Here’s what you need to know.
Golf Companies Make the Rules
Make no mistake about it; the major OEMs have carefully crafted their strategies for selling golf clubs. Henry first tells us that stores have little control over what product they are sent. Need more right-handed 9.5 stiff drivers? Too bad, you’re going to get the configurations that manufacturers want to send, and many will just sit on the shelf and eat up floor space that could be used for more popular models. Don’t have a real need for left-handed or woman’s clubs? Too bad, you have take those as well. We will touch on this later but this mismanagement of ordering really screws up inventory.
Another way that some manufacturers contribute to market oversaturation is to force stores to take on extra inventory before the end of the year in order to help boost their own numbers. This happens more than you would think and it’s not just a big box problem smaller shops have to deal with this as well.
Believe it or not, it isn’t just the publicly traded golf OEMs either. Privately owned golf companies have been known to play this shell game as well. The companies will unload clubs to the stores in November or December and then take back whatever doesn’t sell for a special credit in January. The losses simply get moved to the next calendar year in hopes to make up for it in the 1st and 2nd quarter. It’s a legal way to cook the books.
Demo Clubs are A Debacle
One of the most important aspects of the big box environment is that they have massive amounts of demos available to try in their indoor hitting bays. Typically, the OEMs send the demos well after the stock has hit the shelves. That means every Tom, Dick, and Harry will pull the stock item, inadequately tape it up, and fire away in the simulator until the club is considered “well loved”.
As MyGolfSpy has discussed in previous article, this unfortunate consequence of the selling process makes it impossible to sell the club at full retail price; however, it does put the retailer in the position of needing to order more new inventory from the OEMs. Sneaky, right?
It should be noted that not all OEMs handle their demo programs the same way. Some make the stores purchase their demos while others loan the demos/fitting carts to the stores.
Demo clubs become like the village bicycle. Several OEMs will not take back the demos/fitting carts if they have been ridden hard and left out wet to dry. This becomes a real problem because over the course of a season, demos get stolen, lost, or broken. The OEMs know this and use it to their advantage because the primary source of all three of these problems is the adjustable hosel.
First, the ability to quickly change heads and shafts is to thieves like the ability for a toddler to pick their nose; the finger fits perfectly (evolution, yay!).
Second, the inventory process is basically as inefficient as it possibly could be. Toss in the ability for anyone to change a club from its original SKU (mix and match heads and shafts) and the inventory control process becomes futile.
Finally, Henry tells us that adjustable hosels have increased club failures by upwards of 15% for store demos.
Every OEM has issues in this particular area. Some are willing to address the issues directly, while others insist any problems are isolated failures. How a given OEM responds to these problems is what defines its customer service.
Henry won’t single out any brand. Every OEM has their good qualities and bad qualities. Where one excels the others may slip into more sleaze with product release cycles.
I know what you’re thinking; “here we go again with the product cycle dead horse.” Henry would like you to consider his point of view; short product cycles eliminate the opportunity for the retailer to provide the highest level of customer service. “Products can’t always be exchanged”, Henry says. “Several times a week, customers would come in with broken heads, shafts, or whatever that could not be replaced because the model was already 6 months old and discontinued”.
Sure, the good OEMs will replace the club with a comparable model but that’s not always the best answer when you consider iron sets or matching shafts.
Short product cycles can be a customer service killer.
You know what else can be a customer service killer? The customers…
Customers Are Their Own Worst Enemies
Henry tells us there is about a 50/50 good to bad ratio for the customers. Most customers fit into some category of stereotype. The country club guys want to be treated like they are at “the club”. They never trust a sales associate and their pro is always right.
Normal Joe Golfer will allow peer pressure to trump sound advice from a sales associate. If his buddies have it, so should he.
Gear head hacker guy wants MOI matched swing weight, but can’t break triple digits.
Counterfeit guy swears his clubs are legit after buying them online for pennies on the dollar from an overseas Alibaba or maybe even a big box store in China. Henry says he would see that “guy” in some fashion a minimum of ten times a month. Most of these guys don’t reveal their true selves until it’s time for the fitting.
Often golfers know just enough to be dangerous. The numbers generated by a launch monitor or simulator might as well be the Voynich Manuscript to most costumers. If they do pay attention to one factor, says Henry, it is club head speed.
People can be their own worst enemy in fittings. A particular driver or setup might be the best thing for a golfer but they allow bias and pre-conceived notions to creep in that affect how they swing a golf club.
Henry says the best way to get fit is not to look at logos or specs and just trust that the fitter is competent. Ultimately, the numbers won’t lie if the customers are honest with themselves.
The most infamous fitting Henry was ever involved in ended with an older gentleman deciding to ditch his left-handed clubs in favor or right-handed clubs. After years of terrible golf, the customer was convinced that playing from the wrong side caused his woes.
Henry had fit the gentleman several times before, but couldn’t believe it when he asked for all new clubs in the right-handed version. By learning to play the game from scratch, he was able to avoid certain bad habits he had created on the left-handed side of the golf ball. Golfers, as most of you know, often find creative solutions to their problems.
Corporate Overlords are out of touch with the troops on the ground
Henry never knew too much about the day to day happenings at headquarters, but he believes HQ did an excellent job at creating its own problems. Employees weren’t offered any sort of incentive program or even any sort of formal training.
Every once in a while an OEM would run a sales contest, but spiffing was strictly prohibited. HQ also made it difficult for existing employees to climb the corporate ladder within the company. If an employee wasn’t willing to up and move at a moments notice, getting promoted to a manager position was impossible. Employees were keenly aware that if they didn’t go anywhere, they weren’t going anywhere.
That’s not a great way to promote employee retention and maintain your most valuable human assets within a store.
Henry was disappointed that even after 8 years of services, his corporate contact never called to wish him luck or to say thanks after he told his superiors he was changing careers.
Henry says that other than being overlooked as an employee, inventory might have been the worst part of the job. Corporate preached the importance of inventory, but would never invest any money in developing a proper inventory process. They tried multiple solutions, but never could get it right.
Lost prevention was another issue at the forefront, and obviously that has a direct tie in to inventory. Loss was calculated based on sales from each respective location. As you will realize shortly, theft is a HUGE problem.
We asked Henry what could corporate do to improve the business from the floor level perspective. Henry believes that his former employer is ultimately on the right track, but the execution of the retail vision is lacking. He said that regional distribution centers could help service and inventory, not unlike how Cabela’s and Bass Pro Shop currently operate.
This would also improve transfers, which were a total nightmare. Henry also believes that big box stores should pressure OEMs to come up with packaging similar to Callaway’s i-Mix experiment.
While selling heads and shafts separately didn’t take off for Callaway at the time, Henry thinks this will help prevent theft, broken clubs, and associated inventory issues.
It’s much harder to steal a head in anti-theft packaging.
How bad is the theft problem at big box retailers? It’s the #1 problem.
Customers will steal anything
Hide your drivers, hide your wedges, hide your balls, hide your wife, and hide your kids, because they are stealing everything.
There is a long list of how it happens. Let’s start with the customers. Henry tells us he saw it all. Pipe cutters were popular. Thieves would simply cut the shafts just below the hosel and pocket the heads. The process is quick, easy, and discrete. Other customers would simply stick the club down their pants and walk out.
By far, the most popular method of theft is to swap shafts or heads inside the hitting bay. A customer comes in with his or her own club, goes to the hitting bay, and discretely uses the store provided wrench to swap out his 913 D3 for the new 915 D3. This is where individual packaging would help. Demos would still be vulnerable but at least the customers wouldn’t be stealing new clubs.
Employees Steal Too
Reducing customer theft won’t completely solve the issue. Henry estimates that 25% of the club theft in stores comes from the employees. A few employees have been caught faking pre-owned trade-ins to get credit on a gift card. All the employee would have to do is write up a bogus trade-in receipt and file it. They could then come back and buy products to sell themselves or just sell the gift card outright.
The reason this works is because the used club section has no inventory, only a dollar value of the inventory being held in that particular store.
There is no system that validates that the used Scotty Cameron putter which was just traded in actually exists.
Clubs are just the start. One of the more dubious acts of theft he witnessed didn’t involve taking clubs, but rather good old fashion credit card fraud. Henry describes a cashier, who liked to return things during slow times at the check out line. Clothes, balls, clubs, and range finders were all returned on her credit card.
The problem was that the items were never actually purchased in the first place. As you might imagine, over time, the returns added up. By the time managers and corporate got wise to the scheme, the employee had had amassed tens of thousands of dollars in returns.
Needless to say she was fired and taken to court.
Are Big Changes Coming to Big Box?
Corporate overlords who just don’t seem to get it, customers who also just don’t seem to get it, and of course lowlife thieves; these are unpleasant realities in most any retail business.
Better employee incentive programs, better consumer information, and better packaging (coupled with public executions) may help alleviate some of these problems, but none of them can realistically be eliminated.
The biggest chance for meaningful improvement for little guys and big box alike comes from the OEMs. The golf companies need to do a better job supporting their retail partners. For what it’s worth, I think most of them now realize that needs to happen for everyone to be successful.
While nobody has yet been overly-specific about what that actually means, every golf company we’ve spoken with is talking about the need to be more responsible about how much product they produce. Inventory control has nearly replaced Loft Up, andsomething-Bertha-something as the industry’s buzzphrase du jour.
Restrained production and this new commitment to not bending retail partners over the proverbial barrel might actually eliminate the 4-6 month full price lifecycle for brands that believe there’s still success to be found in accelerated product releases. Because, believe me, if some golf companies slow down their releases, it’s not going to be by much.
We think that will ultimately take the form of more controlled (and realistic) inventory levels, more durable pricing (which means retailers will maintain consistent margins), and fewer blowout pricing opportunities for the consumer.
It’s going to mean higher prices and fewer discounts for the consumer, but it also means a healthier bottom line for both retailers and the golf companies.