The deterioration in the economic climate is just another challenge for golf professionals trying to retail at clubs. It comes with a growing threat from internet retailers and price comparison web sites. If these domains are not looking to directly capture a purchase from customers they are certainly looking to influence the price that the golfer will pay in pros' shops. Customers increasingly start their conversation with: "I found the new [enter name of driver] at only £139 on findthecheapestgolf.com", or: "I saw that in America you can buy this club at Edwin Watts for only $149".
Margins on main brand irons have already declined to levels that allow very limited profitability without discounting, and the current carnage in the driver market (let's see who can bomb stock out for the cheapest) sets new price point expectations in the minds of the consumer.
The temptation for pros is to respond to these challenges by discounting: "I'll meet the Internet price"; "I'll make a price promise"; "I'll cut the costs and clear out my stock, breathe a sigh of relief at an empty stock room and cut back my future orders".
This is what I call ‘mini me' retailing. It's taking a 100 square-metre, specialist retailer (the small pro shop) and copying the actions that you would expect to see at a large supermarket, high-street discounter or internet trader. Large-format, mass-merchandise stores can reduce prices because they can protect their profit margins by: reducing operational costs (whereas, what operational costs does the average golf pro have? They are too little already); squeezing suppliers and demanding better deals
(not as easy for the small pro shop); increasing its investment in ‘price marketing' - adverts that scream about lower prices, lowest price or even ‘can't be beaten in the whole world prices'.
Pros must ignore the temptation to respond in the same manner. It is a war the pro cannot win. The large internet or high street retailers will be able to cut costs, squeeze suppliers and coordinate action across their stores and sites to de-list or hurt suppliers that won't respond to their pressure.
Cutting operational costs will also reduce the level of service these competitors give to customers. Their business models will incline still more heavily to ‘serve-yourself, off-the-shelf, no returns' relationships with a customer, via an ever lower paid check-out clerk or imaginary shopping trolley on the web.
There should already be a significant gap between the service a pro offers as standard, and that delivered via the high street or web, in the following ways:
- Pros should have invested in their custom fitting skills and the facilities that they have for fitting.
- Pros should have developed relationships based on a customer looking for a solution, rather than purchasing a commodity.
- Pros should have spent time getting to know their customers, their golf game and their short-term aspirations.
- Pros should be stocking shops with product that is a match between what they think is relevant and what their customers want.
- Pros should have created a programme of events at their club that allows customers to engage with new product.
- Pros should have ‘service' relationships with customers, in which swing and equipment can be quickly checked.
- Pros should have developed retailing knowledge that allows them to sell product at a competitive price, but NOT the lowest.
- Pros should have educated their customers to know that they won't get a better solution or better service anywhere else.
If the pro does NOT improve service and relationships then the high street will move away from its position of being just the ‘cheapest', and will also be able to offer service that will attract golfers away from the pro shop.
Pros need to look around their shop. Is there any signage that explains in simple terms the added value they provide? Do they have point-of-sale that promotes custom-fitting or the improvements a golfer can achieve using fitted equipment? Do they have signage featuring testimonies from members heralding the improvements the pro made to their golf? The pro also needs to talk to their staff: can they list the customer profile for each piece of equipment? Can they explain the benefits each model has for a customer? Can they add their own description of the technology behind that golf club? If a customer is paying over £100 for a pair of shoes, can they fit them properly? Can they describe the advantages of that shoe over another?
These are the basics. Pros must define and present their brand - for which service and expertise are the pillars. Then the pro and shop staff must deliver that service and expertise. That's called ‘brand in action'.
Ian James will be speaking at Golf Europe, Munich, October 5-7.
