Eddie Reid, managing director of the TGI Golf Partnership, writes about the damaging long-term effects of heavy discounting by off-course retailers, and how free incentives from service providers can also undermine long-term growth
Our industry never ceases to amaze me. I was thinking back at the many different retail sectors I have worked, and advised in, and I can’t ever come up with a comparative market place.
We have recently seen another round of crazy discounts by several off-course retailers, disguised as end-of-season clearances and pre-Christmas sales, and perhaps papering over the cracks of the real issues we have in golf retail.
I wonder how long the multi-national golf brands can sit and shake their heads at this constant stream of retailing activity, which only serves to fly in the face of the huge amounts of money spent on research and development, player endorsements, consumer marketing and retailer incentives, which should serve to position their brand at the premium end of the market.
Yes, all brands these days need multi-channel representation and more importantly, multi-channel brand management. Yes, mainstream high street chains do have aggressive pricing activity in order to grab the consumer from competitors, but here’s the point: [supplying off-course retailers should be] done as part of a strategic plan built into the business, and taking into account the complex factors involved in managing a brand.
And don’t forget, if a retailer knocks 20% off of everything, they need a 200% increase in sales to break even!
A strategy is like a road map; it gives you the route to your business destination. Without a strategy, a business has no map, no direction and gets lost very quickly.
Golf professionals must not allow themselves to be dragged into this ridiculous situation, where the only winner is the consumer, with little in the way of satisfaction or profitability for the retailer.
The easy decision is not always the right decision
How often has someone told you – or you may have experienced it yourself – about a company giving them ‘XYZ’ for free as they threatened to leave [to join a competitor]? Or that they have been given ‘ABC’ by someone as an incentive to sign up with them?
A lot, I bet. Satellite television and mobile phone providers are the ones we often hear about: “I called so and so and threatened to leave, so they gave me Movies and Sports free for six months.”
I guarantee we’ve all heard that from someone.
Is that really the best way to run a business? It may work for multi-billion dollar worldwide businesses, but it certainly doesn’t for the smaller guys; it’s simply not sustainable, and what does it say about the loyalty of your customer? They’re only sticking with you because you’re giving stuff away for free.
You have to look at the bigger picture. Those offers may give you better value for that six-month period, but once that’s at an end, what then? Another six months free? I doubt it; you’re back to square one, with the same difficult decision to make.
So ask yourself: is six months better than a lifetime? I would put money on the answer being ‘no’.
Remember – the easy decision is not always the right decision. Weigh up all the benefits before making a decision, and look at the long term value to your business, not the short term.
As first announced to the UK’s golf trade in the December issue of GOLF RETAILING, to see these articles and more from Eddie Reid and the team at the TGI Golf Partnership, click on http://tgigolfblog.com