Good News for Golf Retail in Mid-Year Industry Review

 

At the start of the year, Phil Barnard was cautious; pessimistic even, about how this year might turn out.  In 2017, the combination of new product launches, and great weather at the start of the year, produced a bumper result. Repeating that seemed very unlikely.

Here, Phil looks at the mid-year position for the golf retail industry and what might be around the corner for pro shop owner managers.

 

There’s no denying that trying to predict what is going to happen this year in golf retail has been harder than ever. Using Golf Datatech's Retail Audit data, we can see that 2018 started really badly and, at the end of March, we were 10% down in value on 2017.

However, since then, the sun has come out, the sales have been rolling in, and year to date figures have improved greatly.

By April, we had recovered to just 3.5% down; in May, we were back to 2017 levels of sales; and June has since proven to be an even better month. Looking at the graph below, which shows the comparative YTD total figures versus the previous year, we can see that, as of May, we were actually just up on 2017 - having been well down for January through March. June is now looking like a 1.8% growth.

 

The line is obviously very different in shape to 2017, which started off with a real bang. Thankfully, we've caught up since May, but can we keep up momentum and finish the year above 2017?

With events like the World Cup, and limited product launches coming through later this season, I’d say it’s unlikely. But if we can stay anything close to 2017 figures, then that should be considered a strong performance.

A longer perspective

At the outset of 2018, it looked like it was going to be a bad year, in relation to 2017. However, it's worth remembering that 2017 was the biggest growth year we have seen. So, if we compare the last few years to 2016, we get a different view. 2018 is now looking very positive, being nearly 13% ahead of 2016.

Going further back, I can tell you we are nearly 20% up on the same period in 2014.

Is everyone going to be happy with these numbers?

Answer: In a nut shell, no. As we see later, units are generally down, so golfers have been buying less. There will be ups and downs with all statistics, so, although the average is up, there will be some retailers who have not had a good start. Some of that will come down to product mix.

Those that have invested in swing studios and put effort into selling hardware, will have done well. Those retailers that have a more limited offering, focus more on clothing or consumables, will most likely have had a pretty torrid time and be feeling unhappy with their current position. It very much depends on the sales mix of the store, but some could be 10 to 15% down on last year.

What has driven this growth?

Answer: In the main it’s hardware. Three of the top 4 performing categories for growth are hardware. Irons lead the way with 9%, followed by Wedges and Woods. Only Putters saw a decline.

If you look at the year to date sales mix, Irons and Woods have been dominant. New product launches seem to have caught the imagination, and Irons, in particular, are having a strong year. To date, nearly 47% of spend across the 17 tracked categories, has been on hardware. So, growth in these areas has had a significant effect on the overall.

 

In contrast, Consumables and Apparel have had a bad start to the year: both being down in excess of 5%. Ladies clothing has been worse hit and suffered the biggest drops. However, in this earlier part of the season, this has less effect on the overall total as these categories tend to pick up as the year progresses. Clubs sales usually peak around May, so, moving forward there will be a bit of transition in spending in to the other categories.

Taking a different look at the growth, we should also consider units (see chart). All but 2 of the tracked categories are down in unit sales. Distance devices and ladies clothing all saw pretty massive drops.

 

These categories have been more affected by the poor weather. The other question is "has golf kit got too expensive?". I can't answer that one straight off the bat, but it's interesting that the category with the largest price drop - Outerwear - is also the category with the largest unit gain.

What about the next phase of the season?  

As we have seen with the weather in the last few weeks, things have been really good. It was the 3rd driest June since 1910 - meaning there was nearly 50% more days where golf was likely to be played. Fingers crossed that does actually translate to more golf, and more sales in the till.

The only worry with the weather is that it's possibly been too good, and has, perhaps, drawn people to alternative activities. Then, there is the World Cup, which usually distracts people, although this doesn’t seem to have had too much affect on the June figures.

I hope the growth continues but I wouldn't be surprised if we see some softening of the figures later this year as we anniversary the major autumn launches. But, in the meantime I hope everyone gets a chance to make hay while the sun is shining!!

 

Phil Barnard is Chairman of Crossover Technologies, and Partner of Golf Datatech, which provides market information to the golf industry, based on sales data accumulated monthly from hundreds of retail outlets. 

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