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More than 28 million people in the United States are avid and occasional golfers, according to a recent report from the National Golf Foundation (NGF). Every year, these players spend billions of dollars on new equipment to help them improve their games.
For many range owners, that kind of equipment demand raises a provocative business question—how can a range
successfully jump into the retail fray?
The answer is twofold. First, the range must be in a viable market. Then, the range owner must assemble the appropriate business pieces to make the retail puzzle work.
Market Viability
To know whether a retail business makes sense on the range, an owner first must become intimately familiar with the
surrounding market. In retail, demographics are everything. But where to start?
“Do your homework,” advises Andy Silis, national sales manager for Illinois-based Tour Edge Golf.
This means thoroughly researching the local market to understand where golfers go to get their equipment, why they go there, whether their needs are being met and if room exists for another retail player. Effective research also must consider overall population, total number of potential golfers, demographic trends, anticipated future demand for golf equipment and the nature of the competition.
Range owners can begin to find some of these answers through Web research, the U.S. Census Bureau, the local chamber of commerce or even something as simple as a quick look at the Yellow Pages under “golf equipment.”
For those range owners who don’t trust their own market research skills, hiring an outside consultant is an option. Many research firms offer consulting services to help business owners analyze their markets. Specific to the golf industry, the NGF sponsors GolFacts Plus, a comprehensive data-analysis service that helps a range owner better understand his particular golf market.
Regardless of the approach, the end result should be a compilation of information that assists a range owner in deciding whether it makes sense to take the plunge into retail.
“If range owners feel like there isn’t a lot of competition or—after research—feel like golfers’ needs are underserved, then they would be crazy not to try to address the equipment needs of their customers,”
Silis says.
In fact, when market viability is present, ranges offer a distinct set of advantages over other golf equipment retailers. Most notably, of course, golfers at a range can actually swing a club and watch a real ball fly. This real-life sensory feedback often is the make-or-break factor in the buying decision, Silis notes. Hitting into a screen at a local “big-box” store just isn’t the same as hitting a real golf ball from a real tee. And, in many cases, the golfer also may seek the expert guidance of the pro on staff at the range to ensure the best club fit for his or her swing.
Ranges also benefit from a captive clientele. Golfers are going to come to the range anyway to utilize the practice facilities, so the ability to buy equipment there as well brings both convenience for those customers and an added profit center for owners. The savvy range owner also may bundle services to streamline the buying decision. For instance, offer two free lessons with the purchase of a set of irons or ten free buckets with each driver purchase over a certain amount. The possibilities are endless, and the earning potential is tremendous.
“These types of promotions bring high perceived value with very little cost,” Silis explains.
Finally, the rapid improvements in golf club technology have the potential to make occasional players better and, as a result, more likely to become more frequent players. In the dual role of retailer and practice facility provider, ranges stand to gain greatly from that conversion. This advantage may become magnified yet again for the range owner who offers custom fitting, as players are more likely to succeed when their clubs more closely suit their swings.
On the flip side, venturing into the retail space presents disadvantages too. The most apparent to many range owners is competition. From local golf specialty stores to mass-volume, big-box retailers, the competition can be stiff in some markets. Not to mention that range owners may have trouble matching the prices larger retailers are able to offer through volume purchasing.
Another disadvantage is added inventory. Range owners may or may not choose to have a great deal of inventory on hand, but they must have at least enough to allow for demos and displays. They also must have the infrastructure in place to handle ordering and fulfillment on each purchase. And since ranges likely can’t compete on inventory or
pricing, they must be able to create a sustainable advantage in customer service.
Once a range owner has completed the market analysis and weighed the pros and cons of a potential retail business, he or she must understand the role a facility can reasonably play in the market. For instance, a facility may never be able to sell more drivers than the big-box store down the street, but that same facility may be able to engage in more custom-fitting business by leveraging its distinct customer service advantage.
Such is the case with The Clubhouse Golf Center in Randolph, N.J. In addition to an extensive tee line and teaching facility, owners Sam and Kate Altiero offer an array of brand-name clubs and equipment, custom fitting, re-gripping services, gloves, balls and more. They also offer an important piece of perspective.
“We are not and cannot be all things to all people,” Sam Altiero says. “So by sticking to what we do best and keying to last year’s sales, we are able to get a reasonable return for [the equipment sales] part of our business.”
What the Altieros do best is keep a small inventory of the latest clubs on hand and invite customers to hit them on frequent demo days. From there, the Altieros leave it to accomplished sales representatives and outstanding relationships with manufacturers to get clubs in their customers’ hands quickly.
They then stock more of the products they know they can turn around quickly. “Our point-of-sale inventory, which is mostly balls and gloves, is generally very well-stocked since we tend to do well on inventory turns in that category,” Sam Altiero remarks.
The Business Pieces
Once a range owner has decided to add a retail component to the facility, the focus then becomes successfully integrating the new profit center into the business. The first piece many range owners consider is space.
There is no hard-and-fast formula for how much space is required to maintain a viable equipment sales operation. Depending on existing space constraints, intended inventory, sales methodology and numerous other factors, the total square footage can vary wildly. And that’s okay, as long as it works within the facility’s role in the market and fits the owner’s business objectives.
Tour Edge’s Silis does offer one piece of advice. “You need enough space to make it look like you are in the business of selling golf equipment,” he says. “Don’t just cram a bunch of clubs in the corner and call that ‘selling equipment.’”
And, the equipment sales area should be located close to where customers come to purchase range balls. “Get it where the action is,” says Silis. “Make it visible.”
Once the space issue is resolved, the next important decision is what type of equipment to sell. That’s easy when it comes to “golf disposables” such as balls, tees and gloves—a range owner always should have those in plentiful supply. But when it comes to clubs, the equation becomes more complex.
High-end or economy? The correct answer usually requires a combination, but is entirely dependent on the market. “If you are in a blue-collar market,” Silis says, “don’t carry as many $500 drivers.”
Custom-fit or off-the-rack? Off-the-rack allows more immediate gratification for the buyer, but it requires a range owner to keep considerably more inventory. Plus, it is very hard to compete with sporting goods or big-box stores on pricing.
For The Clubhouse Golf Center, the answer is an easy one based in sound market understanding. “We are mostly a custom-fit equipment shop,” Sam Altiero says, particularly when it comes to irons. He reiterates that his ability to compete in his retail market relies largely on providing a level of expertise and customer service that large stores cannot duplicate. “The larger chains struggle with offering timely and good advice to customers,” he says.
Sam Altiero adds that he does carry a fair selection of woods, wedges and putters—which typically do not require the same level of customization—as well as some bags and shoes in order to keep his off-the-rack sales going. His real success, however, comes in the custom-fit arena.
In addition to lessening inventory demands, offering custom fitting also provides the advantage of creating cash up-front, since buyers are typically obligated to put a deposit on purchases—a benefit every business owner can appreciate.
Once the space is allocated and the inventory in place, range owners must decide how they will go about pushing retail sales. This is the point at which they can really leverage the many advantages they have over other retailers. But it doesn’t happen all by itself.
“You have to work it,” Silis says. “The key is to actively engage and utilize the assets you already have.”
The best thing ranges can do to boost retail sales is get the clubs in the hands of their customers through any means possible. Ranges can accomplish this goal in bursts through demo days and other promotions, but the true winners in the retail game are the ones who are able to build a day-to-day commitment to selling clubs and other equipment. This process requires proactive behavior, not just waiting for customers to ask about something they see in the shop.
Range owners may choose to offer demo clubs to good customers whenever they come in to hit balls. They may hand customers a free small bucket and a new club and ask them to “try it out and provide feedback.” Or owners may walk the tee line with a new iron and simply allow customers to take a few swings. Again, the possibilities are endless for the creative business owner.
“If you’ve brought in the proper equipment and put it in their hands, then golfers will see that it’s better than what they have,” Silis reasons. “Then it becomes a numbers game, and a percentage of those customers will buy.”
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