In the second part of GOLF RETAILING’S Thought Leadership event at Stoke Park, our group of industry leaders discussed National Golf Month and ideas for growing golf participation, and where the best margins are going to made at golf retail in 2014
All pictures taken by Darren Kirk, Scratch Design www.scratchdesign.biz
David Wells: The Golf Foundation is doing a fantastic job for junior golf but we also need to get adults back into golf. That is where National Golf Month started and Doug Poole has been passionate about putting it together. It has been a real challenge to get different bodies working together, but this project is very important, and we have made a start, and hopefully the programme will grow each year. It is important that the industry joins together, but what is surprising is that it has taken the BGIA to get this off the ground, when there are all these other mighty bodies governing the game. It begs the question about what kind of leadership we are receiving from the highest levels of the game.
We need to encourage people to come along to golf courses to enjoy themselves and clubs need to welcome them with open arms.
Paul Hedges: We totally endorse the National Golf Month at Foremost Golf. Like David, we are frustrated that the PGA has chosen not to support it. I am not sure why that decision was made, because anything that drives more participation has got to be good for the game. From a commercial point of view, a lapsed golfer has got to be, financially, our best opportunity. Members-owned clubs will be the last to adopt this but many proprietary clubs recognise that this is something that will be beneficial to them.
Foremost has created a ‘bring a friend’ concept. We have a very powerful database but it only contains established golfers. All golfers tend to know somebody who used to play golf, so we are to get them re-engaged with the game. National Golf Month’s target is to get 100,000 people back into the game and I think that is achievable.
Graham Green: National Golf Month is a great idea. At Leaderboard, on a local level, we already work with councils and local golf courses to bring more kids to golf courses, with a view to eventually channelling that into membership. Socially, life is changing and the pressures and demands on families are completely different, so we need to make golf clubs accessible in a very different way. We have a busy driving range at Reading, but there remains a big void between new golfers hitting balls at the driving range, and to where they can go for that first round on a golf course, so driving ranges are not feeding new golfers to clubs like they should be.
Paul: One of the issues golf faces is simply that of practicality of facilities, compared to other sports. You can be at any school or park and play football or cricket but you can’t do that with golf.
Ed Doling: At Foresight Sports we are finding that a lot of schools want to offer golf, but can’t build nine holes and maintain them. The average school doesn’t have that space anyway, but if you can find a room you can have an indoor range if you embrace technology. We’re finding a lot of demand for that from schools.
We are also seeing a middle tier starting to emerge with indoor golf centres like Urban Golf, which are very much built on the basis of people drinking beer, wine and having a good time. It’s more about the social side, without the club restrictions. We’ve got an enormous amount of indoor centres on the books for development over the coming months. This concept offers a platform for guys who may not want to commit straight into buying a set of clubs or joining a club, but where they can play regularly. In South Korea, the market for screen golf is enormous: there are 25,000 indoor screen golf bays in South Korea alone. It’s like the 10-pin bowling environment.
We have a new venue opening up in the Midlands with 15 simulator bays, providing professional service, fitting, teaching, social games and competitive leagues, and it is a stepping stone before golfers commit to a club.
Paul: The old adage springs to mind: necessity is the mother of all invention. The reality is that 30 years ago there was no necessity for change as golf club memberships were full, clubs didn’t have any financial challenges, so there was no need in their view to do anything. But now the market place has changed. Golf is still a fantastic sport that a lot of people will enjoy. We just have to find different routes to market golf.
Ed: And then the challenge is to keep people engaged. At Foresight the biggest thing we’re working on at the moment is developing technology that allows all our units to talk to each other, so every shot can be stored on a cloud-based system and golfers can track their progress. So rather than just hitting another 100 balls at a range, golfers can actually quantify and qualify their performance. We are then building a set of skills-based apps to appeal to the competitive nature of players, allowing golfers to share that data among friends. If every shot counted because it was being fed back into your personal profile or you are competing against a friend, you are going to take it a bit more seriously. Once people are playing golf, we’ve got to give them the hope that they’ll see some improvement.
Paul: There are people who hardly ever go out on a golf course, but go to the driving range regularly. They get that satisfaction from hitting golf balls. The first time a beginner hits that sweet shot, that’s when they get the bug, that’s actually when they become a golfer. That’s the feeling they want and they can have it without going out on a golf course.
Jonathan Camp: I believe there is an opportunity for golf to bring in a new format. Cricket test matches are too long for some people, but 20/20 cricket is a great success, and I wonder if 12-hole rounds might prove popular.
Also, if you look at the success David Lloyd has had with his clubs, starting with tennis, and then bringing in gyms, swimming pools, spas and kids clubs, and he has drawn in whole families. Golf clubs could take a lot from that model.
David: There is a good initiative in Germany called the ‘After Work Cup’, with something like 2,000 events going on across Germany after work. It’s nine holes, with all levels of golfer accepted. Men, women and kids go for it, and scores are entered into a web-based system.
Graham: We are looking at putting on Adventure golf with the council, which is driven at families.
Kids love itbecause it’s a bat and a ball and a target and it’s easy to do – it’s effectively taking crazy golf to a new level, and they are looking at playing with a ball with a microchip in it, which counts your score and feeds it back to the clubhouse.
Getting on to a golf course is great for some, if they’re the right age and have the time. There are lots of people who are not ready in their social life to play a full round or join a club, but for whom golf would be exciting in a different format.
Jonathan: It is interesting how dress codes vary from country to country. The United States tends to be more relaxed than the UK, but I feel that wherever you are playing golf, it is nice to feel relaxed. Having said that, I do still believe in the etiquette of golf, and its heritage, which sets it apart from other sports. To be honest, to apparel manufacturers I don’t think it matters. Apparel companies provide ranges of products that tend to tick all the boxes. With Tommy Hilfiger we have a lifestyle collection based on cotton, and a technical collection with polyester.
There is a danger that if you start compromising on dress code you start compromising on everything else, and a lot of people buy into where golf has come from.
Stuart Collier: We are quite forward thinking at Stoke Park, but certainly we have some core values. I think the modern golfer dresses up to play golf more than the senior golfer. In my experience, it is more senior golfers who are inclined to wear what you would class as gardening clothes to play golf in. Whereas golfers aged from eight all the way up to 50-plus actually like to dress up to play golf. I think it is part of the game. I certainly wouldn’t be in favour of a dilution of the dress code. Whatever sport you play you need to wear suitable attire and I don’t think golf is any different. Even if you can’t perform like one of the professionals it is nice to look and feel like one. I would feel quite strongly against letting people do whatever they want at the price of getting them on the golf course.
The dress code issue is as much an off-course issue as it is on-course. Here, where we have a hotel and lots of other elements of the business, if you want to sit in the bar in a nice pair of jeans and a t-shirt it’s not a problem. I have been at other clubs though, where there has been a prize giving and a guy has gone in a lounge suit without a tie, and has received a letter of reprimand from the club. Yet there’s another guy in a 30-year-old suit with gravy stains, but it’s not a problem because he’s wearing a tie. To get a letter because you haven’t got a tie on is ridiculous.
If a club member brings his kids into the bar on a Saturday, putting that revenue into the club, he shouldn’t have to worry about what his kids are wearing. Then there are those 36-hole golf days where you are expected to get changed for lunch and then back into golf apparel afterwards. That’s crazy.
Margin makers in 2014
Graham: This year one of our biggest focuses is on re-gripping. We’ve just cleared some space in store for a re-gripping bar, and the margin is phenomenal. If the shop is quiet in the afternoon, a member of staff can just get re-gripping done with no costs attached to it. It is something that has been hidden in the back room in the past – something we offered but that no one really knew about. Now we are going out there and selling it to people. It takes up two metres of the shop and shows people what we can do. Our coaches promote the service to keep the business spinning through. If people don’t want to upgrade their clubs this year with a custom fit, we can loft-align and re-grip instead. We will make more profit from that two-metre space with a grip bar than we would if there were a dozen wedges on display there.
In general, we are concentrating on our quality of service, and making sure our staff start conversations. When a guy comes in for a bucket of balls, ask how his golf is going rather than just giving him his token and letting him walk away, and missing the opportunity. If you get into a conversation it will always go somewhere. Engagement in retail is vital.
Stuart: From a clothing perspective the crested product is very strong. We have a strong logo and a strong brand on good products and we’re quite happy to mark it up accordingly, with brands like Glenbrae, Peter Millar, Oscar Jacobson and Under Armour at entry level. Also, we took on a range called Links and Kings last year, which is top-end leather products – holdalls, luggage, desk tidies – its pretty expensive gear but we’re fortunate that the type of customer we have doesn’t mind spending £200-£300 on a holdall. Our logo is embossed on the leather, and one sale is the equivalent in margin of four or five sets of irons. Our customers are more likely to buy a really nice leather holdall than a nylon shoe bag. People like quality and are prepared to pay for it. You can see by the clothes they wear and the cars they drive. If you have a good quality piece of merchandise, whatever it may be, it’s not about the price, it’s about the product and the service. At Stoke Park, finding those niche products works very well.
A slightly different skew on margin makers are my two coaching pros, who are probably the biggest referrers of new members in the business. They are teaching a lot of new golfers, members from other clubs or aspirational golfers, and it’s a huge margin area for the club – more so than selling products.
Paul: Overall as a group, the area that is coming to the fore are the exclusive lines. If we are selling the same product as every other retailer there is a difficulty in maintaining price points. The arrangement we’ve had with FootJoy for exclusive shoes has always been successful, but this year the pre-books on FootJoy are astronomical. There is a protected margin as no other retailers can get hold of the same products. The critical factor is having control over the retail price, so you don’t have the issue of somebody coming back to you a week after having sold them a product, bashing you up because they could have bought it somewhere else for less.
Also we are doing more with product life extensions. Now with the rapid product cycle of some brands there is the opportunity to sell last year’s model for another year or two at a lower price point. A lot of golfers are quite happy to pay for last year’s technology at a different price point.
David: At Motocaddy we have a unique business model that delivers a reasonably strong, consistent margin to retailers.
Another interesting line we have developed is trolley rental. We have over 500 rental fleets across the country. It’s a very good added bonus in being revenue you sort of forget about, but it keeps coming in. There is also the ‘try and buy’ element, and pro shops find they sell more trolleys out of the shop if they have a rental fleet. The initial investment in a rental fleet is usually paid for within a couple of months. Then you have the residual value of the unit, which you sell whenever you like. It’s a win-win.
Something else which is a bit hidden is battery sales. What we are seeing now all over Europe and now in this country is the Lithium battery scenario. It is the easiest thing in terms of a story to tell a customer, and comes with decent margins.
Stuart: You have to stock the hardware to drive the interest in and to start the conversations, to then follow up with the other bits. We benefit much more from selling clothing than hardware, but we need the hardware to get people in.
Paul: One of the challenges for some of the older pros is that they have come up through a past where they were expecting to make good profit selling golf clubs, and there is a resentment and a natural negative reaction to the fact they are not making as much now. The model has changed to the point where the drivers are almost loss leaders, and the catalyst to sell other products.
What we have tried to do with our pros over the last five years is to change the conversation to one of ‘return on investment’, and not ‘margin’. Electric trolleys used to get blasted for poor margins, because if you looked at a single sale you would not be making much on it. But if you worked out what your investment was and how many units you sold in a year, we could demonstrate that there is no better return on investment than electric trolleys. They are phenomenally successful.