about the golf experience.”
Little wonder Smith trains his staff in the art of conversation with golfers arriving to check in. “We’re communicating with everybody who walks up,” he says. “We work it into the conversation that there are good values in our shop. That discipline helps us turn a profit on merchandise.”
The conversation with golfers is ongoing, but the rules of wholesale buying and inventory-building have changed. So says Sheila Biggs, vice president of golf merchandising for IRI Golf Group. Biggs is the person you would hire to give a seminar on inventory management using an open-to-buy plan—that classic tool of retailing that Biggs, to her surprise, has abandoned.
“It’s really hard to use open-to-buy in this market environment,” she says. “It works great when you have a certain degree of pricing power and somewhat predictable sales volume, but right now we don’t have either.”
The concept of making monthly forecasts (overall and for each category of goods), pre-booking deliveries and adjusting the pre-book orders every 30 days has become foreign to Biggs and many of her contemporaries. “It’s not practical to even say what the goals are,” she laments. “Not when I’m generating a cost-of-goods-sold that is 66 percent one month and 80 percent the next month.”
Opportunistic Retailing
If you’ve always been a little shaky on open-to-buy metrics, you’ll be right at home in this new retail game; even the specialists are playing it by feel and instinct. Looking ahead to 2011, owners and retail managers talk about stocking their shops the way a camper fills a first-aid kit—acquire what you need but travel light. For instance, Brian Stevens surveys all his merchandise, including how it’s priced and displayed, from the standpoint of whether or not it will trigger an impulse purchase? The more he can answer that question with a yes, the better he feels.
“Obviously, there are big-box stores with huge selections of well-priced golf shoes nearby,” says Stevens, general manager of Crooked Tree Golf Course in Tucson, Arizona. “But there are plenty of guys who make a plan to shop at those stores on Thursday or Friday and then don’t make it. They’re too busy, and it’s not exactly enjoyable, so they wind up in our shop Saturday morning needing shoes.”
Last year, that reality prompted Stevens to choose a footwear strategy that he felt would serve both the impulse buyer and his own profitability: He eliminated all shoe brands except one, carried a healthy range of models, and priced his inventory aggressively. “I was pleasantly surprised by our unit volume in shoes this year, and with profit margins as well,” Stevens says. “I was bringing in a lot of pairs at $45 wholesale and selling them for about $70. We worked out good terms with the vendor for going exclusive.”
Asked about possible complaints from customers who find only one shoe brand in the shop, Stevens calls it a non-issue. “People understand the competitive situation,” he says.
Regardless of the climate, the core product at any golf facility is the course; however, a golf shop with some extra energy and life in it helps sell the whole experience. In that vein, searching for a great buy on windshirts or wedges and then carrying it in the shop becomes an integral part of marketing the golf course. “There are always good deals to chase,” says Kim Nelson, director of merchandising at the famed We-Ko-Pa public course in Fountain Hills, Arizona.
When you do, in fact, find a product category to get aggressive with, make a visual statement. Pile up your stock prominently and even dramatically. “Beer companies figured this out a long time ago,” Smith says. “The higher you stack the cases, the more beer each customer buys.”
Of course, getting deals on merchandise that will entice consumers to open their wallets requires a certain degree of diplomacy—and in some cases, heavy-handedness—with vendors. “I’ve basically told every rep who walks in, ‘You’re going to participate in this recession with us,’” Smith adds.
This may prove daunting for course owners with small selling spaces, who often feel they lack leverage with sales reps and cringe at the time and energy it takes to compare goods and prices, much less try to decide on upcoming fashion trends. Biggs sidesteps this obstacle by moving away from goods that are new and current, and into closeouts.
“I buy very little in the way of new products,” she says. “Before this recession, I would pay the set [wholesale] price to bring in the newest goods, make my profit quickly, and mark down what’s left to move it out.”
Shops in the IRI Golf Group now do their trend following only when price opportunities come along. For instance, Biggs recently brought in a sizeable order of Sunderland sweaters, which she would have paid $65 each for in the past. By waiting, she was able to get them as a closeout at $30 per unit.
Indeed, the length of product cycles was the primary reason Biggs and other golf-merchandising specialists were previously committed to paying full wholesale price. Closeout goods were available, but not until nearly a year after the product’s original release date. “Now, the manufacturers offer closeouts as quickly as two months [after they first shipped that particular style],” Biggs notes.
While buying closeout goods at greatly discounted prices will reduce the risk level of your retail investment, you can eliminate it altogether by following the lead of Al Sellers, who filled his racks and shelves this year with name-brand golf apparel that he acquired on consignment. “It definitely worked from the point of view of how few dollars we had tied up,” says Sellers, general manager of Pine Creek Golf Club in Colorado Springs. “And the customers seemed to be okay with the amount of selection we provided.”
Filling Niches
Even as sales figures for online purchasing head higher every year, the vast majority of on-course retailers have been slow to embrace this revenue-generating opportunity.
One course owner who is at least experimenting in this area, John Schneiter, has no doubt found there’s profit potential in a properly designed online store built into a course’s Web site. Of his family’s two golf facilities in Utah, it’s the Web site for Schneiter’s Bluff where the namesake operator presents his array of golf GPS units, high-end pull carts and multi-play golf ticket books. In what became a pilot program, Schneiter sold approximately 25 units in the GPS and pull cart category, grossing a few thousand dollars. “Some people just like buying things this way,” he says. “You need to market it, send out e-mails, run specials—you have to work it,” he says.
A good place to begin arm-twisting on price is merchandise sales to outing groups. “The manufacturers need to move product, and your event sales person needs to come up with new ideas every year,” says Scott Perkins, golf professional at Willow Creek Golf Club in Knoxville, Tennessee. “If you think there’s a product that could do well as normal inventory, use an event to get it started, and get the vendor to bend on price for you.”
It’s perfectly acceptable to get feisty with vendors, but you may find they have already formulated programs that are well adapted to current market conditions. For example, Antigua sales reps are pitching an expanded line of small and larger luggage pieces, both as stock inventory and as tournament tee gifts. Advantages to this category are multiple: It’s un-sized, so every unit on the floor “fits” whoever is looking at it. In the case of the larger carry bags, they draw the eye because they’re not standard shop fare, and they take up space. That’s important when you’re running much leaner inventories than your shop was designed to accommodate. (A routine surf through website photos of on-course golf shops shows bare walls and shelves quite commonly.) Once drawn toward the display, a customer will notice other items tucked in, such as a windshirt in the carry bag and a logo cap rolled up in the shoe bag, priced as a combo at a good value.
“Our product line is very broad and the embroidery costs can be kept down because we do it all at once,” says Ron McPherson, president of Antigua. “When we talk about event merchandise, we’re trying to provide something that will help to keep that tournament at a course for next year.”
Part of specialty retailing is being a pioneer—if you’ve got the nerve and think you may have the market. Mark Fletcher, CEO of the Canadian-bred outerwear brand Sunice, understands that success in on-course shops isn’t all about high-performance product. More than likely, if a golf shop became proficient in stocking and selling a line such as Sunice outerwear, it would draw customers from beyond its core user base—the human desire to look good while staying dry and warm is a powerful one.
Meanwhile, golfers at Scissortail Golf Club, a public course in Tulsa, Oklahoma, “are grousing about a $22 green fee and buying a pair of socks for $25.” That’s the field report from Gil Patrick, head of golf market development for the 165-year-old, family-owned company KentWool. This past season was KentWool’s first year selling the golf market’s only 100 percent merino wool sock, with a no-blister guarantee, a stress-relief design and lofty claims about foot support, moisture wicking and odor avoidance. The company’s early success proves that people don’t keep their money in their pockets because they want to, they do it out of vague anxiety, and they don’t enjoy it.
“It’s a large amount of money to spend on a pair of socks,” says Patrick, “but it isn’t a large amount of money.” As with any successful product in a golf shop, it gets sold as a to-me, from-me reward that has extra value because it enhances the customer’s favorite activity in life.
In the end, that’s the strategy that ultimately determines the overall effectiveness and success of an on-course retail operation, regardless of the economic climate.
David Gould is a Connecticut-based freelance writer and frequent contributor to Golf Business.