Where Have All the Golf Stores Gone? (Part 1)

Over the past decade the golf equipment business, not unlike most of the US Retail environment, has undergone a radical transformation, with consolidation replacing expansion as the industry’s watchword.  Whereas the US golf market once had more than 1,600 Off Course Specialty stores, today only +/-750 remain.  While the Off Course channel remains the heart and soul of golf club sales and sells more than its fair share of bags, balls, shoes and apparel, its overall reach declined substantially with the closures of nearly 100 outlets in 2016, the bulk of which were formerly Golfsmith stores.  Even though roughly three dozen Golfsmith’s were recommissioned as Golf Galaxy outlets, there are wide swaths of prime US golf markets that are currently operating with few, if any, Off Course Specialty stores available to look at new product, to try new product, or to be fit prior to buying.

These rapid changes in distribution channels leave golf companies and retailers asking a lot of questions:

*With fewer Off Course Specialty Stores available, where are golfers going to purchase their new golf clubs?  To be fit?  To be exposed to new concepts and products?

*Where are golfer buying their golf balls?  Golf Shoes?  Apparel?  Online from their couch or from a bricks and mortar outlet?

*How much impact have Online Retailers had on the traditional brick and mortar golf retail business?

*What golf products are selling well thru Online Retailers?  Which are relatively “slow”?  What kind of golfers buy online?

*Every product category in American retail is concerned over the potential impact of Amazon…what has Amazon’s impact been in sale of golf equipment and apparel?

*How has the Green Grass channel fared in 2017 as their Off Course competitors have faded away? (Spoiler Alert:  Very well as a channel thru the first half of the year)

*And what of the remaining Off Course Specialty stores?  Is their business booming with fewer competitors?  Or are they being impacted like the rest of American brick and mortar retail by declining store visits and lower sales volumes?

*Sporting Goods, once the fastest growing golf channel, is also undergoing consolidation as Sports Authority went bankrupt in 2016, and Dick’s Sporting Goods grew even stronger in their role as the dominant player in the channel.  What kind golfers are going to Sporting Goods stores? What are they buying?

*What new channels are emerging?  While companies frequently cite the impact of Online Retail, what about the newly emerging category of Club Fitting Specialists?  Using the latest in high tech equipment this channel has become significant as more and more golfers decide to get their clubs fit to their particular swing and playing ability.

Golf Datatech attempts to answer these questions and many more with the recent release of the  the “2017 Serious Golfer Buying and Shopping Study”, a deep dive into how the golfing public goes about the shopping and purchasing process, understanding their attitudes about the various channels, and their likes and dislikes down to the individual retailer level.  Over 2,500 respondents form the basis of the analysis that covers a wide range of challenges facing the golf industry in 2017 and beyond.

To inquire re: purchasing the Study please contact Suzie Phillips at info@golfdatatech.com.

 

 

 

 

 

Mid Year 2017 Update on US Equipment Sales, The “Grass is Greener” On Course

US Golf Equipment sales in the first half of 2017 are in the books, and while the results in total are less than ideal, there are some bright spots and trends underway which suggest the business remains soundly grounded, including soaring Average Selling Prices on new product and the rebirth of the traditional Green Grass channel.

As the Off Course Specialty channel continues to find its footing in the post Golfsmith world, the grass is definitely greener in Green Grass Shops as golfers seek out new equipment in a channel many had previously abandoned.  Without easy access to demo clubs and custom fitting opportunities due to Off Course “Deserts” (large geographic areas without appropriate Off Course Specialty coverage once existed but is now lost), golfers are heading back to the pro shop and buying more frequently from their long-lost friend, the Golf Professional.

In total, three of ten product categories showed improved sales in dollars, led by drivers (+3.3% YTD) and golf balls (+3.2%) which are two of the largest categories, with fairway woods (+0.3%) just barely above prior year levels.  At the same time, all except golf balls (+1.1%) were down in units.

On the flip side, in the Green Grass, sales of all product categories except for golf shoes are up, and in total On Course Golf Shop sales of equipment are up over 11%, with drivers up 28% and irons up 15%.  Clearly the consumer, seeing far fewer traditional Off Course options available to shop and buy, has headed back into their local golf shop to make equipment purchases.

It’s true that many of the Off Course Specialty stores which remain are having a decent year in 2017, as they make inroads in the wake of one of their largest competitors closing.  However, the channel in total remains weak as golfers seek to find their rhythm and develop new means to purchase golf equipment. And Online sales continue to grow, though many are done thru sites which are owned/operated by traditional Brick and Mortar operators so isolating online sales is trickier than in many other consumer categories.

Where else are former Golfsmith customers going to buy golf equipment?  How has Sporting Goods fared?  What product categories are selling best online?  For those answers and more, look for future posts re: Golf Datatech’s newest market defining study, “2017 Shopping and Buying Habits of the Serious Golfer”, which was recently released.  Or email info@golfdatatech.com to purchase a copy for yourself.

April 2017 Golf Equipment and Apparel Demand thru On/Off Course Specialty/Online Channels Remains Soft

Facing poor weather and weak unit demand during the early months of 2017, most major categories of golf equipment and apparel are down vs. prior year.

Key Product Line Results:

*Even though heavy rain and cold dampened enthusiasm for playing the game across a broad swath of the US, golf ball sales remain a bright spot overall, increasing in both units and dollars sold vs. prior year.

*Wood sales were down double digits in units sold however dollars fell only slightly.  The wide discrepancy in units vs. dollars was impacted by:

  1. Higher prices on new woods in the market
  2. A dearth of close out models available for golfers seeking value at lower price points
  3. A mix shift toward drivers and away from fairways/hybrids (drivers having much higher selling prices)

*After multiple years of iron expansion, iron sales slowed significantly early in 2017 as golfers turn their purchasing sights toward woods, particularly drivers, which have long been perceived as the “sexy” category and the leader in technology.  There’s little doubt that rapidly increasing prices in irons have negatively impacted demand, with the April YTD Average Selling Price of a new iron up almost 20% in 2017 compared to 2015.

*Apparel sales vs. YAG stabilized in April, leaving the category slightly in the red vs. 2016.    Men’s shirts (the largest category of golf apparel) continue to be the primary drag on overall apparel sales, perhaps negatively impacted by the poor weather which have kept golfers away from their pro shop.

Channel Shake Up:

*There was a sharp contraction in the number of Off Course Specialty outlets late in 2016 and early 2017, with the bankruptcy of Golfsmith the most high profile example.  While some of the former Golfsmith locations were purchased and reopened as Golf Galaxy stores, the vast majority closed and left a void in the market which has benefitted the remaining Retailers and Golf Pros.

*The Green Grass channel has benefitted significantly from some of the Off Course Specialty “correction”.  With 80-100 less Off Course stores (Golfsmith plus other store closings) open across the US, golfers need outlets to buy clubs, balls, shoes, bags, gloves and apparel, and many turned toward their golf professional.  On Course sales of equipment thru April of 2017 were up almost 9%.

Summary:

Total Demand for Equipment and Apparel remains weak thru the On/Off Course Specialty/Online channels, however the largest and most significant months of sales remain unaccounted for, and May and June sales will be critical to forecasting the remainder of 2017.

US Rounds Played…with apologies to Dickens…”Best of Times, Worst of Times”

Like a “Tale of Two Cities” the US Golf Industry, at least when measured by rounds played, is heading in two opposite directions, with low precipitation and relatively mild temperatures for the Northern tier and Southeastern Region bolstering rounds thru February, while the West and Southwest have been pounded by cooler than normal temps and heavy precip, meaning a significant decline.  In total, rounds played are up 2.6% thru February (+5.2% in January, +0.6% in February), a good start to the year, but there’s still a long way to go, and as can be seen in the map below, Mother Nature can have a substantial positive or negative impact.

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The map above shows how Year to Date rounds played have fared thru February 2017 vs. same period 2016.  The vast majority of the country remains “white”, indicating states that are typically “out of season” in January and February, however when one looks at the “% change” in these regions they are soaring, albeit off a small base, with the Mid Atlantic nearly doubling last year’s level, the East North Central up 42%, and New England increasing by 34%.

Looking at Regions/States that are in season, where one would typically see a significant number of rounds played, the South Atlantic soared, up almost 17%, while the West Region, which is also significant at this time of year was down 20%, as California, Oregon and Washington were lashed with the combination of rain and cooler temps that severely impacted golfers plans to play.

The two other significant Regions, the Mountain (-0.2%), which is dominated at this time of year by golf in Arizona, and the South Central (+1.1%), split between positive rounds in Arkansas, Louisiana, Mississippi and Alabama, were offset by declines in Texas, were both on par with prior year.

 

US Golf Apparel Sales for February

Total Golf Apparel sales thru the On/Off Course channels for February were down nearly 3%, leaving the category off less than 1% on a YTD basis.  Most of the issue in Golf Apparel is being driven by lower sales thru the Green Grass, likely impacted by far fewer rounds played on the West Coast.  Buffeted by temperatures 5 degrees below average and more than twice as much rain as normal, the Western States saw a huge drop in rounds played during the first two months of 2017, surely making a significant dent in golf apparel sales.   Particularly hard hit has been the men’s shirt business, sales of which were down nearly double digits in units On Course Nationally.  However, higher Average Selling Prices partially offset some of the unit decline.

Looking at the big picture, sales in three of the apparel categories went up (Men’s Bottoms, Women’s Bottoms, and Women’s Shirts), three went lower (Men’t Shirts, Men’s Bottoms, and Women’s Tops), and one was level (Outerwear).

Trade inventories, with the exception of Outerwear and Shirts, are up significantly from YAG and unless sales pick up sharply in March and April, there may be an inventory glut as we hit the summer months.

 

Worldwide Golf Equipment/Apparel Demand

Golf Datatech was honored to be invited to present the findings from the Worldwide Golf Report 2017 to over 100 media, industry experts and guests at the Japan Golf Fair in Yokohama, Japan last week.  It’s the second edition of the report, a follow-up and expansion on our original work released in 2015.  Special thanks to our collaborators on this project, Yano Research Institute of Japan.  In particular we’d like to thank Shigeki Mitsuishi from Yano who co authored the report with me, as well as the President of Yano, Mr. Takashi Mizukoshi, and our invaluable translator/friend/guide, Kazuto Tamura of Triple/Double Inc., an International Sports Marketing company based in Tokyo.

The Worldwide Golf Report is based upon “Hard Retail Sales Data” collected by Golf Datatech directly from Point of Sales systems in the US, UK, Sweden, Germany, and France, while Yano collects hard data in Japan.  The remaining golf markets were estimated using “Soft Data” based upon insights and analysis by industry experts from around the world, including retailers, manufacturers, and those who have worked at the grass-roots level.

Bottom line, the Golf Equipment and Apparel Industry on a Worldwide basis did not have a major correction in 2016 like many have postulated. In US dollars, total retail sales of equipment are estimated at $8.05 billion, down less than 1%, while golf apparel sales for 2016 totaled about $4.5 billion.  While the US market (the world’s largest) had a rough year in 2016 (falling by over 6%), the second and third largest markets (Japan and Korea) had slight improvements in their local currencies, however when converted to US dollars each was up significantly, as the Yen and the Won both strengthened vs. the Dollar.

The Worldwide Report in 2017 was expanded and improved to include estimates of unit sales by country as well as sales in value for the major equipment categories.  One of the most significant of Worldwide trends is that unit sales are in decline virtually everywhere and in almost all products, however Average Selling Prices (ASP) are rising rapidly. New technologies and exotic materials are designed to improve play and make the game easier and more fun,  however they do add to the cost of new golf clubs, and the combination of higher retail prices at launch with fewer close outs and better inventory management by the large manufacturers, has driven prices up substantially for the consumer.

The Worldwide Golf Report is an indispensable resource for anyone who currently participates, or is considering participating, in the golf equipment or apparel business in any of the major golf markets around the world.  If interested, please email info@golfdatatech.com or call the office at (888)944-4116.

 

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Yokohama 2017

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3 Musketeers Tom, John and Shigeki-san prior to Presentation

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Show Floor, First Day

February Equipment Sales Growth Stalls…but still Ahead of 2016

Total February Equipment sales in dollars slumped slightly (-3%) vs. same month year ago.  While the Green Grass business rode the wave of exceptional weather across much of the US and continues to be strong (+14%), the Off Course Specialty category struggled to shake off the hangover of the closure of roughly 70 Golfsmith stores and fell by 8%.

On Course

Green Grass sales were up double digits for the second consecutive month, and thru February they’re up over 13%.  Generally speaking, the closure of Golfsmith stores is likely to be beneficial to the Green Grass channel in the short run.  In many locales Golfsmith stores provided quality opportunities to see/try new products, and without the availability of those locations, golfers will be looking for other places to try/buy.  There is no doubt some of these sales will move to the local Pro Shop and should prove to be beneficial to the On Course.

Off Course

The Off Course channel fell significantly in February, as the reduction in available locations was not enough to offset the substantial increase in Average Selling Prices for most products in the golf club business.  Total Off Course Specialty sales were off over 8% for the month, and are down more than 2% year to date.  Balls and gloves are the two product categories that declined the most in percentage terms, down 8% and 10% respectively.

Total On/Off

In total, Wedges (+9%), Balls (+6%) and Woods (+5%) are the primary positive drivers in February YTD equipment sales, with Footwear (-3%), Putters (-3%) and Irons (-2%) down the furthest.

While it’s never a bad thing to have sales grow vs. YAG, the large increase from January has been mitigated, and 2017 sales still remain below the long term trend line.

For more information and details about individual product categories or channels, please contact info@golfdatatech.com or call the main office at (407)944-4116.