The presence of American Golf in the European golf market continues to grow. The company has over a 100 UK stores with more in the pipeline, its online operation is growing rapidly, and American Golf is the UK’s biggest employer of PGA professionals. Trudy Hills, Commercial Director at American Golf, spoke exclusively to Robin Barwick
How is 2014 fairing for American Golf?
I understand that the golf market overall is down by around 14 percent over the past two years. The market has really had to restructure, which is not a typical trend for a consumer market, but American Golf is well set within the sector.
Overall, from a group perspective, our sales are roughly flat for the year to date, from a like-to-like standpoint, but this is not a huge surprise. In the context of the whole market and what the sector has seen over the past couple of years, we are seeing an improving trend through 2014 because the beginning of the year was heavily impacted by bad weather in February and March.
We would all like to see growth in the golf sector, but I don’t think we are going to see stellar growth any time soon. When you look at golf participation over the last couple of years, and the other leisure pursuits against which golf is competing, rapid growth is not realistic. That said, we do expect to see improvement at American Golf and to finish 2014 in a positive position.
The improving trend comes from the fact that the beginning of the year was very challenging due to the flooding across the country, but our last few financial periods have all delivered positive, group like-for-like results. Ultimately, I do expect 2014 to show growth compared to 2013.
The improving trend has been evident across both retail and e-commerce in March, April and May and we also expect a decent summer. The World Cup will have a negative impact, but then the Ryder Cup will extend the golf season and compensate for it.
What is the ratio between bricks-and-mortar business and online?
Essentially, we have rebuilt our online business over the past couple of years. What we had before was not fit for purpose in terms of logistics and overall capability. What we have now is a modern, digitally adept business. We are seeing like-for-like sales comparisons up by 40 to 50 percent this year. Sales are growing faster in Europe than they are in the UK, but the UK is also showing significant increases. Obviously, we are really pleased with that, and e-commerce has grown from around 10 percent of turnover just over a year ago, to now representing 15 percent. That trend will only continue.
We are also seeing customers switching sales channels. For instance, at Christmas – just like every other retail sector – we saw a significant increase in online sales. In fact it was the biggest Christmas for e-commerce in American Golf’s history. It’s clear that consumer buying habits are the same for golf as any other sport.
How is the system settling in for taking in-store orders on iPads?
In one word, phenomenal. We tested it in 12 stores over Christmas and it was obvious in the space of 10 days that we had a runaway success on our hands. We had iPads in every store by the end of February and we are undoubtedly securing extra sales because customers are able to get the size, colour and exact specifications of whatever products they are buying, with delivery by 9am the very next morning to home, work or to the store.
This is a service that customers expect in modern-day retailing and they love the service. Our shop staff love it too because they know they are providing a great service and it means we can offer our full range of products even from our smallest store. The volume of iPad sales is significant and is proving to be very popular with our customers.
We want to create a multi-channel business at American Golf, but we don’t want stores and e-commerce to be separate from each other. The iPad has gone a long way to achieving that.
Is there potential for American Golf to grow in bricks-and-mortar as well as online?
Definitely. We see that as our main pillar, and the stores represent 85 percent of our sales volume. While that percentage may decline as e-commerce increases, stores are going to remain the lion’s share. We have a number of initiatives that we know will add growth to our bricks-and-mortar business. We have opened three new stores so far this year, and we have another one opening in the City this summer. That will take our number of stores up to 104.
Broadly speaking we try to open between six and eight stores a year. Sometimes in a down market you need to be bold because there are good deals to be made, and we want to continue driving forward and to take more market share. We will continue to roll out our retail space in the right areas.
Absolutely. It now has the capability we want in terms of offering tangible benefits to customers, which gives our shop staff a strong message to hit home. Our hope is to use the Club Card data to have a positive impact on customer behaviour.
Hardware continues to be the driving force of our business, so we need to make sure we are selling it in the right way. This means offering free custom- fitting and supporting staff with the latest fitting technology in-store as well as continuing to invest in PGA professionals. There are more plans in the pipeline to expand this so I am confident that customers will be attracted to come in store and take advantage of the benefits we have in place.
Are there plans to open stores on the continent?
Not at the moment. It is an option, and I would never say never, but from the perspective of returns, the UK stores and European e-commerce are currently much more beneficial.
How many Club Card members does American Golf have?
1.2 million in the UK, so if you think there are roughly 3.2 million people playing golf in the UK, broadly speaking our membership includes a third of all UK golfers. Some of them will have lapsed but they are all customers, past and present, and they represent an opportunity.
Thanks to the way in which our data management system is set up we can drill down into the data and target very specific groups with relevant marketing information. We have also just started emailing receipts from stores, which is a great way to effectively increase our email database. This in turn increases our marketing efficiencies and our ability to communicate more frequently with customers.
Does American Golf employ one PGA pro per store?
Exactly right, and we have doubled the number of PGA pros we employ over the past year. We work very closely with the PGA now, which we could not have said historically. We are in fact the UK’s largest employer of PGA pros by a country mile. That number will continue to grow as we will need to meet the demand generated by our customers who can book lessons online through Club Card, or book a club-fitting session or a club MOT. We’ve introduced a new booking system which means that any appointments are all scheduled automatically and directly to each store. The system’s working really well from a customer and store perspective.
Having PGA pros at American Golf stores is also key in terms of where we are positioning the brand and how it is perceived by golfers. It’s a question of establishing and reinforcing our credibility, and enhancing the service and experience we offer. American Golf is now seen as a credible shop for the core golfer, and not just as somewhere to go if you are looking for a good deal.
If we hadn’t invested in PGA pros, our business would not be able to compete against some of the better pro shops out there. American Golf is no longer just about selling golf equipment to golfers, but also about helping them play better golf.
What ideas do you like for growing participation?
The fundamental issue with the game is that it takes too long to play. It is not acceptable in today’s generation for men or women to disappear off for the day to play golf. Time pressure is genuine, and whenever we carry out quantitative research, that is the number one issue.
We need to recognise as an industry that golf’s format has to be addressed. We are looking at how we can work with some very good golf clubs and courses to make it easy for golfers to pay and play for nine holes, rather than 18. A lot of golfers have two and a half hours to spare, not five, but they still want to play on an outstanding course. Those frustrations have to be dealt with and clubs need to look at the issue from the customer’s point of view.
The most direct parallel from other sport is 20/20 cricket. Cricket was a sport on its knees. They introduced a new format, made it shorter and more exciting and made it compelling for the whole family. Golf needs to do the same thing. We are looking at ways that nine-hole golf can be made really accessible and for it to be really good value and on really great courses, and hope that the whole industry adopts this thinking.
Otherwise we will continue to see golfers migrate to cycling and other activities. The issue is not with getting inner-city kids into golf, or with bringing new people to the game, but in enabling participation from people who know the game, love the game but have left the game. We think that this is where the realistic and immediate opportunity for growth lies.
Can you see AG moving its store locations closer to golf courses?
Some of our stores are already on golf courses, but, as we have a third of all UK golfers on our database, we can make it very easy for golf courses that want to adopt a modern view to golfing format to access golfers who want to play their courses. There is a huge opportunity there.
Do you see the number of UK courses dropping?
Yes. There is over-supply and under-demand. It’s inevitable in a market that has dropped by 14 percent over the past two years. The industry has not ‘right-sized’ yet, but as time goes on, and as more club finances run out, it will.
What about the future of traditional pro shops?
We all know there has been a structural shift over the last 10 years, from on-course retailing to off-course, and the on-course market share has dropped from around 60 percent of trade eight or nine years ago, to just below 50 percent today. Pro shops still represent 50 percent of the market though, and while I can see a number of pro shops not surviving, a large quantity will survive and will continue to do well. The ones that are professionally run as businesses tend to do well, because they have an affiliation to the club and to its membership. There is an implicit trust and relationship between a club’s pro and its membership.
There are too many pro shops. Some are poorly run and are kept afloat through the multi-faceted aspect of a golf course operation, where you have got a restaurant, bar, golf course, driving range and a pro shop. It is highly questionable whether a lot of pro shops make any money themselves.
As an off-course specialist, our task is to continue to improve our brand proposition, service and capability, but that specialism of the pro shop and that relationship will always be warranted within the industry.