UK Golf Retail Sales: 2022 Review

I am needing to get by Blog back up to date so I thought I should backfill some missing articles. So better late than never – here is a round up of where golf retail got to at the end of 2022.

After two years of chaos, 2022 has ended up being relatively straight forward for the industry. Indeed it was pretty similar to 2019 – just a bit bigger. For most people in the industry we should take some comfort from this. With all the apparent changes with participation etc, the retail market returned to relatively predictable norms.

I am often asked to make predictions on the year and I was concerned I might have shoot myself in the foot in May. I made the following forecast for the remainder of 2022.

By year end I was pretty relieved to see that things turned out pretty much as predicted. There was a slight bump at the end but otherwise the stats had been relatively predictable.

Actual sales levels up to year end.

This isn’t me trying to be a know it all but it is supposed to illustrate that with decent data and some reasonable assumptions, we can have a good guess at what might happen from a fair way out. This is good for all our businesses.

There are a few things to consider

So overall spend was pretty solid up nearly 1% on 2022 and over 13% on 2019. However the mix of spend was quite different. While Irons topped the table with over 21% of sales the biggest looser was Trolleys. Having been in a position to compete for the number 3 spot in the last couple of years. Trolleys dropped over 23% compared to 2021, making it the fifth largest product category – overtaken by Shoes. Outside of the big two Woods and Irons, sales were more evenly distributed amongst the other 15 categories tracked by Golf Datatech.

Generally, apparel had another weak year. While sales had increased on the prior year and now matched 2019. Sales of soft goods are relatively poor compared to Clubs that have seen an increase more than 25% since 2019. Much of this has been discussed before and there are various well-established reasons for the decline. What I would say is that I expect Apparel to be one of the big winners in 2023.

Looking overall there wasn’t any real consistency in value change. Some high value categories were up, others down. Overall consumables were up and generally so was apparel – but it must be remembered that this was off a low base. Bags saw a similar fate to Trolleys with a nearly 10% decline. While Distance devices were also a significant looser. Wedges followed Irons and grew double digits but Putters dropped the most of the club categories.

Stepping away form value and looking at units.  The trends were similar, Irons and Wedges grew. Woods and Putters didn’t. Trolleys and bags plummeted and apparel mainly went the same direction as value. The main exception was Distance devices. Having seen a big value drop – units were actually up.

Looking at ASP tells the rest of the story. Distance devices saw the largest drop in ASP for 2022 down over 12% and bringing the whole category in to decline. Introduction of lower priced products seem to have brought down the overall spend in this category.

Interestingly the same issue seems to have effected Bottoms that saw a decline in ASP, where as all other categories appear to have become more expensive.

So overall ASP was up across the majority of categories. With Mens shirts and wedges leading the way at a 9% increase.

Are prices too high?

Some of the categories are reaching seemingly elevated levels. There has been quite a lot of concern about the current price of drivers. With a number of the big brands bringing out their new clubs around £500-£530. Some think this is too much.

I have a couple of thoughts on this. Firstly its interesting to note that if you inflate the historical prices of the top selling drivers from 2000 or 2015 they are actually very close to todays prices. If you use some of the online inflation calculators, £249 (the ASP of the top Callaway driver of the day) from 2000 is the equivalent to £536 today. So in real terms prices have not increased out of line with everything else. Stuff is just more expensive, however over the same period wages have also increased. According to Statista “Median annual earnings for full time employees in the UK” went up from £18848 in 2000 to £33000 in 2022. So as a proportion of annual income the new driver prices have increased by 20%. However this is only of the median earnings, if you were to look at the average earnings of golfers – the details might be very different, which takes me on to me second point.

We need to remember that Golf is a luxury activity and is only played by 7 to 8% of the population. You don’t have to play Golf and not everyone can afford to play golf. No one is forcing anyone to buy the newest items. People can choose where they spend their money. However if you want to play with the newest and shiniest equipment, there is a cost and for some items this is high. Many commentators have noted that demand for luxury and high value items has been maintained through the current economic woes. Proving that those with money are still happy to spend it. For some that will include golf clubs and should give us some confidence that people will continue to spend money on things they WANT. The only consideration is – what proportion of the consumers fall in to this bracket – has this changed. If so will this affect volume sales?

The third point is that while the newest equipment from the biggest brands is demanding high prices, there are plenty of alternative choices available at lower price points. Not everyone can afford a Ferrari – most will buy a Ford or BMW instead. There are several second tier brands offering excellent equipment at lower costs – indeed this may present an opportunity for them as consumers start to consider different options. We should not forget that there is also a lot of second hand equipment easily available through various retailers. This also provides options for consumers to resell their old equipment to fund their new equipment. All these options provide consumers with choice.

So sales have been good – are we left with much stock?

Well compared to 2021 – we have more hardware and consumables but a lot less apparel. This has been a pretty consistent theme in 2022. Supply chains caught up in some categories and over shot in hard goods. As you can see below Wedges have had the biggest increase in stock. While distance devices seem to have disappeared from many shops.

Challenges remained in soft goods for the first half of the year which meant the industry was short in a number of categories. This persisted through the year. Finally trolley woes resulted in a big destock at retail. Both soft goods and trolleys suffered on the sales front so it will be interesting to consider if the stock shortages were a cause or affect?

Final thoughts

Moving in to 2023 (I know we are already a couple of months in) its worth reflecting on last year to see what we can glean for this year – after all at this point there is still over 90% of the year to go.

In normal years total spend has been pretty consistent year on year, traditionally with single figure changes overall. Even during the pandemic things didn’t shift seismically on an annual basis. What did change is the position of the different channels, with online growing and then declining. In the US its interesting to see that the online channel has shrunk back to pre pandemic shares of sales. Its larger than it was before the pandemic but as a share of the total sales it is actually smaller. In the UK we have seen a move back to the on course in 2022. The off course and online are bigger than they were but can then pull back some of the customers they have lost in the last year or will the on course continue to grow?  

Another factor to watch this year is the effect of “revenge travel” as consumers look to escape the chains of the pandemic and get out to see the world. For those in the UK that travel abroad it might be money out of the golf budget – which could hit sales. This might have a greater impact on the casual golfer than the avid. Conversely there will be plenty of visitors that choose to come to the UK and spend their dollars here. As the £ is relatively week it will be cheap for many visitors, so their spend could be strong.  

My general expectation for 2023 is that spend will be similar to 2022. If the weather is good then it might be up a bit. If the economic woes way on the general public it might be a bit down. The spend profile is likely to be a bit different this year so changes within categories could be more significant. I except irons to soften and for woods to do better. Putters might also pick up from last year. I expect apparel to do better this year with improved inventory and increased visitors.

Deprioritise stocktaking and you could be losing 20% of your turnover!

Dramatic title? It might sound pretty extraordinary but please here me out and I’ll explain.

For many retailers “The Stocktake” is a once a year activity. Something to be dreaded and with little purpose other than keeping the accountant happy. Incidentally, it’s often planned in at a time of year when many team members conveniently want to go on holiday.

Continue reading “Deprioritise stocktaking and you could be losing 20% of your turnover!”

UK Golf Retail Sales: Year End Update 2021

So it’s a another year done and its time to reflect on what’s happened so that we can plan for what’s to come.

When we started 2021 we had some idea that it wasn’t going to be a normal year. Boy it didn’t disappoint. Lockdowns for the first three months set things back pretty significantly and we started Q2 over 46% down on the previous crazy year. However it’s better to be closed in your quiet months than you busy months. So while Q1 set things back, we were back with a bang in Q2 – in fact by the end of April we were already ahead of 2020 by some 33% in value terms.

Q2 ended up delivering some record numbers – I doubt we will see a Q2 like it for some while. May and June being the biggest months ever recorded by the Golf Datatech UK retail audit.

Q3 started strong with the third largest month recorded. Things started to change in August with sales value dipping under the previous year. In fact the last 5 months of the year would have sat below their 2020 counterparts if November 2020 hadn’t been a lock down.

By year end it was a bumper result. Ending up over 23% in value on 2020. More significantly it was up over 10% in value on 2019 – the last normal year. Some brands and retailers would have felt much stronger than that – club retailers were up over 20% on 2019. On the flip side apparel retailers struggled as the category ended down over -11% in value.

Where is all the stock?
Throughout 2021 inventory continued to be a challenge. Global production and shipping challenges created havoc for purchasing departments around the world. Product didn’t arrive as intended and retailers were short of many items for long periods of time. However things ended up better thatn the previous year. Inventory at the end of 2021 was up in nearly all categories compared to 2020 but it was consistently below 2019 levels. With irons being one of the worst categories with 40% less inventory at retail compared to the end of 2019.

The only categories to be in a positive position were trolleys and distance devices. Both seeing some significant growth.

So how did each of the categories perform?
Breaking things down by category we can see the largest two categories in 2021 were irons, followed by woods. This was similar to the last couple of years, however the gap has closed between the two. If inventory had been more plentiful and custom fit orders fulfilled I think Irons would have enjoyed even more sales. The gap between the two largest categories and the others was fairly consistent with previous years. The third largest category – balls, saw a healthy return on 2020. I believe this is one indicator that there was a slight change in golfers between 2020 and 2021 – with a greater proportion of regular golfers making up the rounds compared to the previous year. Trolleys managed to maintain its place as the fourth largest product category, continuing to keep shoes out of this spot. Shoes continue to decline from their levels of a few years ago. I think this is further indication of consolidation between spiked and spike less sales, as well as some leakage to direct and non-specialist retailers. In the main status quo was maintained with the other categories. Apparel continues to do fair badly in the post covid times.

So how has each category performed?
During my previous updates I commented on a continual upward shift in value compared to last year. At year end this trend has continued with all categories up on 2020. Men’s shirts was the largest winner compared to last year. Perhaps no surprise considering how bad apparel was in 2019.

All the main categories saw significant increases with Balls the largest winner in the top 3 – up over 35% on 2020.

Looking at the composition of the value change is always important. In my previous updates I talked about the gains in ASP and units. By year end all categories except one were up in units on the previous year. Shirts and balls saw the largest gains with more than 30% and 25% respectively.

Categories that really struggled for stock this year included bags, irons and trolleys. Even with the constrained supply these categories still saw significant increases in units versus 2020. However putting a little more context in to the numbers – compared to 2019, it shows a different picture.

While in the main the key categories are up in units – the change is less significant. In addition to this the apparel units – which are traditionally more on course orientated, are still suffering significant losses. Shoes seem to have followed a similar path and probably support the view that customers were less inclined to buy items that needed handling. All in all while we have seen significant value growth, unit changes have not been as significant. Much of this is probably down to constrained supply. It’s interesting to consider how big the unit increases could have been if we had greater stock availability. I am sure irons could have been significantly larger.

And what about Pricing?
Stepping back to the 2020 comparison, the trend for higher pricing was maintained through the year. All categories either maintained or increased average sales price.

There are a number of reasons for rising ASP. However restricted supply resulting in less discounting was probably the main driver in 2021. Balls in particular didn’t see the usual early promotions, this would have had a positive impact on pricing.

As we move in to 2022 it will be in interesting to see what impact inflation has on pricing and whether improving supply will have a counteracting effect.

Ok so what does this tell us for next year?
Many of the problems are still the same as they were last quarter with fragmented supply and rising costs. However I expect to see the economy starting to have a bigger impact on results especially in H2. The chancellor has written some big cheques over the last two years and at some pint we have to start paying the bills.

I expect the good momentum created in 2021 to carry on in to 2022 for at least the first half of the year (H1). Various things won’t have unwound and assuming we get a good spring people will still be keen to play golf so demand should be pretty strong. From what I hear there is still large amounts of back orders for clubs and they will continue to hit the tills in Q1 and Q2.

Risks still exist in retailers and brands planning. Does everyone have sensible plans for 2022 and order accordingly. We have been discussing the Bull Whip Effect for the last month or two. This could present a real challenge to the industry in 2022 and through to 2023. For those unfamiliar with this concept here is a quick summary. The idea is that a small reaction from consumers can have an large effect on manufacturers. Like a bull whip, you flick the wrist a few inches but the whip end moves many feet. When there is a spike in demand retailers who have sold out or lost sales due to low stock place larger orders for stock. They don’t want to miss out next time. As a result wholesalers and distributor do the same but add a bit more just in case. This works down the supply chain to manufactures who scale up production to make sure they satisfy all the demand – plus a bit more. Obviously this all takes time and when often happens is by the time the stock is made and heading to the retailers – demand has cooled. A new problem appears – there is too much stock heading to retail. In addition to this the incoming stock is not what the customers now want. Its pretty easy to see that a scenario like this could occur in the golf trade if retailers and brands eye further growth or expansion. I have a feeling it might be hard for some to curtail there orders but it might be the sensible thing. We really don’t want to return to the bad old days where clearance was a major issue for the industry.

Planning sensibly for next year is key. One of the key questions is what does the new normal look like? Unfortunately we don’t have a crystal ball so we are going to have to look at the numbers to make an estimation. Looking at the trend for H2 2021 the numbers would suggest some consistent elevation over 2019. Looking at general sales values, the shift from 2019 was pretty consistent over the last 5 or 6 months. With the second half of 2021 cutting a constant path between 2019 and 2020. I think this bodes well for 2022. So if I was doing my planning I would start back with my 2019 numbers. If I was optimistic and looked at the H2 trend I would hope that general spend should be higher than 2019 somewhere between 5 and 10%. How that spend is made up could be very different to 2020 and 2021 and that might be where things become tricky. I think clubs could remain high, there is lots of good kit coming out and there is still pent up demand. Clothing might see a return as it has been hit hard over the last period. You would also expect travel to open up and that would increase soft goods sales. However on the flip side, if travel opens up we might see lots of Brits heading abroad and spending their hard earned cash on holidays and experiences instead of goods.

One other thing to consider going forward is the is where consumers spend their money. Looking at the market overall there has been some shifts in consumer behaviour in 2022 and 2021. A lot of sales went online in both traditional and non-traditional golfing outlets. Some of the new golfers in particular shopped out of the speciality channel. Amazon would have done very well in 2020 and 2021 however this trend may reverse. Towards the end of the year there was a sense that customers were starting to turn their back on online in preference for bricks and mortar. They just wanted to get out of the house and see and touch some things!

Whatever happens in 2022 with the economy or Covid there is one thing to remember. Golf is very resilient industry and avid golfers play golf whatever happens. Hopefully that will remain the case in 2022 and the industry has solid year. You can be sure that we will keep counting the sales and inventory and providing insight to help brands and retailers make smarter decisions.

Reasons to be cheerful in 2022

With a back drop of a crazy two years that no one could have predicted, it might seem pointless trying to predict the next 12 months. However, we can’t let that stop us and here are my thoughts.

The numbers don’t lie

Covid-19 has had a huge impact on the golf market and, yet, it hasn’t been all bad. Just before things kicked off in February 2020, standing at the front of a room of 200 golf professionals, I made some bold statements: “…the golf market is very resilient. Whatever happens, it rarely changes from the long term average of more than + or -10%”.

Continue reading “Reasons to be cheerful in 2022”

UK Golf Retail Sales: November 2021

I started writing this just before Christmas, before being distracted by mince pies and turkey. So, let’s backtrack and take a brief look at how the UK Golf Market faired in November.

As before, we are using comparisons to a previous lockdown and November looks pretty awesome.

According to the Golf Datatech UK retail audit, sales values through the golf speciality channel were up over 58.3% on 2020, and a very impressive 35.9% up on 2019. Now, that is real growth. That puts us at a year to date +27.3% up on 2020 and +9.7% up on 2019. In fact, taking out slow apparel sales, the main hardware and durable categories are up over 18% on 2019.

Continue reading “UK Golf Retail Sales: November 2021”

UK Golf Retail Sales: Q3 2021 Update

As we head towards the end of the year, it’s a good time to reflect on what has happened during the main sales season. September is the last of the big months and the end of Q3. A strong year to date has set us up for good year-end and thoughts for 2022 are very present. Following significant momentum in Q2, which set a number of records, September finished off Q3 well. While on the annual basis only July was up on 2020, September was still a good month. In fact, at the end of Q3, the total market value was 30% up year to date on 2020 and, more significantly, over 6% up on 2019.

While these numbers were strong they come at a time when the industry has faced some significant challenges. While there was no lockdown to prevent people playing golf, life has started returning to normal. As a consequence, there has been fewer golfers playing the game. As we can expect, the drop off has been bigger during the week than the weekend, which appears to have remained strong. The question for everyone at this point is, where will the tide set? Will it remain higher than it was or return to 2018/2019 levels.

Another significant challenge for the industry has been inventory. Not everything is within our control and shipping and factory closures in the East have provided a major challenge. The worst hit category this year has been Irons which has been the largest product category, year to date, for the last 3 years. Inventory is currently 25% down on 2020 and a staggering 48% down on 2019! This has hit sales and is illustrated by the fact that the Woods category has over taken Irons in the product mix this year.

While all categories are well up on 2020 this year with double digit growth, Apparel is still struggling in the longer term context. The lack of visitors is probably to blame for this and has meant that Apparel is 20% down overall versus a normal year of 2019. The affects of this drop will have been felt differently by brand depending on where they sell most of their products.

Value, Volume and ASP

Year to date value is up in all categories.

Value has been driven by both Average Sales Price (ASP) and Volume for most categories. ASP’s have seen a dramatic increase and are up in every single category YTD versus 2020 and all but one are up versus 2019. Interestingly, 5 of the 7 Apparel categories have seen prices rise over 10% versus 2020.

Year to date Units are up versus 2020 in all categories except Outerwear. Some of the changes are even more extreme than the pricing. Again Apparel has seen a large jump with Men’s Shirts and Bottoms being ranked 1 and 3 in terms of growth. The other category that is up significantly is Balls which perhaps bodes well for the longer term.

Versus 2019, the trend is a little different with Clubs all being up – except for Putters. Balls are up and so are Trolleys. However Apparel is still lagging far behind so there is lots of opportunity for further growth.

How does this help me for next year?

Well, the main challenge for everyone in the industry is making smart decisions on what to buy for next year. Buy too much and tie up cash and be forced in to clearance. Don’t buy enough and miss out on sales. With the way things are going we should show some solid growth for 2021 versus all years. This has been driven by Value more than Units in most instances. So, it’s important that we factor this in to our planning.

While we have reached a new market high, we should also consider if there are any factors that may reverse this?

We appear to be through the worst in terms of COVID. While the numbers are high, the vaccination program has enabled the economy to get back up and running. As a result high numbers are not creating the impact on the NHS that had occurred before the vaccines. We can’t be complacent but all being well, things seem to be manageable. As a result of this we should hope to see more visitors next year which will boost some areas of the economy and increase sales. However, it will also lead to more UK residents going on vacation and spending some of their money else where.

In general, the economy seems to be ticking over ok with the only real issue being supply driving prices and creating inflation. This could cause some issues and might create some negativity. This said, I think we can be confident that we are in a better place than we could have hoped for 18 months ago. As a result, I would hope that next year’s forecasts could be built on numbers that reflect a more normal year, such as 2019, with some single digit growth representing the new tide level.  

Looking at stock levels now, retailers have more than they did in 2020, except for in Irons. However, stock levels generally are lower than 2019. There are some exceptions to this with Balls, Trolleys and Distance Devices up double digits on 2019 in terms of units – predominantly driven by the off course retailers.

Leaner stock levels of the last few years have improved margins and reduced clearance. This is better for retailers. What we don’t want to do now is to create a situation where a lack of stock this year creates some panic and then over purchase for next year. The other factor to consider is how an individual’s business has changed over the last couple of years. Hardware has been on a role – do we expect that to continue at the same levels for 2022?

With all this, we can draw some conclusions. Even with the chaos of the last 2 years, the status quo should not end up all that different when it comes to UK golf retail. Taking a longer term view, we haven’t seen huge change across the industry. However, certain categories have seen changes and online retail has done well.  This has led to a shift in many businesses and Total Sales remain in a relatively predictable range.

Assuming growth this year, the figures for Total Value for all years since 2017 have been plus or minus 10% of 2019 sales, which was the last normal year. For most people, their plans probably don’t need to be outside of that range. Again, we are talking averages, and with all things, you need to consider how far from the average you are, and how this might impact you. The obvious exceptions to that are businesses that have an extreme bias in their trading, eg. resort courses or sole apparel brands.

Companies focused on specific categories will need need to pay more attention to what is happening in their particular market.

Whatever is ahead of us, I think we can be confident that it should be less chaotic in 2022 than the last two years. How companies perform is largely down to how they react to the challenges thrown at them and not what the market dictates.