Stone Mountain Golf Club is a Marriott Golf public course offering “rock-solid golf” at the base of the famous slab with the Stonewall Jackson carving in the Georgia hills east of Atlanta. The club’s pro shop carries nearly half a million dollars of inventory (retail value) in its 1,250-sq. ft pro shop. “It’s not typically that high,” says Stone Mountain’s General Manager, Steve Hupe, almost apologetically. “Up until about two years ago, it was holding pretty steadily at around $350,000.”
Hupe certainly has nothing to apologize for, though. He goes on to explain that the nearly 30% increase is because of what Stone Mountain is now carrying in its shop to accommodate added sales from the “Internet Shop” it “opened” two years ago. Visitors to the club’s Web site (www.stonemountaingolf.com) now have two buttons to click on at the bottom of the home page: Web Specials and Internet Golf Shop. Clicking on “Web Specials” leads shoppers to items that Stone Mountain posts periodically on the site of its Website host and developer, which specializes in serving golf and country clubs. Clicking on “Internet Golf Shop” leads to a customized eBay site.
“We started [Internet sales] two years ago, when we had some odds and ends [of leftover and slow-moving pro shop inventory] that we wanted to get rid of,” Hupe reports. “We had pretty good success, so we’ve pumped it up since then. It’s not quite as easy or as neat as it sounds, there are a lot of new shipping and payment headaches you have to deal with; we’re even dealing with people from India now. But it definitely opens up sales to millions more people than you could ever hope to see coming into your store.”
Among the Elite
Stone Mountain’s golf shop has been a perennial winner of merchandising and sales awards bestowed by golf industry publications. The fact that it’s held a steady place as the only public shop in Georgia to appear on these Top 100 lists has definitely helped bolster its reputation and lead new customers to seek it out, both in person and through cyberspace, Hupe reports.
“We take our merchandising pretty seriously,” he says. “How you display things is critical, both in the shop and other forms [Web pages, brochures, etc.}.”
So it’s clear that Stone Mountain knows what it’s doing when it comes to running an efficient and successful pro shop. Which highlights an important point to anyone who might take a cursory look at its 30% increase in inventory carrying costs: Don’t confuse inventory management or control with inventory reduction. As the Stone Mountain example illustrates, overall inventory value, or cost of inventory per square foot, may not tell a true or complete story.
In Stone Mountain’s case, the extra $150,000 it now carries is largely due to volume deals the club made to load up for the Internet portion of its sales. “There’s no question that Internet sales are more cost-sensitive, so you have to be prepared to make volume buys to get your [wholesale] prices down to where you can still be competitive,” Hupe says. “It’s not easy to buy 20 sets of clubs at a time and carry them until they sell, but that’s what you have to do. You just have to keep reminding yourself that you’ll move them out because you’re reaching so many more people.”
And Stone Mountain certainly doesn’t skimp on inventory management and control. It contracts with a retail consultant that provides regular comparisons of the shop’s sales data with regional and national trends and works with club staff to make real-time adjustments of what’s carried and how items are priced.
“They come in every month, sit with my head golf pro and go over a printout they’ve run after getting our data,” says Hupe. “We break everything we sell into 22 subcategories and look at what’s selling, what’s not, how our inventory compares historically with our levels in the past, how we’re selling versus regional trends, and a lot of other factors. It really helps us decide what should be marked down, what we should get rid of entirely, and what we may want to start selling, or selling at a higher price.
“For example, there are some ‘island’-style golf shirts that do really well down in this region, and the data [the consultant provides] really helps us decide how much of those we can carry—it usually ends up being more than we might originally be comfortable with,” Hupe says. “At the same time, we have to know, as a public course, that when we see $120 double-mercerized pima cotton shirts selling in industry data, they’re not really something we want to get into. You still have to do a lot of tweaking of what the numbers show you, according to what you know about your own business. But it’s really helpful to see the trends.
“Sunglasses were a great example of how [the data analyses] really helped us get into something we weren’t selling at all,” Hupe adds. “We had no money invested in sunglasses inventory, and [the data showed us] it was something every other shop was selling. We found a source and invested $5,000 in initial inventory—and now we can’t keep ‘em in here.” C&RB
Summing It Up
• Don’t confuse inventory management with inventory reduction; there’s nothing wrong with carrying more items or stock if you have reason to believe (beyond gut feelings or hope) that it will sell.
• Internet sales can greatly improve shop “traffic,” but to a different type of customer who presents new pricing and service challenges.
• Many industry publications and organizations sponsor annual award programs for merchandising and retailing success; taking the time to participate in these can pay off for your shop with enhanced reputations and expanded reach.
From Evil to Profit
As if club pro shops don’t have enough inventory cost and space headaches tied to what they’re trying to sell, there’s also the matter of rental equipment—specifically, full sets of golf clubs. These are especially critical to have on hand at resort or “destination” courses where players can have baggage-related problems or decide to play after arriving. But rental equipment is also needed at public courses, where players are less likely to own clubs, and even at private ones, for when members bring guests or discover their own clubs aren’t in the trunk like they thought.
The costs tied to having a decent selection of rental sets on hand are not inconsiderable, though, as usually a club has no choice but to purchase them upfront. While rental inventory can sometimes be turned into used-set sales, an alternative approach that can minimize clubs’ outlays and still provide this service is a “rental rotation program.”
Fashioned after computer and car lease financing models, these programs require only monthly payments and long-term commitments (usually for a year) from clubs, according to Jim Williams, CEO of a firm offering the service, Austin, Tex.-based Styx Capital. An added benefit, Williams says, is that rental rotation lets clubs offer a greater variety of the latest equipment, so players can test it out—perhaps leading to sales of new clubs and sets.
“You can even mix and match,” Williams says. “If you want [a set with] a Nike driver and Taylor-made irons, it can be provided.” Specialized programs are also offered to provide ladies and juniors sets and left-handed club
s—all necessary variations on the theme that present especially aggravating inventory-related hassles for pro shops.
Resorts and destination clubs can also promote the availability of top-quality club rental sets, Williams adds, as a value-added service and enticement to golf-playing travelers who’ve grown tired of the increasing security-related hassles as they try to ship their own bags around the country. “For a resort, [offering a rental service] can help provide an excellent first impression,” Williams says.
Clubs are notified near the end of lease periods to find out their plans for the rental sets, which can be returned, bought outright, or retained on a month-to-month basis.
“In general, the first rental fee covers the [club’s] lease payment,” Williams says. “Any guest rental fee after that is profit to the club. Since no upfront capital is required, a portion of the pro shop that used to be a necessary evil suddenly becomes a profit center. ” —BH/JB
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