Golf market update

Phil Barnard, CEO of Golf Datatech, looks back on the first half of the golfing year and what the statistics tells us about the state of the industry.

Back in January when I was staring into the crystal ball trying to put some thoughts on the year ahead I said that the year would be pretty dependent on the weather, That the football championships would create a decline in June figures and that hardware might get a bit of a boost. I also said that I expected to see a reaction from the off course to grab back some of the share that it lost last year. Six months on and I was pretty close on most points.

Let’s start with the basics – the weather. It certainly wasn’t great golfing weather for much of the first half of the year. The start of the year was wetter and milder than average. March, a key month, was very wet in southern areas – receiving 150 per cent of the annual average. April was wet everywhere. There was a bit of respite in May but June got a soaking. While temperatures were on a positive side rainfall was 163 per cent and sunshine only 73 per cent of the seasonal averages. Not great for getting the average or casual golfer on the course. The retails stats would support this, showing a fall in ball unit sales of 7.4 per cent with a rise in weather wear of 7.9 per cent.

So the markets are down then?

Well no! According to Golf Datatech numbers the market is actually up in value this year versus last year. So far 2.8 per cent year to date (YTD). Early momentum in February and March seems to have continued and the growth has been pretty maintained since February at around 3 per cent. (see graph 1)Screen Shot 2016-08-30 at 16.05.17

How is that possible?

The off course retailers have been pushing hard and having some good success with apparel and footwear. Seeing some dramatic climbs in shirts and tops, up over 30 per cent in the last 12 months. This has really driven the total market to date. Hardware is also up in three out of the four key club categories. Not everyone is happy though – on course has had a bit of a kicking. Since the start of the year the poor weather has certainly not helped the on course retailer. Things have improved but the market is down around 3 per cent so far this year. (see graph 2)

Screen Shot 2016-08-30 at 16.05.22During this period balls have been down over 4 per cent and gloves nearly 3 per cent. That’s a clear indication of reduced footfall. While the off course has seen growth in all apparel, on course has seen a fall in both shirts and bottoms. In comparison weather wear has rocketed – up 8 per cent on course and 27 per cent off. This is not unusual: in wet years we often see the off course retail channel benefiting.

So was it all doom and gloom?

No – there has been an uplift in hardware. While I didn’t get the right category (woods have been a bit disappointing) there has been strong growth in Irons, Wedges and Putters in both retail channels. However, there is a note of caution in that all the rises seem to be coming from higher prices. ASP’s are up in all categories except bottoms and shirts, with putters up nearly 18 per cent YTD. (see graph 3)Screen Shot 2016-08-30 at 16.06.04

Units down

While we have seen a positive trend for ASP and Value, we have seen a drop in units in all categories other than apparel and wedges. Woods and trolleys have really struggled and the hike in putter prices has had a real effect on the units sold. (see graph 4)Screen Shot 2016-08-30 at 16.06.07

This has been the same old story for the last few periods. The trend is pretty consistent and doesn’t look like changing soon. While some of the increase leads to greater margin for the retailers, much of the hike is a result of higher cost prices through the weakened pound. And Post Brexit, that trend doesn’t look like changing soon.

So what’s going to happen moving forward?

The Ryder Cup at the end of September can always bring a bit of a flurry at the end of the season. I expect most of the trends to maintain their current movement with the year ending on a slight increase in value. There may be a decline in apparel and wedge growth as they have been very hot to date. End of season clearance may affect unit sales in a few areas. Stock has appeared to be reducing so there should be less dramatic clearance than there has been in past years. Whatever happens, there is still plenty of opportunity in the season with a few large months left. Here’s to a strong finish to the year.

This is an extract from Phil’s blog, which can be found at https://philbarnard.wordpress.com/