As the golf industry works its way through perhaps one of the most bizarre major tournaments in memory, the stops and starts at the U.S. Open remind many of the golf business as a whole this year as the market looks to find any indication of a trend that may signal where the business is going.
In an interview Friday night from the site of the U.S. Open, James Hartford, chief market analyst at The SportsOneSource Group, and Marty Hanaka, chairman and CEO of Golfsmith, Inc., sat down with CNBCs Darren Rovell via satellite to discuss recent trends in golf.
Hartford pointed to the general trend in the sporting goods industry that sees many higher-end discretionary items such as fitness and golf take a hit as dads forego a new high-end driver to ensure that their kids get to summer camp or get a new glove. Hanaka, who is taking an aggressive approach to the business by adding a number of Golfsmiths large-format Xtreme stores this spring and summer, sees a consumer that is purchasing items, but may not be buying irons sets or high-end drivers.
Rovell, citing the retail point-of-sale data compiled by SportScanINFO, remarked that golf ball sales appeared to be on the rise this spring. Hanaka added that rounds played are on the rise.
Much of the talk around the golf market this spring is the highly promotional environment for drivers. Golf retail executives that spoke with Sports Executive Weekly suggested that the promotional events this spring were clearly driven by the vendor. They suggested that the driver promotions that offer a fairway wood as a BOGO or GWP havent increased traffic and may be cutting into otherwise healthy fairway wood sales.
Rovell asked Hanaka and Hartford about the longevity of the promotional environment. Hartford suggested that promotions like the driver/fairway wood deals were probably short-lived as inventory is liquidated and the deals become commonplace. He suggested that more targeted promotions that get spectators off the couch and into the store were more effective in the long run and created a relationship between consumers and the retailer. Hanaka outlined the Golfsmith program that gave away 20,000 golf rounds this spring and another promotion this past weekend that would give full refunds to anyone purchasing the Big Bertha Diablo, FT-9 or FT-iQ driver from Callaway if either Rocco Mediate or Phil Mickelson wins the U.S. Open.
The other executives that spoke with SEW said that the repair and refurbishment business was way up as avid golfers hold off on new irons this time around.
The impact of the driver promotions appear to be restricted to the Callaway, Nike and TaylorMade brands and a few others that are chasing the business. The recurring theme of the discussion was the life cycle of new technology, with the move to annual technology updates clearly at the center of the inventory and promotion issue. One executive said that Titleist, Mizuno and others on a two-year cycle are not feeling the pain and are still getting strong results.
The SportScanINFO data indicates that overall year-to-date golf products sales have been fairly flat in the non-specialty channels tracked by the firm. Slight gains at the full-line sporting goods and Internet channels offset a mid-single digit decline at the discount channel. Sales were up in the first quarter, but have settled back in the last month. Sales of drivers were down in mid-single digits for the YTD period as sharp declines in the full-line sporting goods channel – where average selling prices fell below $120 in the first quarter offset strong gains in the Internet channel, where driver ASPs are nearly $80 higher.
Based on the SportScanINFO data, it appears that consumers are still finding some dollars for discretionary spending as sales of golf balls, putters and wedges all saw increases for the year-to-date period.
