How Only 1 Man Changed The Golf Industry!

WRITTEN BY: GolfSpy X (Published June 2010)

Big banks, huge chains, too big to fail, monopolies, more mom & pops closing, these are all terms you hear more and more in the news today.  And rarely is it a good thing for the economy or the consumer.  The consumer is the one that truly loses.  It leads to less competition…which leads to less choices for the consumer which in turn leads to more power for the companies at the top.  It is happening all over the country and in more industries across the nation.  Almost every town has felt the wrath of big business.

So…what about the golf industry…is it happening to golf as well?

Well you don’t have to be an avid golfer to notice the list of golf companies dwendling over the years.  Some of the largest and most prestigious golf brands from years past simply don’t exist anymore. And the number of companies with the biggest pieces of the pie are getting smaller and smaller. So…is this a good thing or a bad thing and is this a major issue for the golf industry?  Well…yes it is an issue…but not the most consequential one in my opinion.

The Issue I Feel Changed The Golf Industry

The way I see it…the most consequential issue I speak of might just be responsible for many of the issues golf has today.  Now…while this issue might have began as a somewhat friendly (well not really) competition and intended no harm on the industry it could be the one thing that is effecting it the most.

Think Back to The Late 90’s

The issue I am speaking of started way back in 1998…when one man who was respected by many and one who had risen the ranks at the company he was with…decided to leave his current employer and start a job with another company…who at the time was the leader in golf club equipment sales.  After a brief stint with the company leading the industry he decided to go back to his original employer.  This triggered an intensive legal attack from the past higher ups.  Not that uncommon we know…but the result of this battle (pissing match) is.  That’s because this battle has in my opinion lead to a trickle down theory which has sent ripples across the entire  industry both far and wide.

In my opinion this one simple job change even in a multi-billion dollar industry has lead to all of the following…all of which I will expand on below:

1. Shorter Product Life Cycles
2. Pricing Wars
3. More Closed Down Retail Shops
4. Less Custom Fitting Shops in Your Local Towns
5. Less Access For Golfers To Improve Their Games
6. Less Golfers Playing The Game
7. I Could Go On For Days….

1. Shorter Product Life Cycles

You might have noticed that over the past few years the rate of new golf clubs hitting the market is on the rise.  The typical product life cycle for new golf equipment has gone from every 3 years, to every 2, to every year and now to every 5 to 6 months.  And for the most part it was all started by one company which was lead by this one employee we are referring to.  And basically we feel the roots of this new trend was all because of the “pissing match” we previously spoke about.  The focus on equipment has become less about the consumer and their needs and more about 2 companies trying to cut each others throats.

Now many of you might be saying, “so what is so bad about coming out with a new driver or new set of irons every 5-6 months instead of every 2-3 years”.  Well from a consumers standpoint it sounds great we all love new equipment right…and in the beginning of a new trend like this it usually is for the consumer and for the company who started the trend as well (profit wise).  But in the long term it could and seems to be having nightmarish consequences for the industry as a whole in my opinion.

When this employee I speak about worked for the company that at the time was the industry leader…they had an owner that firmly disagreed with reducing the current 2-3 year life cycle for his golf equipment and so did many other leaders in the industry.  There were many reasons why but one of the most important was…because if not…the vendors (Retail Golf Stores) would have a major issue on their hands in regards to controlling inventory and are now suffering because of it.  Every time a new piece of equipment came in they would have to deeply discount the old (basically new) equipment.  Which they had not even had time to try and sell and move off the shelves.  So now instead of sell-offs every 2-3 years they are having to basically give away all their almost new gear every 5-6 months.  The golf club manufacturers solution was to simply have them heavily discount their prices or they would offer buy backs for the surplus of inventory on hand.  Which has hurt both the vendors margins and the golf club manufacturers as well.  This coupled with the fact that the economy is not doing so hot has lead to more and more shop closings.  Which has lead to more big chains controlling the arena for golf club sales.   Which has lead to less talented lower paid positions for what used to be skilled fitting technicians.  Which has lead to a lot more issues. This new business model or business trend has created a “Keep Up With The Jones’s” type of mentality for the other golf manufactures as well.  Put yourselves in their shoes.  How can I compete unless I pump out new equipment as often as the other guy.  Because basically what this company has done is shifted from trying to brand a company to simply trying to grab market share.  They want every time a golfer walks in a store to buy equipment to be the newest and flashiest  gear on the racks.  Sounds like a great move right?

Well not if you think about the cost it takes to make and produce all this new gear.  Factor in all the R&D costs, marketing etc. and you start to realize that this is most likely the reason you are seeing less TRULY INNOVATIVE technologies being launched and more flash in the pan type of equipment with simply new paint schemes and weights being placed in a different positions.

2. Pricing War

Imagine for a second that you are an owner of a huge golf equipment company and you are trying to be the big man on the block.  What is one way if you were in a stalemate with another company to grab the #1 spot?  Well one way (not usually the best) is to make your price lower then the guy on the shelf right beside you that is competing for the same spot.  Well this is exactly what happened when the companies owner passed away from the company we spoke about being the leader in the industry.  The one thing other then keeping life cycles at a 2-3 year clip that he stood firm on was NOT lowering prices.  Too many repercussions could come from such a business model change.  Among them was having to produce a cheaper product for the consumer and cutting corners…something that can be devastating to a brand.

But he has passed away and a new man was in charge of the company who was basically an accountant…he must not have seen it the same way.  Seems he felt a “Pricing War” was what the company needed.  And so there you have it.  I do see his dilemma…competition is competition but still disagree with the move.  Because what it has created is the whole “Shorter Product Life Cycle” trend we currently have now.

How?…well pretty simple.  Think back again like you are the guy calling all the shots.  And you are in a “Pricing War” with your rival competitor.  You both have product on the shelves and they are both lets say $299.  Well you lowered your price and guess what…he matched you…so now what do you do to stay a step ahead of the competition?  You got it….COME OUT WITH A NEW PRODUCT.  Well that is exactly what we feel happened when this one employee was faced with his old companies new “Pricing War” tactic.  Newer product with the same price tag as the competitors so called out dated equipment and DING, DING, DING…you got a winner.  And they did have a winner and still do sales wise.  Might sound great and short term it has worked well for them…well once again sales wise.  But long term in my opinion it has lead to….

3. More Retails Golf Store Closings

If you are the owner of a Golf Retail Store your equipment and gear is your bloodline…it is how you put food on your table and the tables of your employees as well.  And if all the sudden the products that sell the most in your stores were basically worth nothing to you anymore you would have a major problem on your hands.  Well that is basically what is happening…store owners get in new gear and in a matter of a few months they are having to dump it.  (Which by the way…has also lead to an insane amount of issues on EBAY and by company golf reps.)  So if the number one sellers in your store became worth nothing to you tomorrow…would you be able to stay afloat?  Well many haven’t been able to.

4. Less Custom Fitting Shops in Local Towns

So as we said…we feel the “Pricing War” is contributing to the closing of golf shops across the country.  But one other major impact it has had is on the smaller “Local Custom Fitting Shops” in almost every town.

Almost every town with a golf course within a 50 mile radius and a population over a couple thousand people has at least one golf shop in town who sells components of some kind and does custom fitting.  Well at least they used to.

You see…customers for the most part whether they want to be or not are more price conscious then they are customer service and value oriented.  If not then there wouldn’t be McDonald’s an Wal-Mart’s popping up on every street corner across the country.  If this was not the case Mom & Pop’s would be flourishing…but they’re not.

I don’t want to go off on a tangent about that so back to the “Local Custom Fitting Shops” and why they are having problems today and how this is effecting golfers.  Well before the last 5 years or so there was a major price difference between custom fit clubs and the name brand gear you see on the shelves.  A big enough price difference that it created basically two distinct markets…and ones that could both survive.  Price was one of the attractive features of the custom golf shop…and the other was that you got to have someone custom fit you for your gear.  There were a lot of good slogans from these custom fit shops but one I always remembered was “You Must Be On Crack If You Buy Off The Rack!”

Anyways…with the surplus of discounted equipment that has been created by these “Shorter Product Life Cycles” that is flying around on sites like EBAY, Discount Golf Shops and Chain Golf Shops around the globe it has basically killed the custom fitting industry.  There is no longer enough of a  price difference between the two types of products.  So when the average golfer who used to shop at the “Custom Golf Shop” sees that he can get name band equipment at the same price they are deciding to go name brand and off the rack without getting properly fit for their equipment.  Which is unfortunate.  And yes the custom fitting options by the major golf companies has had an impact as well but the level of fitting you can get by trying out a biased fitting system by a major brand compared to an overall fitting process done by a qualified “Custom Fitting Shop” is typically not even something comparable.

So the result is that the majority of these shops are not able to stay in business and many are closing down.

5. Less Access For Golfers To Improve Game

So back to that one employee.  I feel that this one issue that was sparked in my opinion by a single employee in the golf industry…who led another major company to initially engage in a “Pricing War” which then lead to a “Shorter Product Life Cycle” has created “More Retail Store Closings”, “Less Custom Fitting Shops In Your Town” and also “Less Access For Golfers To Improve Their Games”.

The reason is quite simple…less shops consumers have access to leads to less access for golfers to go out and purchase equipment and practice with their equipment that can improve their games.  If a golfer who used to be able to drive to the local golf shop or driving range in 10 minutes now has to drive 45 minutes he is simply less likely to visit those places as often.  And over time if less golfers have less access to golf facilities and golf stores to practice on maintaining or improving their game it leads to…

6. Less Golfers Playing The Game

That’s right…”Less Golfers Playing The Game”.  There is unfortunately still only 24 hours in a day and now more then ever Americans leisure time is shrinking more and more.  So if you look at it from the standpoint of the guy out there looking to take up the game of golf and start a new hobby…it makes it less appealing if there are not as many stores around to get a starter set from.  Or for the guy that used to play a couple times a month…if your local driving range shuts down and your local fitting center is no longer around you might just give up golf for another hobby. Remember there is only 24 hours in a day.  Less Time + Less Access = Less Golfers.

Now like I said…this one employee I refer to I am sure never intended for any of these things to happen to the industry as a result of their new business model.  No different from a simple game of pick up basketball or hell even a game of checkers between two friends…this seems to have started out as a simple competition between two leaders in the industry.  But you know as well as I do that sometimes that in the heat of the battle…we can lose site of our original strategies and overall goals because the competitor in us simply takes over.  Which has lead to a hell of a lot of knock down drag out verbal and physical fights between even the best of friends…so just imagine if you were the head of an entire company.

* Speak Your Mind *

I am really looking forward to your comments on this.  I want to see how you all feel about this trend to “Shorter Product Life Cycles” and how you think they have impacted the game.