Market Update: October 2017

As we find ourselves in the depths of winter, it’s time to reflect on how the market performed in October, before sales start to drop off significantly.

October is often an unpredictable month. Usually the 7th largest of the year with around 8.3% of annual sales, and it can throw up some funny results. Some years, we see an “Indian Summer”, with extended periods of play. And on the other hand we could see an early start to the winter. It’s also a time when some brands launch new products but other retailers start major clearance. Needless to say it can throw out some spiky numbers.

So how did it go this year?

In the main, pretty bad compared to 2016. Overall sales value is 10.1% down on 2016 with some categories taking a significant drop. Looking at the overall breakdowns, the off-course clubs group was hit the hardest – seeing a 28.9% drop. In contrast, the on-course group saw a 13.7% increase. Other categories have not fared quite as well. Apparel, consumables and other categories are all down between 5.8% and 21.2%, both on- and off-course. The only category (outside of clubs) that is doing ok is light durables – held up by a strong showing from on course shoes.

October 2017 value change table

Looking at the total market for October, shoes and mens’ tops are the only categories to show any growth. Worst hit is shirts – both mens and ladies are down 40%

October 2017 value change

Was October a total disaster?

It would initially appear that way, but if you dive a little deeper into the numbers, it isn’t quite as clear as that. Even though this month’s values have seen a drop over last year, the year to date picture is still strong, with total sales value up 9.4%.

Compared to 2016, October was bad and there are a number of reasons for that. If we take a longer term perspective, October is only 1.6% down on 2015 … and actually 6.8% up in 2014. So when we look at this year’s performance, we need to consider that this October was “on-trend”, and that the real issue lies with a spike in the 2016 numbers.

Let’s compare stats for 2016 and 2017 for participation and weather 

We don’t yet have any participation figures but we do know that this year, on-course ball sales were down 22.1% in units. This would indicate a significant drop in play. Looking at the weather stats, October started badly – hit by a couple of named storms that swept across from the US. However, looking at the rainfall and temperature, the UK actually had less rain than average – 90% – and the temperature was actually up 1.5% on average.

However, sunshine hours were only 80% of the long-term average. What is clear is that these figures are very different to 2016, which was a very good year, with only 42% of average rainfall and 119% of average sunshine hours. The other significant difference was in days of rainfall (a new stat that I have discovered – yeah!). October 2017 had 14 days of rain – one day under the average. 2016 only had 8! This lead to October 2016 seeing an increase in ball volume of 6.9% compared to 2017’s fall. Once the ’round-played’ stats come through, I am sure we will see a significant year-on-year drop-off in play.

So, is the weather to blame?

While undoubtedly the weather played its part, (it always does), this is only one part of the picture. The other major issue in the difference between 2016 and 2017 is the promotional activity run on the off-course last year. Last year saw a major push from the off-course channel for club business with some very aggressive promotions that lead to a 33.7% increase in off-course club sales. This is an unprecedented jump that probably had some longer term effects.

The promotion was so successful that it will have changed some consumers’ buying habits: bringing forward their normal purchase cycle.

So consumers who might have changed their irons every 6 years, had an incentive to trade-in their old clubs and get a new set a year, or two, early. This effectively brought forward some of this year’s sales.

The success of this promotion hasn’t been totally realised due to 2017’s successful product launches. Good showings from Ping and Titleist have hidden some of the disparity. On-course iron sales this month have shown a 37.4% increase on last year – a stellar performance and, in the main, reversing some of the channel shift that happened last year. On-course also saw some growth in woods. Overall these figures help support the clubs sales which overall saw drops between – 4% in irons to -24% in wedges.

Looking at the longer-term club trend, 2017 showed a 2.7% increase on 2015 and a 13% increase on 2014.

So, where did golfers spend their money?

For the first time in a while, we saw a change in the ranking of categories. Irons took top spot with 18%. The change in season brought some repositioning of the other categories, with mens’ tops and shoes jumping up the order, passed balls.

October 2017 sales mix

Looking at the year to date trends, you can see this a bit more clearly.

October YTD 2017 sames mix

The main drop seen in shirts slipping down the order.

Drops in value were also mirrored with significant drops in volume this month.

October 2017 units change

Unless you were a shoe brand, this is probably one of the most depressing graphs I have seen in a long time. Shirts being the biggest loser, but generally everything getting a pounding. Let’s move on.

As we have seen all year ASP’s continue to rise and October is no different. Seeing considerable growth in 13 categories, with only 3 apparel categories seeing some single digit drops. October 2017 ASP change

OK so with the exception of a relatively poor October most of the trends are the same as we have seen for most of this year. What next?

The big issue is whether the relative slump will continue. The worrying thing for me is that last year, October was 9.2% up on the previous year. November however was 17.2% up!! Based on this month’s trend, we might be in for a rocky month next month. Weather hasn’t been great to extend the season – unlike last year. We should also see further effects of last year’s off-course promotions, as they ran on for a couple of months. This is very likely to have an negative effect. Lets just hope the positive product launches can carry us on a bit further.

So where might we end up.

Earlier in the year, when sales were good, I tempered my enthusiasm for massive year on year growth – based on how strong the end of last season was. This seems to be coming true, with the steady year on year drop off continuing.

2017 Value trend - October

Having come from nearly 20% growth in March, its hard to think that this year’s gains might be relatively small. However the trend has declined in most months. As previously offered I was expecting something around 8% to 10% and I think that is still a possibility. While the boom of the last quarter in 2016 has had an effect on this year’s numbers, there have been some really strong product launches that continue to excite the consumer. Let’s hope they continue to buy with enthusiasm.

 

Market Update – End of Summer 2017

I am a little behind this month but thought it important to get another market update out to comment on what happened at the end of summer (August data). I will be doing another one at the end of the month so will keep this short and sweet, here goes. 

August was a big month, and looks like it will be the second biggest of the year, with more than 10% of annual sales falling in the last month of the Summer holidays.

Initially, the stats look a little confusing. Overall market value is up 12.1% versus 2016. However there is a big difference On-, and Off-course this month, and not all categories are up. Also, On-course ball volumes – a good indicator of participation – were down this month -1.1% , which usually indicates that there might be some fall in sales.

So what happened in the key categories?

August 2017 Category Value change

Well, On-course was up across the board. Clubs were up a staggering 29.8% while consumables were up a mere 4.4%. Off-course saw some gains – up 3.7% overall and 5.9% in Clubs. However Apparel was down -12.5% and consumables -2.8%.

The other interesting point is that On-course Outerwear was up 27.6% in units. So I think we can assume that those golfers that did play, needed some weather protection. 

Why are clubs up so much On-course?

Long and short of it, the On-course has really benefited from the recent Ping Launch of the G400. Perhaps we should call this the “Ping effect” or, with the current model, nomenclature the “G Effect”. I talked about this a couple of years ago with the G series and history has repeated itself. It looks like some pent-up spending has been unleashed and while the customers were in the shop they have bought clothing and other items as well. This has to be the main reason for the huge spike in sales, as weather and participation would appear to have been poor – so customers needed a reason to get to the shops.

Crazy stat!

I don’t usually pick out any specific products but the G400 is an interesting story this month. Looking at the raw data for every £100 spent in the On- and Off-course speciality golf shops, £8 was spent on either a G400 iron or a G400 wood – WOW that’s some launch!

So how did this effect the general mix of sales?

General mix is similar to other months. However, woods and irons have both taken a bigger share of the spend this month, with hardware accounting for 42% of sales versus 38% in June, and 39.5% in August last year.

2017 Value mix - August

Overall sales were up in 13 or 17 categories. Shirts collectively were the biggest looser along with men’s bottoms and distance devices. It appears that the spend on big ticket woods and irons pulled attention away from the higher value tech products.

August 2017 Value change

So was all this growth just from ASP (like most of this year)?

ASP is well up across the board with huge gains in woods trolleys and irons. However most of the clothing categories are pretty static with a year ago.

August 2017 ASP change

High ASP’s might be hurting distance devices. They are well down in units, but otherwise most unit sales are middling to flat, (except the obvious apparel that’s been hit by the weather). Woods were down slightly this month which is better than previous months. Irons were actually up even with the 18% increase in price.

August 2017 Unit change

How does this look for the rest of the year?

Well, the trend is pretty well set this year for solid growth. Previously I was calling between 8 and 10% and this is looking pretty safe. One of the key determinants was how well the product launches from the key brands went in H2. Ping has obviously done very well and Titleist have also made up some ground. Looking at this momentum double digit growth year on year is well on the cards.

Sales growth v last year.

Value trend Agust YTD 2017

Next month the picture will be a bit clearer and we can see if the trends continue with strong On course sales.

Market update – 2016 a brief review

2016 really was a year of two halves. Awful weather in the first 3 months really hit the participation and as a result the on course retailer struggled. Five named storms between January and March meant courses were closed across the land with some not seeing any play for over 8 weeks. Keen golfers still wanted to get their golf fix but went to the off course stores and ranges to see what was going on.

By the end of April the on course market was 4.5% down in value while the off course was racing away at 13.8% up. By the end of June the on course was still down 2.77% while the off course was still up over 10%

Fortunately the second half of the year saw an amazing turn around with great weather and lots of play. The off course still maintained its strong position and the on course managed to recover to just 0.5% down on the year. This was a great result all round and showed one of the strongest H2 performances seen for a long time. Overall market ended up at +5.3% in value terms v 2015.

Performance was mixed across the categories with the off course having an amazing run on clothing. Here the overall changes at the end of the year.

2016 on and off category performance

The relative differences in performance meant there was a shift to the off course for a the first time in a few years. Overall the on course still had the largest split of sales but this had reduced to 54.6% down from 57.8% the year before.

On v Off share - 2016

It was the same story across all categories except trolleys with the biggest change coming in apparel with the off course growing from 31.8% to 37.8% of the total market. Trolleys actually saw a small decline.

So how did consumers spend their money?

Overall spend saw a slight change in the overall priority of the categories

2016 sales mix by value

Woods and irons are still the top two categories, Footwear took the number 3 spot for the first time – overtaking balls. Tops was the biggest clothing category with putters being the smallest of the tracked categories accounting for 3.5% of spend. Hardware accounted for over 41.8% of total spend.

How did spend compare to last year?

2016 saw some big changes with 3 of the tracked categories seeing double digit growth. Biggest mover was bottoms at over 14% growth, followed by wedges and shirts.

2016 category value change v 2015

Biggest looser was weather wear seeing a 2.6% drop in sales. Trolleys also had a small decline – otherwise it was growth from all the categories.

What drove the changes?

Main driver for the market changes in all the hardware categories was an increase in ASP. Putters saw the biggest gains ending the year up 19.4%, with irons up 10.5% and woods up 8.7%. Many of the changes were the effect of sustained drops in the £ v the $. Brands facing increasing costs had to put prices up to the retailers on big ticket items.

2016 category ASP change v 2015

Interestingly two of the biggest movers – shorts and bottoms saw slight ASP drops – was promotion used to drive the increased sales?

Big changes in ASP lead to some decreases in units.

2016 category units change v 2015

Declines were seen in 7 categories – mainly hardware or big ticket items. The biggest increase in ASP was met with the biggest drop in units, Putters we down -8%. Average price of a putter had got up to £130. No longer the item you change on the turn.

All in all 2016 was a topsy-turvy year that saw a great performance from the off course and a par save from the On.

Market Update – September 2016

As the days shorten and the thoughts of Christmas start creeping in, its time for most to wrap up their season. Here are some brief observations about what is going on in the market place at the end of Q3.

Overall the market is still up on the same time last year (8.5% up in value September 2016 v September 2015). This is much better than lots were expecting and better than lots are feeling. In truth everyone is up (just) but the off course is doing really well.

 
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