Among the many facets of the golf business, pro shop retail has always intrigued me. As a little boy, my dad owned a men’s clothing store so I guess I was introduced to it at an early age. The first time I visited the annual PGA Merchandise Show I was intrigued by the many choices golf pros and shop managers have and decided to ask my friends at Royal Dornoch in Scotland about their retail operation. Retail Manager Brad Smith was nice enough to oblige.
Since Royal Dornoch, as a World Top 10 golf course sees so many visitors, and there are many “souvenir” purchases, I asked what are the most popular items. He indicated that Headcovers, Headwear and Polo Shirts are the biggest soft good sellers in the shop. Ball markers are always a popular item too. The biggest Brands are Peter Millar, Holderness and Bourne, Kjus and PRG (Accessories).
Of particular interest to me has always been how pro shops have evolved from where folks purchased clubs to being focused on soft goods. Having observed very little equipment I asked Brad about that. He said: “We have a small commitment to Titleist, but we have never really pushed it. Such small Margins so isn’t worth chasing. Plus everybody needs fitted these days and we don’t currently have the tools or resources. New clubhouse will change that. Also, only about 300 local members, most of our sales are visitors, very rare they are coming in for a driver fitting 20 minutes before they play the course. But we see a huge opportunity here with our new clubhouse.” With Dornoch seeing so many visitors, the shop’s revenues are generated heavily from visitors (85%) which also diminishes the focus on equipment.
Smith also stressed that margins for hard goods (clubs, balls, etc.) are much smaller than soft goods, and that you can’t really put club crests on a golf club, making it easier for the customer to shop online, possibly at lower pricing. Since the crest makes any item unique, price matching with online retailers isn’t as much of a challenge. As a result, Dornoch’s cost of sales is typically less than most shops hovering around the 50% mark.
Being old-fashioned and a fan of cotton, I often kid Brad about having so few options. First, he indicated that a cotton polo shirt is 25% to 30% more expensive than the modern tech fabrics and that with all the visitors they tend to be more price-sensitive than at one’s local club. I asked about some of the current trends, in addition to tech fabrics. Smith responded: “Trends go 360, wasn’t logo ago everything was camouflaged, then it was crazy prints, now its back to being subtle. There is a big trend towards more reusable and environmentally friendly products, like cotton, problem is its expensive and actually not very good material, so companies are making cotton blends. Everything is driven by price and performance.“
Interestingly, Royal Dornoch doesn’t do a tremendous amount in rental clubs, but gives out free pull trolleys. Smith says: “70% of our visitors will take a caddie. It has grown, but it wont grow too much as we already have 20 electric trolleys on site, and not all the time will they go out. We only have 5 buggies available for hire due to the course not being set up for them. Hire sets (rentals) is storage space, we currently have 16, we will look to increase to 20, but they are not as in demand as you think.“
Royal Dornoch is in the process of completing a new clubhouse facility which will provide more than twice the space of the current shop. Smith indicated that the thing he’s most excited about is not only having most sizes and colors right there, but also “pop-up” counters (think Apple Store) so the staff aren’t all in one place and customers have multiple locations in the shop to complete a transaction.
The most intriguing part to me has always been the buying (stocking the shelves) part. Smith claims to be “a numbers man” and acknowledges that you analyze the numbers and then take a well-educated gamble. “As for picking styles and brands, you look at what’s coming through your front door, look at what is trending in the market. When you go to the PGA show, you are again are taking in what stands are biggest by size, have they grown, which are busy, you are also looking at colours, what are the most popular colours.” He emphasizes that a lot of it is a gamble, I tend he selects products that you like, which makes it easier to sell. Of particular interest was his comment that “Blue sells, 70% of the market will buy a shade of blue, mainly Navy, so you build stuff around that.” When I looked in my closet and saw so many navy blue RDGC items I suppose I understand.
