Lockdown Plan Unveiled

While last week’s roadmap from the Government might have caused some disappointment, at least we now have a date to work towards. As it currently stands golf will be permitted on the 29th of March. Having lost, what will be close to 3 months of play and retailing, where does that leave us for the rest of 2021?

More Reasons for Optimism

January and February have been shut-outs but there has still been a fair amount of retail going on – Low activity by normal standards, but significantly more than April 2020.

As it stands, January was 67% down on 2020 and February will probably end up in a similar position. Online retailers are selling and many of the traditional stores are finding ways to clear out stock and take pre-orders for some of the impending arrivals. As I have previously said, January and February are small months during a ‘normal’ year: typically accounting for 8 or 9% of turnover BUT, more importantly, only 6 to 8% of margin.

March is slightly different and tends to set the tone for the rest of the year as this is usually when the season really fires up. If we add March in to the losses, then on average, January to March would cover 16% of sales, but again, only 14.5% of the margin. By the looks of things we might have lost 60 to 70% of this years sales during this period.

The question is, can we recover circa 9% of sales during the rest of the year? I think so.

Last year, we lost all of April and most of May, when these months would normally account for around 22% of annual sales. The hole was a lot larger then and we lost 2 of the biggest months where we could have recouped sales. In fact, if you look at June through December, the golf market managed to do 80% of its business in just 7 months, including an additional lockdown in November.

More Modelling

Looking at the numbers, we can update some of our models to see where 2021 might take us. Modelling 2021 on 2019, instead of 2020, what are the scenarios?

I think it is safe to assume that there is pent up demand and we should see a bounce back. The questions is, how big?

As a starting point, we know we are going to loose roughly 70% of January through March. Based on last year, let’s assume April is flat, as retail won’t be fully open for the month but golf will be playable. If we get a similar recovery to 2020, let’s consider May and June might be up 15%; July and August of 10%; and September and October of 5%. Assuming November is flat and December sees a small uptick, golf retailers would finish 8% on 2020, and down around 3% on 2019. If we can achieve that, then I think it would have to be considered a reasonable recovery. However, if momentum picks up, as it did last year, and we see a similar revival in the game earlier on in the year, there is every chance of a strong recovery.

In the second half of 2020 sales values were up, on average, over 20% for the 5 months we weren’t in lockdown – if this was the case this year then we could see a 15% gain over 2020 and a 2 to 3% gain over 2019.

Be Sure to Take Stock

The key issue this year may not be one of sales, but of product availability. Will there be enough stock to satisfy demand?

In a number of non-golf categories, we are seeing that stock availability is causing problems – try buying a PS5 games console or computer graphics card, amongst other things. Another interesting problem is the lack of cardboard and boxes, with online retailers struggling to find packaging to post items. Who would have thought that would ever be a problem? As a result of low stock, sales have faltered and prices have elevated. Shipments out of China are being delayed and imports across Europe have slowed down due to Brexit and Covid issues. So, this years sales might be blunted due to a lack of stock, despite demand.

If you’re a golf retailer, it’s essential to have a plan for what you need this year and keep in contact with suppliers to ensure you receive your stock. In the past, we have seen that things don’t change too much year on year in golf, so be confident in the future demand of your stock and have faith in your buying decisions. If you do cancel orders, you may not be able to get it when the sales kick in. Retailers that have worked with their partners will be the ones that get the goods and make the sales.  

Good luck and lets keep our fingers crossed for a great season!

Don’t panic! 2021 could still be great

I have previously said, and am pretty sure everyone would agree, 2020 was a crazy year.  We now need to have quick look at events from the worst of conditions in order to plan for what happens next.

While lockdown #1 effected the various regions differently, Golf lost nearly a 1/3rd of a year to COVID, and, while general retail lost even more, it really has been a bumpy ride for golf retailers. We hit a low in May, with retail sales, year to date, down 54% in value. However, a resurgence in the popularity of Golf, due to its COVID compliance, saw golfers, new and old, loving the game and spending their money. At year end, the speciality golf channel recovered to be only 10% down on the previous year. All things considered, this was an amazing result.

The second half of 2020 was up 24% in value versus 2019 according to the Golf Datatech retail audit. On and Off-course retailers saw a very different split. Off-course was up 43% in the second half of the year compared to 10% across On-course. Overall, On-course ended up down in value: 19.8%, while Off-course was up just 3%.

The graph below plots the changes in value versus the previous years. As you can see, whatever happens in the first few months, the market tends to trend back to plus or minus 10% – even with a pandemic! This should provide some comfort for retailers that the market doesn’t move around too much. In many instances, it’s likely that internal factors can have a bigger impact on the business, than the market overall.

The 2020 Consumer Shift

First thing to note is that there was a shift in consumer spending. Generally, the Clubs category did well but Clothing did not. This might provide an illustration on how internal factors have had an impact on spending.

Retailers, as well as customers, were nervous about the rules – especially clothing. “Can I pick it up?”  “Can I touch it?” “Will I get Covid?” All questions that customers asked but probably didn’t get answers for and, as a result, consumers opted to leave clothing on the rack.

Off-course apparel numbers were up, bolstered by online sales. Consumers felt more comfortable ordering clothing to try at home.  With the right preparations and messages to customers, Apparel, and other categories, can still sell well. So, while external factors created a negative situation, retailers who adapted worked around it.

The Stock Factor

The other factor that seems to have really hit clothing sales is STOCK. At the end of May, at the start of the golf boom, inventory levels were 15-20% down. By the end of July, stock levels were 20-30% down.  Stock wasn’t being replenished and orders were cancelled.

August and September are 2 of the biggest months for clothing but as orders had less stock, sales took a hit.

As mentioned, Clubs did well and Irons and Wedges were up for the year, which was an amazing result. Customers obviously felt more comfortable buying these products. Custom fit sales didn’t produce the same stocking issues, although there were delays in getting items to customers.  As a result, sales were good.  

Trolleys were another example of stocking issues:  Sales were down 13% in units by the end of the year but could have been very different, if not for lack of stock. Orders were cancelled early on and then deliveries from China couldn’t keep up with later demand. It was an understandable position but one created internally. Looking at the numbers, Trolley stocks were down 55% in July and, as a result, August sales were down 20% in units on the previous year – the only hardware category to see a drop.

Consumable Challenge

The only real surprise to me last year was consumables. Rounds were up for the year but the sales of balls and gloves in the specialty channel didn’t reflect this. I think some of the sales went out of channel: with golfers adding a dozen balls to their Amazon basket, along with their batteries, books and anything else they were getting shipped.

I also have a hunch that the mix of golfers this year had an effect on consumable sales. Did all the regular, and especially older club members, play as much golf this year? Did some stay at home and isolate? While rounds were up, how much of the increase was from new or returning golfers that may have different purchasing habits, and who were less connected with the pro shop, or specialty high street store?

And Now for 2021

It’s been a poor start so far, with a new set of lockdowns.  As I write, Scotland is still open for 2-balls but Wales hasn’t allowed golf for a couple of months. There must now be pent-up demand.

Golf doesn’t look like it will return in England until the end of February, or possibly later in March. However, while this looks bad for trade, in reality, I wonder how much golf would have been played over this period, with very wet weather and now half the country covered in snow?  Even without COVID, it would have been a rough start to the year. The only upside is that there is some government support for closed retailers and clubs. Furlough is offered for staff and grants are available for some clubs and retailers that pay rates. Covering these costs in these down times could actually help improve the financial situation for many. If we had all been closed for snow – there would have been none of these payments.

Reasons for optimism!

As with many things, a proper plan can deliver the best results. Last year’s initial panic meant manay retailers and brands lost sales. While the reasons were understandable, those in the trade that positioned themselves and planned accordingly, ended up with a stronger year.

Looking ahead, assuming we are shut for January and February, there is still plenty of opportunity ahead. Some retail has been happening over this shut period but the market will be down considerably.

Generally, January and February are small months which, typically, only account for 8 or 9% of turnover BUT, more importantly, only 6 to 8% of margin.

Usually, these quiet months are times for clearance, planning and a store refresh and high stock levels are not necessary at this time of year.  So, there is still plenty of time to gain more margin this year.

Once we are out of lockdown I expect the year to be a bit more like 2019 than 2020. We know January and February will be small. Hopefully there will be some pent up demand as the weather improves and golf returns to peoples thoughts. So March through May will be the key period and important to get everyone back in the swing. With the vaccine roll out forging ahead I hope that there will be no need for lockdown during the summer. People will be encouraged to go outside and stay healthy. Travel may still be a problem so there may be some restriction on international holidays. Hopefully more people stay in the UK and play more golf. If we combine these factors and manage to retain many of the new and returned golfers things could be very buoyant in the coming months.

Now for some modelling!

Looking at the numbers, we can do a little modelling based on 2019 to try and work out where we might get to in 2021. We will lose the majority of January and February but at some point we will be released – lets assume that’s some time in March. Based on last year lets assume March and April are flat. Pent up demand should drive more sales in the following season. If we get somewhere between 2019 and 2020 bounce we can look at gains in May and June of 15%, July and August of 10%, September and October of 5%. Assuming November is flat and December see a little uptick golf retailer would end up 11% on 2020, and about flat with 2019.If we can achieve that, then I think it would have to be considered a good recovery, especially having lost the first 2 months to lockdown. However, if Golf is released early, momentum picks up and we see some of the higher play in the summer like last year, there is every chance of a strong bounce back and more considerable growth for the year. Remember in the second half of 2020 sales values were up on average over 20% for the 5 months not in lockdown.

I very much want anyone reading this to understand that, even in the harshest of conditions, the golf market appears to be very resilient. Golf spend is relatively consistent, year on year, with normal years being + or – 5%. Even in a pandemic it was only -10% down overall.

However, what does change is what people spend their money on and where they spend it. Retailers that have done well last year may continue to do so if they can maintain their customer base. Retailers that have lost some customers need to re-engage with their target market and add value and service to win them back. Golf retailers will need to start selling balls and gloves, instead of just taking orders for them as there are now other retailers offering service and golf balls!

Make sure you take stock!

One key thought to leave you with. If you don’t have stock, you can’t sell it! Sales last year were definitely down for many stores as they didn’t have the stock in place to support the demand. It was clear that cancelled orders rippled through the system and brands weren’t able to get stock into the country. When they did it went to retailers that had maintained their orders. Make sure that you make a plan for this year and that you do have stock ready for when play starts again. Suppliers may be more cautious so stock won’t be hanging around in warehouses if you decide you want it. The other thing to consider is that if you do cancel too much , when you want it, you will be at the back of the queue to get it. Retailers that have worked with suppliers and planned their stocking will be the ones that get the goods first and make the sales.  

The most popular phrase in 2020 was “You are on mute”. This year we expect the it to be “We ran out of stock!”.

What’s in store for golf retail in 2021?

If I’d been sitting here a year ago, about to write this, I don’t think my imagination could have possibly created the events that eventually unfolded. I’m pretty sure I would have been focusing on the effects of the upcoming Brexit deal, changes in the high street and consumer shopping behaviour. Most likely, I will have talked about the impact of weather on the golf market. Nothing had more impact than the pandemic last year but before we look at 2021, let’s take a quick look back.

Continue reading “What’s in store for golf retail in 2021?”

UK Golf Retail Sales – Quick Market Update for the end of 2020

Well at last we have got through what most will consider as one of the worst years – unless you sell PPE that is. As it stands Golf proved its health benefits and turned out to be rather popular again. With all the ups and downs we have now complied the overall data for 2020 and the news is pretty good – value was only down 10.7%.

No surprises we are not up – it was almost an impossible task to loose nearly 16 weeks of the year and not expect some negative impact. However some are up and up a lot. Others are down but not as bad as it could have been. Here’s a quick video with some highlight numbers. 

UK Golf Retail Sales Market Update for August 2020

Since lockdown the Golf market has performed very well – courses have been full and people have been reconnecting with the game. In July Golf Datatech recorded their biggest ever month of sales in their UK retail audit.  To follow that up – August has become the second largest month on record.  

Here is a quick Golf retail market update on the numbers for August 2020 and how they compare to 2019.