I started this article before the Covid19 outbreak and was then conflicted as to whether I should continue writing with the ensuing carnage. Inevitably, the pandemic would have a significant effect on our personal and professional lives, as well as our future behaviour. So, I pressed the pause button on my previously planned feature and, as predicted, the global economy has since slipped into recession. Now 8 weeks into lock down and I’ve had plenty of time to put together my thoughts on a post-Covid golf retail industry.
Where was golf retail heading before the virus outbreak, and where might it end up now?
Pre-Covid, general retail was changing at a rapid pace. The traditional high street was under constant pressure, online retailers continued to grow and Amazon had become all-powerful. Day to day retailers were shifting towards a more experiential in-store service, providing customers with a sense of expectation, and golf retail was starting to pick this up.
Historically, things have been different in the golf industry, in comparison to general retail and it isn’t unreasonable to assume this will continue to be the case. Golf is fairly unique in that the channels of distribution are different to most other retail businesses. In fact, it’s possibly the only activity where a large part of the associated purchasing is done at the point of delivery: at the course or driving range.
"With custom fitting, science and expertise can calculate the right product and so a large amount of stock is no longer required".
High street retailers have grown over the last 50 years and taken a significant share of the golf business from the golf Pro. The larger floor space and sheer amount of choice offered by the high street shops was attractive to customers. However, in the last decade there has been a renaissance in specialist on-course retailers: largely due to the way the Club category has moved towards custom fit. This has played into the hands of the club Pro who can use his expertise, and relationship with the golfer, to sell the product. In the past, the big box retailers relied upon rows of clubs to tempt customers, who were convinced that, among the options, would be the “the right one”. With custom fitting, science and expertise can calculate the right product and so a large amount of stock is no longer required.
Another factor in this transition is the swing monitor which has enabled retailers to demonstrate the benefits of a new purchase. You can measure, and compare, the performance of any club against your old one. This has made it easier for customers to see the benefits and builds greater value in the purchase. As a result, prices have increased and stock levels fallen.
What has been the main driving force in golf retail and how will that change in a post-Covid world?
Ultimately, the customer is looking for the best ‘value’ which, in the Clubs category, comes from seeing a boost in performance. Historically, ‘value’ was confused with low prices, but we know it isn’t the case: it’s actually the perceived benefit versus cost relationship. It isn’t any good having something cheap that doesn’t perform – where’s the value in that?
‘Value’ is easy to illustrate for Clubs - see how far the ball goes and decide if X yards gained is worth Y £’s spent. With other items, ‘value’ is less tangible and harder to quantify. For shoes, it could be how comfortable they are and, with clothing, it may be if it makes you look good and feel.
“You know you’re purchasing the right product because it’s fitted to you and the fitter can demonstrate the benefits. It’s the evolution of ‘big choice’ to the right choice.”
The ability to choose from a large selection of product has been used to deliver ‘perceived value’ for a long time. Without the option to choose from multiple options, there’s a nagging sense that there might have been a better product out there. Custom fitting delivers the same level of satisfaction, without the need for all the stock. You know you’re purchasing the right product because it’s fitted to you and the fitter can demonstrate the benefits. It’s the evolution of big choice to the right choice.
Moving forward, we must continue to deliver ‘value’ to the customer. The customer needs to believe he’s getting the right product: either through choice, or fitting, and which is validated factually, professionally, or by his peers.
There’s one more thing to consider. In order for the customer to get the most ‘value’, he should enjoy the experience.
How do we identify the customers’ needs?
When we look at the Club category, the pattern is pretty well set. Custom fitting works so offering ‘choice’ to consumers comes down to having enough custom fit options. After that, it’s about the overall experience – which will be delivered by the shop environment; the equipment available; performance tracking; and the expertise of the retailer. Obviously, the aim is to find the product that works for the customer and deliver a boost in performance.
How do we now deliver a similar proposition for other categories? How can we do a better job of meeting customer needs? For clothing and shoes, this will be about identifying the right fit and look and can be done a number of ways.
1. Service. Shop assistants provide more help with product measurement and selection.
2. Identifying products that fit and look the best.
3. Technology. Sizing, measurements and product selection could be delivered through kiosks, apps, or even walk-in “Pods”. Brands might consider virtual-fitting apps and augmentation that could measure customers and suggest sizing.
Imagine walking into the fitting “Pod” where you are scanned for size and the style of clothing that will suit you, and then are provided with options to choose from. Once the selection is made, the system then augments an image of the you wearing your outfit to make sure you “like the look”.
Post-Covid, one thing to consider regarding fitting, is personal space. Customers may feel less happy being measured by a staff member and technological solutions will be a solution.
How do we provide the customer with choice, while ensuring capital efficiency for the retailer?
‘Choice’ is still a very effective weapon in a retailer’s armoury. What’s more, it’s pretty simple to deliver: you just need space and stock. The problem is that it isn’t financially viable for the majority of retailers so the challenge is how to provide choice, without crippling the business financially.
offering the customer a great deal of choice "isn't financially viable for the majority of retailers so the challenge is how to provide choice without crippling the business"
With the huge choice available to the customer, I think we’ll see a fundamental change in the stocking policies of brands and I can envisage 3 different types of stocking programmes developing in the future:
· Stock for immediate sale, merchandising, and fitting.
· Stock that is available online for delivery to store or direct to the customer – the virtual stock room.
· Stock that is owned by brands and sold on a commission, or space rental, basis.
Let’s see how they could benefit the retailers and the brands.
1. Stock for immediate sale, merchandising or fitting
Without any stock there would be little reason for a customer to go into a store. So, retailers will need to stock a range of items for immediate sale and sizing but the choice will be limited.
Online commerce has taught customers that you have to wait for what you want. That might only be a day or 2, but we know customers are prepared to wait for the right item. Shops focus on delivering a good service: helping customers identify what they want from store stock to find the right style and size. If it’s what they want then they can take it there and then, or, the retailer can order it to be collected in store, or delivered to homes within a couple of days.
"Online commerce has taught customers that you have to wait for what you want".
This is where auto-replenishment comes in. If retailers are light on stock, the options they are stocking should be replenished once sold. The last thing we want is to miss sales from stock-outs.
2. The Virtual Stock Room
The Virtual Stock Room connects the retailer with the brand’s warehouse and provides stock availability directly. If the retailer can show samples of sizing and materials to the customer, they can select the exact product through the brand’s ‘live’ catalogue. The chosen product can then be delivered to the store, or direct to the customer.
3. Stock Owned by Brands
The final option is where the brand supplies the stock and pays commission on the sale. This isn’t a new concept but it hasn’t always been successful and usually fails if retailers focus on items they have in stock and need to clear, instead of the items that are costing them nothing to display.
To improve the performance of these schemes, the incentives and rules must be appropriate. Rewards from this type of process may be delivered on a commission basis, or, brands could rent the merchandising space. Retailers that deliver good amounts of sales could charge higher levels of rent. Retailers could operate at lower margins in this framework as they’d have less liability in stock holding. This could enable brands to make higher margins plus manage stock and pricing more effectively. Potential incentives for everyone.
What impacts could we expect after Covid19?
There’s no doubt the lock down experience will have adjusted people’s perspectives. Over the last 2 months, customers have been trained to buy online and will be more willing to do so in the future. I think items that need little involvement will definitely see a sustained shift to online. However, many people will still like shopping and the experience of going, seeing and trying will become even more important. A fusion of these practices might be the prevailing choice for many categories.
"customers may want to stay local. The inclination to go to a big indoor Mall full of people may have diminished for many people".
Purchase Online and Pickup In Store (POPIS), or Click and Collect, allows consumers to view, research and select products online that are in stock. They can then go and pick them up when they want to. Often customers just want to know an item is available before they travel. This sits alongside the Virtual Stock Room that I mentioned earlier.
Another factor to consider is that many customers may want to stay local. The inclination to go to a big indoor Mall full of people may have diminished for many people. Instead, customers might want to remain local: staying in their community where they feel more comfortable, which provides great opportunity for the golf shop and driving range.
Environmentally, consumers may start to change their views on excess purchasing. There may be a move to buy less but get more value. Consumers may be less interested in the brand and more interested in how a product performs, how long it will last and whether they will get value from it.
Phil Barnard is Chairman of XPOS, golf’s leading sales and stock management system, and European Partner of Golf Datatech. Follow Phil on Twitter @phil_barnard and LinkedIn