Thought Leadership – Hanbury Manor

The inaugural GOLF RETAILING Thought Leadership event, in association with BMW, took place at Marriott Hanbury Manor on December 9. Five senior figures in the UK golf trade joined us for a morning of open discussions on issues facing the industry. Here is the first part of our coverage of the event, in which our experts reflected on trade in 2013, and on the over-arching issue of golf participation in the UK
Sharing their thoughts

NIGEL FREMANTLE (NF) – Founded the ND Sports distribution business in 1980, which would evolve to become Brand Fusion International, which distributes Sun Mountain and Super Stroke, among many other brands. Nigel is chairman of the British Golf Industry Association.

CAROLINE GRIFFITHS (CG) – former Ladies European Tour Golfer and past chairman of the LET. She was director of golf at the Vale Golf and Country Club for 10 years, she has owned her own pro shops, and has been Group Retail Manager for Crown Golf since 2001.

SIMON HOMER (SH) – Simon was appointed head of Adams Golf Europe at the beginning of 2013, following the acquisition of Adams Golf by TaylorMade-adidas. He joined Adams from trolley company Powakaddy, where he was marketing director.

BOB SMITH (BS) – Bob is a former tour caddy, and he carried Michael King’s bag in the 1979 Ryder Cup. He has worked as a sales agent for numerous brands, and has been European distributor for Peter Millar since 2004. Bob is a former chairman of the BGIA.

STEVE WESTON (SW) – Steve is a former club professional who launched Mappt in 2012. Mappt is developing a web and mobile platform, offering applications for both golf consumers and golf professionals.

The year that was 2013

NF: Personally, I think the trade remained pretty flat. I went to a bank seminar the other day and the bankers were getting excited about economic recovery, but generally the retail sector is not very buoyant. For Brand Fusion though, business certainly picked up over the summer.

CG: Across 27 pro shops at Crown Golf we enjoyed spikes of retail trade in July and August, but apart from that we have not had a very good year. We enjoyed a record year in 2011 – our best ever – followed by a disastrous year in 2012, and I would have bet my house that we would have exceeded 2012 in 2013, but we haven’t. We are basically about three percent behind 2012. Quite painful.

Caroline Griffiths

Caroline Griffiths

BS: Trade in 2013 had a lot to do with the weather. We did not have a spring. Winter just carried on and then turned straight into summer in the space of about two days, and then summer stayed until September. At Peter Millar, our pre-sale for 2013 was low because 2012 was such a poor year, and then all of a sudden, come July 2013, everyone had run out of product and expected us to be sitting on replenishments, but because of the low pre-sale we didn’t have the stock. I think that was the same for everyone in the apparel trade, and some of the big brands ran out of product, causing a serious problem.

Ultimately, it looks as if we will come out of 2013 within one or two per cent of what we sold in 2012.

SH: Adams Golf is in a different spectrum to a lot of other hardware brands, because we have started out from a small base in 2013. We have had a fantastic year in terms of sales and profit, and our strategy has been to grow our distribution but to do it steadily.

An issue facing some hardware brands is over-distribution, with a lot of brands stocked by something like 1,500 outlets. In other sports, including cycling, the top brands have pretty tight distribution, and the over-distribution of brands brings its own problems.

So we are intentionally growing our distribution slowly, and making sure we are in the right places, and that has resulted in a solid year. People have earned money from our product and we have not had issues with over-stocked retailers.

People in the trade know the Adams brand but they have seen it in various guises in the UK in recent years and in different hands, but now the trade can see that we are investing the overhead into the brand and that it can be taken more seriously now.

NF: We have to remember that the golf trade is depressed because there are less golfers playing.

Bringing back golf’s lost souls

SH: The biggest problem facing the trade is the number of people participating. A lot of people who used to play golf are being drawn by other activities, like cycling, which attracts a lot of ‘M.A.M.A.Ls’ – middle-aged man in Lycra – as they are called. The recession has taught people to be more economic, with living costs going up, so people are evaluating their hobbies, and the time their hobbies take up. If you have got a young family, spending up to six hours away from the family at the weekend is a long time.

CG: Not only are playing numbers down, but membership numbers are dropping too – they have been for the past five or six years at least – because club memberships are expensive. Once people have given up their membership, perhaps with the intention of playing on a pay-and-play basis, they have given up that loyalty to a club and affinity to a group of people, and many of them stop playing golf altogether. Once golfers have turned to play-and-play they tend to play a lot less golf, because it is more effort to book and to arrange with friends, as opposed to the routine that a lot of members have at their clubs.

BS: The demographic of the golfer has changed completely. The age group now of most golfers is between 40-60, with golfers over the age of 60 beginning to drop down, and golfers below the age of 40 can’t afford the time or the money. Unless golfers want to play competitively, they don’t see the need to be a member of a golf club.

Bob Smith

Bob Smith

SH: Sometimes it is only the fact that some golfers had to pay an expensive joining fee that is keeping their membership going, so when a lot of clubs started to drop joining fees, it made it easier for golfers to justify cancelling their memberships.

SW: The last 10 years have been fascinating to see what has been happening to the golf industry. Memberships have declined and we are finding more and more of these nomadic golfers floating around. People are seeing that they are not going to get value for money from their memberships and they are abandoning that model.

I am impressed with the clubs who are offering golfers a compromise on membership, where the golfer pays an annual fee of between £250-500, so the club retains the golfer as a member with a handicap.

Because of the financial pressures clubs are facing, a lot of them are dropping their visitors’ fees, which is creating a new problem, because members are looking at the reduced rate and working out that it will be cheaper for them to play the same number of rounds a year as a visitor, rather than as a member. Ten years ago the golf handicap was king, but these days golfers only really need a handicap if they want to be a competitive player. I don’t think golfers are as interested in being competition players any more, and that is one of the biggest changes that is happening to the industry.

BS: A lot of good golf courses have set their green fees too low. If the green fee is too low then a lot of visitors won’t go. If you think about American visitors to the UK, if they see a green fee of £55 they don’t think the course will be good enough, but if the green fee is £95 they will go.

SW: Nine-hole rounds are under utilised by a lot of golf courses, bearing in mind that golfers are finding it harder to justify the time to play 18 holes. At least nine-hole rounds would keep green fee revenue coming in, and keep more golfers coming through the pro shop.

The golf industry needs to smarten up and look at some if its traditions and systems, some of which have been quite robust for 100 years, but the industry has been turned on its head over the past 10 years. A lot of golf courses have been caught out, and the industry has become quite fragmented. At the top end, clubs such as Wentworth, Sunningdale and the Buckinghamshire seem to be doing very well, because they attract a lot of corporate business and their memberships hold their own, then at the bottom end, a lot of play-and-play courses are doing okay, but then in the middle ground there is a whopping great 80% of UK clubs – the traditional, members-owned clubs that charge between £1,000-£2,000 a year for membership – that is really being hit. There are masses of golfers in this middle ground, and the industry needs to capture them – capture their information – and a lot of clubs either don’t collect this information, or if they have, they are not using it to their advantage.

I think the golf industry might still be heading on a downward trajectory for the next couple of years.

BS: That middle ground is a critical area. These people are finding that money and time that was once disposable is in fact not disposable any more. From there, club memberships suffer, and then the pro shop suffers, so does the bar, and the whole club is affected. And that middle ground has been golf’s most consistent spenders; they play golf regularly and are part of a peer group that encourages them to update their products.

CG: At Crown Golf, pay-and-play business is entirely weather driven, and if we have a decent summer then rounds played go up and that rise is also reflected in retail. By the way, among our biggest revenue drivers at retail are sweets and drinks. They bring a lot of money for the group and at a decent margin.

Finding the right price

NF: There is disposable income out there; cyclists are spending thousands of pounds on their gear and I think golf has missed out by cheapening the products and cheapening the way people perceive the game. Look at golf balls; despite being the most expensive, Titleist is still the top-selling ball because it is perceived to be the best.

Nigel Freemantle

Nigel Freemantle

Super Stroke grips are a good correlation: we are talking about £25-29 for a putter grip, but people are prepared to pay for it if they think it is the best, or if they think it is going to make a difference to their game.

Golf as an industry can learn a lot from cycling: here is a sport that is exciting, healthy, socially acceptable, and people are prepared to spend serious money on it.

BS: You have hit the nail right on the head. The tail has been wagging the dog for too long in golf. Everybody has become scared of price. At Peter Millar we make sure we do not under-sell our product because it does not work.

NF: We have to challenge ourselves in the golf industry a bit. Suppliers need to recognise that in fact there is too much product out there, and Simon, I liked what you were saying about building distribution slowly, limiting supply, rather than supplying 2,000 clubs with the same driver, which would result in it being sold for just £99.

SH: Over distribution drives retail prices down, and the other factor is that new models now last as little as three or four months on average. There is a balance to strike between motivating consumers to buy new product – because there are always golfers out there who have not bought any new clubs for two or three years – but because people are spending less, rapid product updates puts pressure on retailers.

We estimate that in the UK, golfers change their irons about once every five years, and they change their drivers about once every 18 months to two years.

About eight or 10 years ago we hit the £199 driver price point, which seemed crazy to me. The brands do a very good job at developing new products and investing in technology, but golf must be one of the only industries in which brands have made all that investment, and then sell the new product at a cheaper price than the club it’s replacing. The market is not big enough for that kind of pricing to be sustained.

If a brand’s only USP is price, it will fail.

CG: If golfers are not getting professional advice on equipment, they are risking investing in clubs that will not improve their game, and then their enjoyment of the sport drops. If a golfer spends a lot of money on an expensive driver which is supposed to be the best, but the golfer has not tried it, and has not had great advice, and then finds they still can’t improve their golf, then they might think, ‘Well, I might just get a bike instead’.

A call for modernisation

SH: The old-fashioned traditions of golf clubs are finally coming home to roost. Clubs have been told for 20 years they need to modernise, break down their committees that run members’-owned clubs, but there are too many clubs concentrating on trying to make their golf courses championship calibre, when there are more important issues they need to address.

SW: There is a massive marketing and communications issue among golf clubs. Within a 10-mile radius of where I live there are 12 golf courses, and I visit all of them at last twice a year, yet not once have I received any kind of communication from them.

SH: I 100% agree that clubs need to work harder to pull people in, but then a lot of clubs let themselves down when they do bring people in, because visitors see that clubs are no different to what they were like 20 years ago, and they are not attractive, whether in terms of dress code or a snobby bar steward. Don’t get me wrong, golf needs to protect its heritage and some standards, but so many clubs do not give golfers any incentive to bring their children to the club.

Simon Homer

Simon Homer

Those 30-35 year-old men with young families are the ones who are turning their backs on golf and going out and buying bikes. Clubs need to give them more reasons to go to the club, like installing a gym – that is a great way to add value to memberships and combine expenses for people with young families.

NF: Club chains are changing the trade; chains like Crown, Marriott, De Vere and the Burhill Group, by giving their customers a better experience. There remains a problem with this middle market, and there are a lot of crap golf courses out there that deserve to disappear. Actually, losing a few golf courses would solve a lot of problems. The R&A commissioned a report 20-odd years ago, stating that we needed 700 more golf courses in the UK, and so lots of farmers and land owners built new courses, but the report was wrong and we are left with too many golf courses. Golf clubs have either got to reform, or they will go out of business.

Sometimes I feel we are trying to protect against the inevitable; the clubs that don’t change will not survive. For argument’s sake, if the UK was to lose 400 golf courses, that could generate 400 members from each club – that’s 160,000 golfers – who might start filling up the memberships of the surviving clubs. This would leave us with a more sustainable golf trade.

Calling lapsed golfers

NF: National Golf Month has been created by the BGIA to encourage clubs to become more pro-active to attracting people to the game.

In May 2014, the first National Golf Month is going to take place, and the message we are sending out to people is to get back into golf. It is estimated there are between six and eight million people in the UK who have tried golf, but who have let the game slip by the wayside.

BS: These six to eight million lapsed golfers have played between five to 10 rounds of golf a year at some point. It is the most important number in golf retailing, in terms of finding a way to drive the trade forward.

NF: The idea is to try and link these lapsed golfers with their local clubs, and for clubs to welcome visitors to come and have a look. We need lapsed golfers to opt in to the opportunity on the one hand, and we need clubs to opt in to welcome them on the other.

Some of these middle-market clubs – which are suffering – may not opt in because they are run by a narrow-minded committee and because of their apathy. These are the clubs that don’t encourage women or juniors to play and that still have long socks rules. Ultimately, these clubs are bad for the game and they are the clubs that will fade away.

Suggestions will be made to participating clubs about what they could offer golfers during National Golf Month, but it is up to clubs what they do. And this is not just about pros offering free lessons; it is about welcoming people into the club and giving them a positive experience.

CG: The industry needs help – we all know that – so any help that is available is fantastic. Even if National Golf Month switches on a light bulb at 10% of golf clubs, then that would be a good start.

Steve Weston

Steve Weston

SW: I used to work with Scott Cranfield Golf, and we used to offer carnivals of golf at different venues, and every day of the Carnival, each pro would put aside one hour of their day, so that free coaching would be offered to different groups of six golfers. It used to work brilliantly.

The second part of coverage from GOLF RETAILING’s Thought Leadership event at Hanbury Manor will be published in our February issue.