Sure, it looks like David and Goliath all over again: smaller, independent club pro shops pitted against larger retail big-box stores. But in this version, David isn't just a little boy with a rock.
In 2005, club pro shops hold far more dangerous weapons up their sleeves: a loyal audience; personalized service among friends; and an 18- hole "backyard."
On the other hand, Goliath isn't toothless. For example, a club shop's customer base often arrives on the property with things other than shopping on their minds, while retail stores can assume most of the folks they see are looking for some product or service. And thanks to the shorter golf season in many parts of the country, club shop employees are often left twiddling their thumbs during the December holiday season.
So without business savvy, it won't be much of a fight. "You have to use the same retailing principles that any successful store uses as far as controlling inventory," says Tim Reeser, Head Golf Professional at Falls Village Golf Club in Durham, N.C. "If you don't, you can lose money on the golf shop—not just make a smaller profit, but end up on the wrong end [of the bottom line] altogether."
But to those who do their market research, track inventory tightly and step up customer service, the rewards are worthwhile. Ed Wankel, President of Long Island Golf Management and General Manager of Olde Vine Golf Club in Riverhead, N.Y., reports sales margins of approximately 43 percent from the three club shops that he oversees.
"And that's after the Golfsmiths and Galaxy Golfs have made our margins a lot tighter," notes Billy Harris, the PGA Head Golf Professional at Dallas Country Club. You Are What You Measure So forget yesterday's average-sales-per-squarefoot measurement of success—with club shops shrinking to an average of 600 to 1,000 square feet, that number doesn't really provide a good indication of profitability anymore. Wankel, instead, now measures the average profit dollar per member annually, figuring private clubs at $500 per person. So if a club boasts 400 members, he calculates his decisions on making a minimum of $200,000 a year.
Other club shops measure average dollar sales per round of golf—but just what comprises an acceptable level for this barometer is all over the map. Harris shoots for an average of $20 to $23 per round, while Debra Thorne at Legend Trail Golf Club in Scottsdale, Ariz., needs to see a minimum of $14 from everyone on the tee sheet.
John Oyler, Head Golf Professional for the 1,460 members at the Bonita Bay Club West in Bonita Springs, Fla., labels an average of $10 to $12 per round as "pretty good" for his privatesector environment. Oyler, in fact, goes a step further and breaks down the number of rounds into total dollar sales per retail category for each month. This helps him monitor trends and determine whether to stock more in ladies apparel or logoed balls, for instance.
Unfortunately, golf rounds depend heavily on the weather, so when the desert sun sends temperatures soaring above 100 in the Phoenix area and the day's roster may only include 30 players (versus 150 in the cooler season), Thorne has seen her per-round sales drop in half. "And these are usually the same faces during the summer, so they aren't set to purchase," she points out.
Gary Robison, Director of Golf at the Firestone Country Club in Akron, Ohio, deals with the same consequences for the opposite reason. Nippy fall and frigid winter temperatures drastically reduce the course's availability, and therefore his traffic.
"We track an average sale per player per round," Robison says, "but those can be misleading. We really just try to make it so every member and guest that comes through here leaves with something. We really don't have a specific goal or anything to judge, other than active results."
Making the Turns
Inventory turns, most golf pros agree, need to be at 2.5 to 3 per season. Here, too, accomplishing that feat requires solid purchasing skills, says Keith Larsen, Director of Golf at the Edgewood Country Club in Rivervale, N.J.
"We're at a disadvantage [compared to the big-box discounters] of having to buy a little better and be a little more in tune to quantities," Larsen says. "We're dealing with a fixed clientele of 300 to 400 people, versus the general public, so you have to buy wisely. You can't sell what you don't have and at the end of the year, a lot of product sitting on the shelves is also a disadvantage."
Disadvantage, yes—but a business setback? Not necessarily. At Falls Village GC, Internet sales have proved to be a great way for Reeser to offload returned merchandise and spiff up sales numbers from November through February, when play is virtually dead.
And thanks to online sales opportunities, he can now also say yes to club trade-ins, just like his retail discount competition. "If the blue book lists a club at $100, I give the customer that discount, and then try for about a month to sell the clubs online for $120," Reeser explains. If that fails, he sells the used clubs for wholesale, and still comes out even.
At Long Island Golf Management, Wankel relies heavily on his clubs' point-of-sale systems to track inventory and spit out daily reports. At the very least, this keeps his staff from physically counting golf balls—and the pinpoint accuracy can also help zero in on any theft or loss that may be occurring as well.
Getting The Right Goods
Private clubs can be a haven for selling hard goods, clothing and especially logoed items, golf pros report. "Members of a club will try to support their golf shop, provided they can get pretty much whatever they want," notes Wankel.
At Firestone CC, Robison estimates that he custom-fits between 90 and 95 percent of the people who stroll into his shop to buy his Titleist line. "And obviously while we're fitting them, we're giving instruction and building relationships in that regard," he says.
But because these are big-ticket items in a golfer's budget, club shops need to keep their prices competitive—and therefore be willing to keep margins skinnier, Reeser warns.
"People do come in my shop looking for the clubs they saw the pros use on TV—but because I'm a small shop, I don't have a lot of buying power," he points out. "Most vendors can buy them for less than I can, so they make a higher profit on clubs."
Reeser's strategy is to use the big-name clubs as a draw to other business. He also finds it helps to stock a few brands that are not nationally advertised and then mark them up to match the household names—and cover that overall profit margin gap.
Logoed items represent the most unique sales advantages, experts agree. Robison takes the traditional shirts and caps a step further by including trinkets, gifts, glassware, money clips— "just stuff; anything we can put the logo on for an impulse buy." He throws artwork and framed photos into this category as well, and the impact among guests, who make up as much as 70 percent of Firestone's play, is positive.
"We try to give them a warm welcome, some kind of magic moment in the middle, and a fond farewell," Robison says. "Whether that's buying a shirt or another logo item, that's our goal,"
Soft goods like clothing also sell well in a private club—which, in Wankel's experience, translates to "at a faster rate than the public course shops." Chalk up some of this popularity to the fact that as Baby Boomers age, they continue to consider themselves younger people, as Larsen notes. Certainly the fashion trends seen on the tours have trickle
d down to his shop.
But don't look for logos to mix well with the spritely, floral fashions available in ladies apparel, cautions Oyler. It's far better to brand the sleeve or pocket of a solid-colored, men's shirt. "And headwear is huge," he adds. In this category, his older membership shuns the wilder, Nike-style versions—but the secret to sales still lies in offering a variety of styles and colors.
Nor should public courses hang up the idea of selling soft goods at all. In addition to the gloves, balls, shoes and hats that Wankel sees flying out the door at his public shops, Thorne has found success pushing street and fashion clothes at Legend Trail. "It helps people leave the course, change out and go on their way," she explains.
"Our biggest mistake is when we go a bit too heavy in one vendor," she adds. "So it's important to work with brands [from companies that] allow you to place just one order."
Special Touches in Smaller Spaces
While some clubs and resorts have increased their retail shop space as part of renovations, others have made the decision to borrow from existing space to create new dining or function rooms in their clubhouses. Those with shrinking square footage report that they are relying more on special ordering capabilities, to make up for what they now lack in selling or stocking space.
The added plus of special orders is that they can offer club shop managers an especially effective way to provide customized service and embed themselves into a golfer's loyalty. "Contrary to what a member might think he wants, at least we can probably steer him to something we know would be better," Larsen says. "That gives us an advantage over someone who just walked off the street to work in a discount house."
Bonita Bay accelerated its custom ordering this year to the tune of ten to 12 ladies outfits per member. A critical component of that growth, Oyler reports, has been building a reliable relationship with vendors, so orders can be phoned in and turned around in record time.
"Members tend to want things yesterday," Larsen notes dryly. "You have to get things on a next-day basis, because typically when a customer makes a decision, they want it right then and there."
What's more, expectations of elevated service now have members expecting their pro shop staffs to know more about all of the products in the shop, as well as the ins and outs of new items they aren't yet carrying—"even if they just come in to buy a pair of socks,"Wankel says.
So Larsen does his homework by scouring the better department stores to stay abreast of not just sports apparel, but fashion trends in general, and their respective price points.
Club shop owners have also learned the importance of keeping their selling space fresh and interesting when trying to attract the same customers. Larsen changes the appearance of Edgewood's shop every few weeks. Oyler concentrates on mixing up his traffic flow to steer folks past new areas and items. "It's like Disney World," he compares. "We move fixtures and create an environment where people are the most prevalent consideration as we think of how to display our goods."
Finally, club shops' closed and limited clientele might make it seem like there's no need to advertise— but savvy pros would never ignore this important part of the sales equation. That's why Oyler sends out messages about new items and sales so they can flash across the global positioning system (GPS) screens of Bonita Bay's golf carts. Newsletters also mention featured products, and a member intranet site allows folks to cyber-browse the shop as well.
"The key is to keep it personal," Robison sums up. "That's the only way you can treat a business. When you lose that, you're in trouble." C&RB
Summing It Up
• With some clubs shrinking pro shop space to accommodate other needs, new measures of retail success, such as average sales per member or rounds played, are emerging to replace traditional gauges like sales per square foot.
• Inventory turns remain a critical measure, but to keep turns at acceptable levels, smart buying has become as much, if not more, of a factor as smart selling.
• Logoed items, customized apparel and special-order sales are rapidly growing categories where club shops have a clear competitive advantage.
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