Sporting goods retailers are witnessing a significant increase in the sales of oversized golf clubs and graphite shafts, accounting for 74% of total sales in golf equipment in 1994. A research report showed that sales of premium irons grew by 40% in 1994 to $687 million. As a result, sporting goods stores are focusing their marketing strategies on the higher-end line and are upgrading their merchandise to meet the growing demand for premium brands.
With sales trends showing a swing toward higher-end clubs, sporting goods retailers are shifting their mixes to include higher price points and a presence of premium brands.
The same high-tech features once limited to pros and par golfers are now being demanded by high handicap duffers who are willing to open their wallets for oversized clubs, graphite shafts and other tools designed to improve their game.
A recent research report from Hambrecht & Quist, Inc. (H&Q), an institutional research firm based in San Francisco, found that high-end sales represent the most significant growth area in the golf business, accounting for 74 percent of total sales last year versus 64 percent in 1993. According to H&Q’s research, sales of premium-priced irons and woods grew by 40 percent in 1994 to reach $687 million. Sales of mid-priced clubs decreased by 24 percent, dropping to $125 million and representing only 13 percent of the market versus 21 percent in 1993.
Fueled by a continued influx of new players, sales of entry-level equipment increased nine percent last year, to $119 million. But the H&Q report states that the low-priced segment still only accounts for 13 percent of the total market.
Gary Stewart, vice president of merchandising for SportsTown, says the chain’s golf business has grown substantially since it began focusing on higher-ticket clubs. “Since we changed our assortment to focus on $200 to $400 price points, our sales have been moving up. Everybody is looking for oversized, and they are willing to pay for it,” Stewart says.
Seeing the swing toward the higher-end, full-line sporting goods stores are not only upgrading their offerings from traditional brands like Wilson and Spalding but are also taking some short-cuts to add brands like Cobra, Lynx, Callaway and Taylor Made.
Paul DiLonardo, the golf buyer for Herman’s chain, says many of its stores are seeing a demand for these premium brands, but the company must go through distributors and third parties to secure the product.
“The Wilsons and Spalding are still our bread and butter, but the premium brands are nice window dressing for our stores that have specialized golf salespeople who can explain the benefits of the product,” DiLonardo says.
Although most of the top brands restrict their distribution to green grass pro shops and golf specialty retailers and take strides to battle their products from being diverted, they admit that sporting goods stores are becoming a bigger factor in the market.
Rick Pavreck, vice president of sales for premium brand Tommy Armour, and president of the Golf Manufacturers & Distributors Association estimates that the sporting goods channel accounts for about four to five percent of sales for premium golf clubs. “Sporting goods is an emerging channel for premium golf clubs, and is already well established for golf balls,” Pavreck says. “It is inevitable that this channel will be a major seller in the years to come.”
Cobra Golf, another high-end brand with limited distribution, has also witnessed the sale of its products in sporting goods stores. “There seems to be a changing mood out there with the big box sporting goods chains aggressively pursuing premium brands either directly or through the grey market,” says Tom McGinnis, Cobra’s vice president of sales.
Despite the emphasis on big-ticket lines, McGinnis says Cobra has no plans to expand its distribution to sporting goods. “We do not want to lose control of our image and the way our product is displayed and sold. We also don’t want to take sales away from the golf specialty shops who have educated sales staffs and offer fittings and other services.”
However, McGinnis did admit that based on the “sheer numbers” the sporting goods megastores represent, they would be “watched closely” in the future.
With or without the support of the sport’s top brands, the majority of retailers surveyed by SGB indicated that golf sales were strong this spring, and are expected to continue climbing, thanks to the focus on more expensive gear.
“Our business has been very good this year compared to the past two years,” says Ron Boreta, president of Las Vegas Golf & Tennis, a franchise chain of 70 stores. “We’re seeing a lot of better designs for the average golfer, and the customers are spending the money on the new items.” In addition to the trend towards oversized clubs, Boreta says the chain has recently seen a big sales spike in clubs with titanium heads.
H&Q’s research also supports the bright picture for the golf market. The firm’s research states that most other industry reports have understated the growth of the golf market because they did not include sales of Callaway. With Callaway’s sales factored in, H&Q estimates golf equipment wholesale sales increased 20 percent in 1994, reaching $930 million. Looking ahead, the firm projects sales of irons and woods will climb 16 percent in 1995 and top the $1 billion mark for the first time.
H&Q points to the low penetration of oversized irons, estimated at less than 10 percent for avid golfers and two percent for the total market, as a driving force for the industry’s growth moving forward.
U.S. WHOLESALE IRONS AND WOODS SALES(*)
1993 1994 % Growth
Premium-Priced $492 $687 40 Mid-Priced $164 $125 -24 Low-Priced $109 $119 9
Source: Price Waterhouse, Habrecht & Quist, Inc., estimates (* In millions)