It’s been a crazy time for golf retail amid a backdrop of uncertainty throughout general retail. Like most retail businesses, golf shops saw a total drop-off in April, followed by some recovery in May and June. Happily, sales figures over the last 2 months have shown that golf is booming – but not everyone is enjoying a revival. Golf retail expert, Phil Barnard, looks at the winning and losing retail categories in a post-lockdown world and how retailers need to approach buying and planning for 2021.
By the end of May, year to date sales value was down a worrying 54% against 2019 but, thankfully, things have since improved. June’s sales were down just 3% and, in contrast, July saw a jump to 24% increase. This brought the overall position back to -32% for the year: still a long way from where we want to be, but a satisfactory outcome with all things considered.
Unfortunately, improvements in sales haven’t been spread evenly across the categories in the golf industry. During June and July, Trolleys and Bags sat at the top of the leader board, followed closely by Clubs. In contrast, Apparel consistently lagged behind. In July. Apparel was up 10% on the previous month, but still down 18% Vs July 2019. Out of the seventeen categories tracked by Golf Datatech, the six worst-performing year to date were down between 41%-60% Vs 2019, and were all Apparel.
On the face, of it you could think things were heading for disaster but the picture may not be as back as it looks.
Overall, Apparel has struggled in value in the last two months – down Vs 2019 during June and July - however, the split between on- and off-course is quite marked. Whereas off-course apparel sales were actually up in both months Vs 2019, on-course sales were notably down.
Initial thoughts might be that there has been a shift in sales channels. We all know that online sales have increased dramatically this year and while the off-course data does include online retailers. However, there is more to consider here.
Early figures looked to indicate a general reduction in Average Sale Price (ASP) across Apparel sales for on-course sites, indicating a result of clearance sales. However, looking closer at the numbers and the type of products being sold, I believe the woes of the Apparel category are less to do with online sales or discounting, and more to do with the lack of tourism.
Most visitors buy a memento from the clubs they visit, very often a piece of clothing. Recent analysis from the US showed that the average golfer has 17 golf shirts with over a quarter of golfers having over 24. Golfers love a logoed shirt! With lockdowns and travel bans, hardly any foreign customers have been in town this summer and, as a result, resort courses providing for foreign visitors, and typically selling at higher ASP’s, have been some of the hardest hit.
This can’t account for all of the category’s problems, but I do believe it’s a big part. On top of this, there are three other issues that have contributed significantly to the reduction in general on-course Apparel sales.
1. TIME. With the ongoing threat of Covid19, most clubs now dissuade customers from arriving too early or hanging around in the club or shop. This has obviously had an impact on sales. With no time to browse, many players are asked to get in and get out.
2. ACCESSIBILITY. I have been to a number of on-course shops that are displaying signs warning customers not to touch shop products if they don’t intend to buy. This isn’t a great experience for the consumer. Clothing has to be looked at, held up and felt before it is purchased. I am sure many customers have been put off even trying when they see these signs.
3. STOCK. Panic at the beginning of the season caused many retailers to cut back on pre orders. As a result, many stores are looking a little sparse and missing some of the new kit. This has actually pushed regular customers to go and search online for their new clothing fix.
What now for golf retail?
We now need to look at the local and domestic markets slightly differently. Undoubtedly, the resort clubs and tourist destinations are going to struggle until visitors come back. Customers will only return when travel restrictions are lifted and golfers feel happy to travel. That might not happen for a while and, at the earliest, will be next year with the current travel season now drawing to an end. This leaves most clubs looking at the domestic market so, what can we plan for that?
Fortunately, there are some positives in the data. While sales units are down by an average of 44%, inventory is also down 22% showing that in a time when stock could have seen a considerable build, we have actually seen a significant drop. This should mean that many retailers are in a relatively healthy position and should be able to respond positively for next year.
The key thing now is to plan for next year and ensure you have the product and brands to service your customers. That means making a plan for stock that takes in to consideration your current inventory and new product to freshen the offering.
Forecasting for 2021
Next year, we expect the economy to reach a new normal and it shouldn’t be as bad as this year. Sales will be made but we can expect things to tighten somewhat: somewhere sitting just under 2019. If this is the case, consumers are going to be harder to convince to part with their cash. They will need to “want” a product, instead of just grabbing something cheap. It will be important for retailers to offer something new in terms of design and performance to sell to customers in 2021. One other thing to consider is that a lot of golfers took up the game this year, or returned to the sport after a break (20,000 new memberships according to Golf England). Many of them appear to have been buying clubs, bags and shoes so they may be looking to improve their wardrobe next year.
With most retailers sitting on significantly lower stock levels than last year, you'll need to place some orders for new merchandise. It’s more important than ever to focus on your customer set and order the right stock in an appropriate amount – it’s time for a buying plan and that dreaded word – the “Pre-order”.
Don't baulk your pre-orders
Over recent years, many retailers have worked on reducing their pre-ordering and, for some, that is a good thing. However, this might start to cause problems for many retailers after this year’s unusual season. Pre-ordering is an important part of the retail mix – especially in Apparel. Brands have been pretty flexible this year in dealing with orders from retailers, and many have allowed retailers to cancel items. Next year, I suspect they will be more conservative: Ordering less from their suppliers and having less in excess to meet ad hoc demand. Hence, if you don’t place some form of pre-order you might not be able to get anything to sell.
Next year is going to be a critical time for bricks and mortar retailers to try and gain back some of the ground lost to the online channel. If there is little choice or stock available for your customers, they will just look elsewhere and may be lost forever. As part of the plan for 2021, retailers must make some estimates on what you are going to sell and make sure that you have stock to support sales and entice customers. Finally make sure you get your stock mix in line with your sales mix. If retailers want to be more conservative in ordering, it may be better to reduce the number of stocked brands – sticking with the brands that are most popular in store.
Phil Barnard is European Partner of Golf Datatech and Chairman of XPOS, the number one sales and stock management solution for golf. Follow Phil on Twitter @phil_barnard www.crossovertec.co.uk www.golfdatatech.com