Golf industry opens season with confidence in its game - Sporting goods What's Hot What's New What's Happening - Brief Article - Statistical Data Included

DSN Retailing Today, Jan 21, 2002 by Mike Troy

The golf industry is expecting improved sales this year, following a lull in 2001 where retailers and manufacturers reported overall flat sales and a decline in the number of rounds played. This optimism is based on the belief that golfers simply took a break from investing in equipment last year.

When concerns about the economy began to surface early last year and there was a perceived lack of newness in the market, it was easy for golfers to eliminate discretionary new equipment purchases. While there's still concern about when the economy will improve, a pent-up demand for equipment among the nation's approximately 28 million golfers is likely to be unleashed by a wave of marketing from club manufacturers this spring.

The most significant development in this regard is Nike's entry into the golf club market. The company will unveil its new line of drivers, irons and wedges in late January at the PGA Merchandise Show in Orlando, Fla. The premium-priced clubs are expected to receive a major marketing push befitting a company with Nike's resources.

"It is great for the sport because it is making all of the other brands step up," said Stina Steinberg, equipment and instruction editor at Golf for Women magazine.

True enough. The impending launch has already led other major club manufacturers to launch preemptive strikes by introducing their new club lines earlier than previous years. In mid-November, Callaway Golf announced the introduction of seven new products. President and ceo Ron Drapeau said, "[It] represents the most dramatic group of product introductions in the history of our company."

Adams Golf announced the introduction of a new line of Tight Lies GT fairway woods and drivers in early January. Spalding Sports introduced in early December its new line of Ben Hogan Apex Edge Irons. And in late October, the golf products division of Fortune brands introduced two new sets of Titleist DCI irons and a new series of King Cobra SS 350 titanium drivers.

All of this new product activity may not directly benefit discount stores and most sporting goods retailers because these clubs are premium-priced, and distribution is limited to pro shops or retailers with a PGA pro on staff. Nevertheless, category growth starts with clubs because the investment often prompts golfers to buy a new bag, shoes, balls and accessories, and increase play.

"It should be a good year for golf," said Doug Morton, president and ceo of Gart Sports.

Other retailers also are counting on strong performance from the category as a result of recent moves. One significant development that took place last fall was the decision by Fortune Brands to sell three SKUs of its Titleist HVC brand golf balls directly to Wal-Mart and Kmart. This addition of the premium brand gives these companies the opportunity to gain additional market share, trade customers up to a more expensive product and, longer-term, demonstrate to other manufacturers the willingness of discount store customers to purchase higher-end brands.

Fortune Brands doesn't directly sell Titleist to Target, but the retailer has a potentially more valuable draw in the form of 17-year-old golfing phenom Ty Tryon. Target announced a sponsorship deal with Tryon in early October; two months later, he became the youngest player in history to join the PGA tour by posting a 66 on the final day of qualifying school. When he plays in his first event of the new season, the Phoenix Open Jan. 24 to 27, the deal with Target calls on him to wear its bull's eye design and Mossimo brand clothing.

Target's sponsorship of Tryon is sure to elevate the retailer's name among golf watchers, but whether it translates to equipment sales is unlikely given the inherent disadvantages discount stores face when selling golf.

The approach to the club portion of the business has long been to emphasize entry-level price point boxed sets and loose clubs, such as woods, wedges, putters and other utility clubs, displayed in a 4-foot wire rack. Even this approach proves to be too much at times for the limited labor expense and high customer count business model of the discount store as club displays quickly become disheveled and goods get damaged. Even when given the opportunity, discount retailers balk at carrying better golf clubs.

Fotoball licensed the Rawlings name and put it on a set of quality golf-clubs early last year, but couldn't secure adequate distribution. Terry Favish, entertainment brand manager with the company, said the Rawlings name didn't translate to golf the same way it has for the likes of Wilson, Dunlop and Spalding.

While the assortment of clubs at discount stores tends to be limited, the same can't be said of accessories. Every manner of towel, divot repair tool, head cover, practice aid and ball retriever can be found at discount stores, and they typically carry a higher margin than clubs and balls.

JEF World of Golf, a leading supplier of accessories, reported strong sell-through, especially during the holiday season when giving golf-related gifts is popular. "We do everything except clubs, shoes and balls. And with the economy not doing well, we were pleasantly surprised with our sell-through rate this past holiday season," said national sales director Bob Hildebrandt.