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Having two years of stock for a


nine-month product is the problem If the lifecycle on a product is going to be shortened then it stands to reason that the volume of sales of that product must surely be less than if it had a longer life-cycle. That means, starting at the factory, the amount of units that should be manufactured and pushed into the supply chain should be less. It means that if you’re a retailer, your stock


levels need to meet demand for a much shorter period. Getting this wrong and ending up with large stock levels in the supply chain, from the manufacturer through to the retailer, has a catastrophic impact on the profitability of both the retailer and the manufacturer. Even more dangerously, it has a more fundamental long-term impact on the integrity of our relationship with the golfer.


The short-term impact of the


inventory problem for everyone The retailer leſt with product, which is about to be replaced, needs to take action to clear their shelves. That means either negotiating it back up to the manufacturer, or running their own promotions and sales. We now see sale prices on retail floors. For the manufacturer there’s a need to


liquidate their stocks as well. Those stock levels are now swelled by the stock coming back up from retailers. So the manufacturers look for ‘liquidators’. The first port of call is a Dick’s, or a Direct Golf, or another discounter. They offer an exclusive ‘extension’ for that product line at a write-off price in exchange for the retailer taking a large quantity off their hands. Now even the sale price looks expensive as it


is set alongside old generation product on retail floors. Unfortunately, the manufacturer can’t offload all of their surplus stock to the discounters in the current climate, so they look for an even ‘lower level’ group to liquidate their stock. In the United States these are oſten EBay retailers. Now we see truly ridiculous prices in the Internet domain. I sat with the President of one large


equipment vendor yesterday, who confessed that aſter the four major superstores, their next 10 biggest accounts were eBay retailers clearing dead stock for them. In this scenario everyone is losing margin, and many are losing money.


And now we get to the death scene And so we found ourselves in the situation last October where my local Dick’s Sporting Goods had 1000 square feet of floor space selling white drivers from $599 down to $199. That is an unsustainable proposition. In fact, it’s an insult to the consumer.


We’re in an industry where the


number of consumers is failing to grow. It’s shrinking by as much as 3-4% in some markets


It says, “For any suckers out there, we have the


new white driver at $599, but hang on for not very long and we’ll sell it to someone else at $199”. The consumer has been betrayed. Going


forward, who will rush out to buy new release product?


The whole industry needs to change,


but it isn’t about a longer lifecycle In South Africa, because they’re so relatively insignificant, they struggle to get inventory when new product is released. The result is more demand than there is supply. The TaylorMade SLDR Mini sold out of green-


grass retailers and the TaylorMade warehouse within weeks. There is credit due to the local TaylorMade operation who invests in launch strategies on the green-grass, and to the PGA Professionals who work hard to get the product into the hands of golfers. But there is still the fact that there wasn’t enough product in the first place. The result is that the next time new product


arrives the consumer knows they need to get in quickly or they lose out. In fact, we’ve had situations where the majority of our green-grass retailers in South Africa had sold out of a product before it had arrived. The model is there for the whole industry to


get its mind around. It just needs everyone to rethink their approach to Inventory Planning so that there is demand pressure slightly beyond what can be supplied.


There’s another reason we need


short lifecycles We’re in an industry where the number of consumers is failing to grow. It’s shrinking by as much as 3-4% in some markets. So we all settle for lower revenues. The golf clubs accept there will be fewer rounds. Professionals accept there will be fewer gloves sold (lengthening the months of stock they’re carrying) and manufacturers live with the fact that there will be less equipment sold. In this scenario it is dog eat dog. The


inevitable result is fewer golf clubs, fewer PGA Professionals and fewer equipment suppliers.


If we have no growth in consumer numbers


then we need to grow revenue per customer and profitability per customer. We need to get more golf out of each golfer.


We need each golfer to replace their golf equipment more frequently. How does lengthening product lifecycles help to get golfers to replace equipment more frequently?


Please don’t think reduced prices


increase demand enough I have sat in meetings with green-grass groups and individual operators where they have talked about the opportunity to increase sales with lower-priced equipment. I have also watched manufacturers operate a ‘fashion’ approach to pricing over nine months with the obvious objective of driving sales aſter the early launch success. The evidence seen in the industry’s results


are clear. We are selling fewer units at a lower average price and at an unsustainably lower margin than before. The only winners in that scenario are the Internet retailers with the cost of a garage in Sunderland to maintain.


We need to put the value back into


both the transaction and the brand We need to create excitement and theatre around new releases. We need to create a real win for the early adopters. They should have the privilege of exclusivity, not the label of ‘sucker’. They should enjoy the benefit of improved performance while others wait to catch up. The product they are playing with should be treasured as priceless with real advantage. It isn’t a fashion commodity to be had off the clearance rail in six months’ time. This is going to require a new partnership


between the green-grass and the manufacturers. We are all going to have to mature. My advice to retailers is to find manufacturers prepared to change and to become loyal to those manufacturers. My hope is that manufacturers get brutal about distribution. We all need better quality sales figures. That means we have to work better together.


SGBGOLF 27


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