There are too many negative stories in golf and one company which is certainly feeling positive is Callaway, who saw their market share increase in 2016. Andy Brown took a trip to their UK head office to ask marketing director Nick McInally the reasons behind their success and why the golf pro is at the heart of their plans.
There are many things that come as a surprise unless you are directly involved in a business or industry. For instance, did you know that The Sun newspaper has seen sales drop by over 10 per cent since 2015 or that a newly qualified tube driver earns just under £50,000? Even if you are involved in an industry there are still some things that will slip by and surprise you. One of these for me is just how good a year Callaway had in 2016 – I knew the company had done well, but according to information provided by Golf Datatech and Sports Marketing Surveys Inc. they really did have a year to remember.
“Our account base are aware about how good a year we had because we are sharing the information with them on a regular basis, but non-stockists might not be aware of the continued growth of our company,” says Nick McInally, marketing director for Callaway. “2016 was a hugely positive year, we were the number one on the European Tour in wins in almost every product category and had two Major wins. For market share we look at Hardgoods and Ball on a pan-European basis – UK, France, Germany and Sweden – and we were number one at the end of 2015 and we have been able to maintain that in 2016 and actually increased market share.”
One of the main areas of growth that the brand have seen is with green grass retailers, with McInally revealing they are seeing their market share with them increase month on month. “We are probably in around 65 per cent of doors. We understand that there will be some doors that aren’t right for either Callaway or the retailer to be in but we’ve worked with accounts to highlight that if we have 23 per cent of sales then, in theory, almost one in four of their members will be playing Callaway. So if you aren’t stocking it they are going somewhere else to buy.”
One of the key juggling acts for all golf retailers is to ensure that their pro shop is stocked with a good section of different brands which are right for their target demographic, but which also provide them with a good margin. While the margins on hardware are not always as good as other categories another issue that retailers have is product cycle – still having lots of product left to sell when a new driver or set of irons is released is among the most common gripes I hear. The twin issues of product cycle and profitability are two areas which the marketing director for Callaway is keen to address.
“Another big change was that we have effectively moved all of our products onto a two-year life cycle. One of the important things we tried to stress was that in the past there had been a lot of Callaway products, and we did release when there was something better than what we had, but now we are on the two year cycle,” he comments.
McInally is also keen to stress that Callaway have made a strategic decision to stagger releases throughout the year, something which means that the new products have time to breathe and which also provides retailers with another reason to communicate with their customers and get them back into the pro shop throughout the entire year. When it comes to profitability, the independent data provided from SMS Inc shows that Callaway was rated number one by retailers on both balls and clubs. This is important for the brand, but McInally cautions retailers to not look solely at just ‘potential’ margin.
“You can have a product with fantastic margin but that is only made when someone buys the products. We know pros who have taken in brands who offer fantastic potential margin but ended up not selling any of them and they ended up gathering dust on a stand.There must be both elements – there has to be consumer demand and the pro has to make money on it,” he says. “That’s where Chrome Soft has really hit a sweetspot because people are seeing players winning with it and the marketing around it and pros are making more money by selling them than they would with other brands.”
The Chrome Soft has undoubtedly been one of the brand’s big success stories of recent years, the image in the trade of Callaway being a hardware company that also happens to produce golf balls is changing. The ball is a good option for pros, and McInally says that in his dealings with golf pros across the country he is increasingly impressed.
“The days of the golf pro being a failed tour pro have gone – there are lots of very good professionals out there driving revenue and margin for their businesses. The guys who are willing to invest in custom fit and willing to invest their time in building relationships with members are the guys who are the most successful. We are in a specialist industry and it takes specialist people to make that work.”
2016 was a good year for Callaway and an eventful one for the golf industry, with two of the biggest stories being Adidas confirming that TaylorMade is for sale and Nike pulling out of the hardware and balls sector. Nike are still firmly in the golf industry in apparel and have made a swathe of high profile player signings, including world number one Jason Day, but for many their decision was still viewed as a blow to golf. On the back of these events Callaway have perhaps profited from being seen as a stable company and one that is focused on golf, a point which McInally agrees with.
“In the past it was seen as an advantage for other golf brands to have a parent company as it meant there was a business that could put more money into it if things weren’t going well. Now I think we are in a situation where green grass pros want to know exactly who they are dealing with and so now it is an advantage to be ‘just’ a golf company. We are a listed company but we are all about golf; it is all we do,” he comments.
“There have been opportunities in the past for Callaway to get involved in other sports and our R&D knowledge would allow that, but it isn’t what we are about. From Chip Brewer at the top to all of us, we are all product junkies, so the first time a new product comes in we are all so excited to see it and play with it. The people here live and breathe golf – for a time it is no secret to say that at certain levels we lost that for a while. The people who have come in from the outside and succeeded are those who are passionate about golf.”
As with any golf company 2017 will bring a host of new products, including the new EPIC driver with Jailbreak technology which has 11 different patents associated with it, which everyone at Callaway is getting very excited about. McInally acknowledges that for the new product to be successful golf pros are absolutely vital as it requires the bespoke knowledge of golf professionals to fully explain and demonstrate through custom fit why the consumer should make that purchase.
“Everybody realises that it is so important to give the customer a bespoke service that is fitted to them and an experience; that is where custom fit is as much theatre as it is science. People need to come away thinking that they have had a great experience and they have the results to back up their purchase and that, ultimately, their performance will improve. Our new driver is technologically advanced with 1,000+ processes so we need the support of knowledgeable and passionate retailers to get our message across.”