Hopes that the U.K. golf market would recover in 2010 were quickly dashed by the very cold weather at the start of the year, paired with continued economic sluggishness. In many parts of the country, snowfalls made it hard to play until the end of March, and retailers could not make up for this loss in the remainder of the half-year. To make matters worse, the country suffered the wettest July on record, sparing only the southeast of England – and August was equally calamitous.
The downturn was worst in golf equipment, with sales declines in double digits for some categories of clubs. The drop in sales of golf balls, estimated at about 8 percent for the half year, is a strong indication that the number of rounds played continued to diminish for the period.
In this context, sales of apparel and footwear proved relatively resilient, but with a very marked shift toward either cheaper or more expensive products. Talks with suppliers and retailers indicate that sales of golf apparel have slid by another 5 percent in the half-year for shirts and sweaters, albeit a little less for rainwear. The heaviest losses were incurred by secondary brands in the middle of the market, while sales continued to increase for more technical brands such as Galvin Green.
The pattern was even more striking for footwear, where sales declined by about 3 percent for the half year, although average selling prices jumped by 8.5 percent. This has entailed a further increase in market share for Adidas, given the fact that this brand is the U.K. market leader for footwear retailing at more than £100 (€117.6-$156.7) per pair. The explanation is that many consumers are trying to buy less, but when making inevitable purchases like a pair of shoes, they opt for higher quality that will last longer.
Some off-course retailers and their electronic counterparts have benefited from the parallel trend among consumers to search for cheaper products. However, the market situation has mostly benefited retailers with relatively efficient stock management, either off-course on on-course. As an example, Foremost, the buying group, which has provided tools for its members to improve on this front, has been rewarded with a smaller drop in margins than in sales for the first half of 2010. On the other hand, some of the smaller independent retailers and pros have been struggling.
Overall, the guarded optimism that continued to prevail in the second half of 2009 has turned into a more skeptical outlook. Not only is the market continuing to shrink, but most distributors and retailers fear that the market will remain morose in 2011 – with ongoing economic uncertainties and increasingly unstable participation patterns.
According to a report that we have just released on the British market for golf clothing and footwear, the golf apparel market in the U.K. fell by more than 8 percent in 2008 and by between 3 and 5 percent in 2009, but retailers’ inventories at the end of last year were said to be cleaner than before.
The study, which is distinct from the one that we compiled last year for the British Golf Industry Association on 35 other countries in Europe and Africa, provides many interesting facts and figures about the evolution of golf participation in the U.K., especially among women and youngsters, and the development of inbound and outbound golf tourism, among other topics.
The British golf apparel market strongly distinguishes itself from others in Europe, due to a low proportion of women’s garments sold, relatively low prices and the distinctive demands of the country’s male consumers – which can be described as a mix between American and European tastes.
In contrast with the equipment side, where on-course and off-course retailers divide the market almost equally, on-course retailers play a more important role in the area golf clothing and footwear.
The U.K. sports apparel and footwear market has seen increasing demand for technical sports clothing in the last years, and the same could be said for golf. This helps to explain the steady growth of the U.K. golf apparel market in the five years up to 2007, even though registered participation has steadily dropped in England since 2004 and also declined from its peak in other parts of the U.K. Another factor has been a trend among specialty retailers to place increased emphasis on apparel, as a means to make up for shrinking margins in the equipment business.
This growth came to an abrupt end in 2008 as the tough economic circumstances placed further pressure on golf participation, and sharply reduced consumer spending as a whole. The downturn accelerated changes that led to concentration at all levels in the U.K. golf business, including golf course operators. At the same time, retailers have been reducing the number of brands carried in their stores – favoring suppliers who can offer impeccable and flexible service, as well as investments in merchandising.
Adidas and Nike have made a very good job in the British golf apparel market, especially in the area of shirts. Galvin Green has made strong headway in the area of outerwear, but according to figures by SMS, two British brands, Sunderland and Pro Quip, recently held the leadership in terms of volume. Interesting changes have taken place in the equally important golf knitwear market.
Estimated by SMS at 875,000 pairs in 2008, the volume of the U.K. golf footwear market is relatively high compared with the number of registered players. Three brands dominate it, but a couple of others have carved out their niches in the sector.
Many golf apparel brands focus the largest share of their European investments on the U.K. market, due to its size, its influence and its ties with the U.S. They use different business models in the country. For some Swedish brands, such as Daily Sports and Galvin Green, the U.K. is the biggest market, but while the first one continues to use a distributor in the country, the other one recently set up its own sales subsidiary in the U.K.
Our report details the ways in which some of the major players cover the market. This includes interesting methods such as the “credit crunch buster” introduced by Premium Golf Brands at the end of 2009. With a few interesting exceptions, most foreign golf apparel brands cover the market through agents. The report outlines successful examples of market penetration such as Under Armour and unsuccessful ones such as Chervò, giving reasons for their different performance.
Pro golf shops make up 55 percent of the core retail market, but they are increasingly threatened by online retailers such as Onlinegolf, which have become the leading customers for some golf brands. Most pro shops are members of one of the two major golf buying groups. The bigger one of the two, Foremost, recently went through a major structural change whose details are laid out in our report. Based in Scotland, TGI Golf is more exclusive and does not offer centralized invoicing and payments, but has strict rules for working with suppliers and for minimum orders by its members.
The establishment of golf departments in large generalist sports retail chains has been a recent trend in the retailing of golf products. JJB Sports made the first move and has been followed by DW Sports, which took over its former fitness centers, and by Sports Direct, the retailer controlled by Mike Ashley. The latter has been using Sport Direct stores to market its own Dunlop brand, among others, and it has bought a small chain of golf stores, European Golf, that is becoming responsible for the management of the sports departments in Lillywhites and Sports Direct stores.
This report is immediately available for €299, with a discount of 20 percent for subscribers to SGI Europe.
