It’s been a busy time as the dust settles following the vote several weeks ago. What was considered by most as an unexpected result has had a big impact on the UK already – a new Prime minister, a new cabinet and a tumbling currency has left most most people scratching their heads as to what it all means.
Across the globe it has created endless news pieces, on thousands of TV channels as everyone recovers from the shock. Commentators in France, Germany, the USA, Hong Kong and China to mention but a few have all been hard at it, chewing the fat. Lots to talk about but no real understanding as to what happens next.
Interestingly, some effects were immediately apparent. If you were travelling abroad then the bad news was that your pound was buying less. On the other hand the stock market was up – good news for those pros with pension pots and nearing retirement.
Most commentators now feel that the doom and gloom spread in the run-up to the vote was overstated. However “uncertainty” about the future will result in many companies spending less on hiring and investments while consumers may postpone large spending decisions, according to a report by Moody’s, a very influential credit rating agency. Their conclusion being that the UK will slow down but not go into recession.
The Bank of England recognising these potential problems has cut its base rate from 0.5% to 0.25% the first change since 2009 and lowest in its history. Their objectives to counter any hesitance and to encourage both consumer and business spending.
The figures published this week for key economic factors look promising. Unemployment is currently down (-8,600), consumer spending is up (+5.9%), prices are relatively steady (-0.6%) compared to the same period last year and the government ran a budget surplus in July. But a word of caution, the full impact of our historic decision is yet to come.
The factors that could impact on a pro’s business are numerous. Exchange rates will immediately increase the costs of most products found in the pro shop. This plus the substantial price rises already seen over the last twelve months will do little to counter the criticism often levelled at golf that it is expensive.
Employers’ reluctance to invest owing to uncertainty, could last over the next three to five years, recognising that the actual exit is unlikely before 2019. This could put downward pressure on employment and wages, reducing discretionary purchasing power on luxury goods and services, a category into which golf falls. Regular golfers, those most likely taking part in monthly medals, are unlikely to be effected as the sport is their passion. Less committed golfers already being distracted by other sporting opportunities, business and family time pressures may spend elsewhere.
What should you be doing now? Certainly, if you have not already done so, you should be clearing summer stock and those lines or brands that you will not be continuing in 2017. Irrespective of Brexit you should get your cash back into the bank even if it means discounting. I know that’s easy for me to say but it’s better to take even a small loss now rather than wait and take a bigger loss in six months’ time when a product is showing its age. Think positive, get your money back quickly, giving you the opportunity to reinvest your valuable cash in something that’s going to make a profit! All too often I see older stock pushed to the back of the shop where it will stay, only collecting dust, unless you make it do something. Remember for most golf retailers every £100 worth of stock that has been sitting there a year has actually cost £200! Its not just the cash you have paid you are loosing but the profit opportunity from having the right products that would have sold!
Next, in the light of the potential down turn in the economy caused by Brexit, it is critical that you are on top of your retail game. The professional retailers out there have already embraced the value and importance of both planning and monitoring their performance using Epos systems like Xpos. They will know how much stock they have and really need to fulfil their budgets. They will know which products make the majority of their cash profitability and need continually promoting. They will know their cash position and they will also have their overheads under firm control.
Soon next year’s new products will be launched and the buying-in cycle will commence. At this time it’s easy to get carried away by exciting new developments but be cautious: don’t let your heart rule your head. Only commit to stock levels that you are sure you can clear. Focus on what do your target customers really want and what are they really going to pay. Be realistic on quantities and don’t chase the stretch discounts. If the numbers don’t add up then consider dropping brands if they force you in to a position that is going to squeeze your cash reserves. Remember profit comes from selling the stock – not from buying it cheap and letting it sit there.
Over the coming weeks and months I will be adding to and updating these observations. In the meantime don’t wait for events to overtake you, get professional now. Like good scouts “Be prepared!”