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.
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!