Inventory Issues - Local vs. National

I know there has been much discussion on OEM inventory strategies, with TaylorMade running into some real issues with excess inventory a few cycles ago (I'm still seeing ads around here for buy a discounted SLDR driver, get a FW for free), and Callaway taking a different approach that seems to have worked well for them. I ran into something on Friday though that I think is a little different so I thought I would throw it out there for discussion.

First, a bit of context. I live in a city of just over 100,000, which is the largest city in the state by a good margin. We don't have Golfsmith or anything similar. We do have a Sports Authority with a very limited golf section and a Scheels (a regional sporting goods chain) that actually has an ok golf section, but rarely has the current releases anywhere near the release date. None of the pro shops in town carry much inventory, and many of them mark up the price. Unless it is privately owned, I'm confident that there is not a Trackman or a FlightScope within 150 miles. There's some chance there is not one in the entire state, but there are some ultra-private courses that may have one, so I can't say for sure. What we do have is a local golf shop that does a pretty good job. They have 9 or 10 simulators, a pretty large selection of clubs, having fitting carts, deal with OEM reps regularly, and are all around good guys.

I was slow at work on Friday afternoon, so I booked a simulator for an hour at the local shop. I was just planning on hitting some balls and playing a little bit, not trying anything out. But I got there a little early, so I was browsing around. I was looking at the Callaway rack and was surprised to still see so many XR woods and hybrids (not to mention a few X2Hots) and to see more 815s than GBB or 816s. But I didn't really think anything of it, and went off to play. When I was done, I thought I'd take a look at the Apex hybrids and maybe hit one because I've been considering adding one in place of my 4 iron. As it turns out, they didn't have any. So I looked a little closer, paying attention to fairway woods in particular. There must have been 10-15 XR fairway woods, and nearly as many 815s. But there were probably only 5 GBBs and there were just 2 816s. I asked about the Apex hybrid, and it turns out that the local shop has ordered "a couple," but they won't be getting any until March, which really surprised me. I got the sense that they would be getting the XR16 stuff much sooner though.

So that got me thinking. By all accounts, Callaway's inventory management strategy has been excellent, but in this one particular local shop, it seems that they are overburdened with old inventory to the point that they are not even ordering the newer stuff (or at least not ordering much of it). I wonder if this is a problem elsewhere, or just a specific decision on a local level--i.e., the local shop seems to have thought they were going to sell more XR stuff than they did. Or maybe it's that the local market doesn't support carrying much inventory from the higher-priced lines like GBB and Apex because they don't sell as well as the somewhat less expensive lines like XR.

* Just to be clear, I don't mean to disparage the local place. The service was great -- they said they'd order in an Apex hybrid earlier if I want to hit one. Just thought it might make an interesting discussion topic.

** Also, I can't say what the situation locally is with respect to other OEMs. I only really had time to look at the Callaway rack.

I know my local shop tends to keep his inventory to a minimum because it ends up sitting there, he does more order than off the shelf.

He has two driver/wood head covers from Callaway from the British Open, and my guess is he won't ever sell them, just doesn't seem to move inventory like he used to, he once told me he uses 2nd Swing golf to repurchase a bunch of his leftover inventory.

IceyShanks said:

I know my local shop tends to keep his inventory to a minimum because it ends up sitting there, he does more order than off the shelf.

He has two driver/wood head covers from Callaway from the British Open, and my guess is he won't ever sell them, just doesn't seem to move inventory like he used to, he once told me he uses 2nd Swing golf to repurchase a bunch of his leftover inventory.

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For a shop in this type of situation, I wonder if it isn't a bit of a catch-22. On one hand, customers are expecting you to have a decent-sized inventory so they can try things out, particularly because you use the simulators and fittings as a selling point. On the other hand, if your customers aren't buying enough to turn that inventory over (especially during the winter), your decent-sized inventory can become outdated in a hurry.

IceyShanks said:

I know my local shop tends to keep his inventory to a minimum because it ends up sitting there, he does more order than off the shelf.

He has two driver/wood head covers from Callaway from the British Open, and my guess is he won't ever sell them, just doesn't seem to move inventory like he used to, he once told me he uses 2nd Swing golf to repurchase a bunch of his leftover inventory.

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That seems odd because I thought most OEMS will do buybacks with commitment to purchase new product.

fupresti said:

That seems odd because I thought most OEMS will do buybacks with commitment to purchase new product.

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Can't comment on Icey's local place, obviously, but this is something I was wondering about. Assuming Callaway does that, it strikes me as even more odd that a shop would have a good handful of X2Hot hybrids and a whole bunch of 815 hybrids still in the rack, but not a single Apex.

bigskyirish said:

Can't comment on Icey's local place, obviously, but this is something I was wondering about. Assuming Callaway does that, it strikes me as even more odd that a shop would have a good handful of X2Hot hybrids and a whole bunch of 815 hybrids still in the rack, but not a single Apex.

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I think a lot of vendors keep older product in stock to hit price points. Why not have a Callaway club that appeals to the discount shopper on hand?

fupresti said:

I think a lot of vendors keep older product in stock to hit price points. Why not have a Callaway club that appeals to the discount shopper on hand?

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Makes sense. I'd guess that the vast majority of buyers here would be more inclined to grab an X2Hot at some steep discount than an Apex at $219.

Makes me appreciate the PGA Superstore, Golfsmith and many local shops within 15 minutes of me.

Nate said:

Makes me appreciate the PGA Superstore, Golfsmith and many local shops within 15 minutes of me.

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I know the golf shop bigskyirish is talking about, and while it's a great shop and probably the best in the state, I was amazed when I went to the GolfMart here in San Diego for the first time after moving here. The amount of clubs available to just grab and test is awesome. At the shop in Montana if I wanted to test a club they'd grab the clear tape and tape it all up and seemed to make a big production of it.

fupresti said:

That seems odd because I thought most OEMS will do buybacks with commitment to purchase new product.

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I know he gets rid of some of it that way. But not all.

I see it like the auto industry. Sooner or later it will all come crashing down.........only there will be no bailouts.

HoosierGolfer said:

I see it like the auto industry. Sooner or later it will all come crashing down.........only there will be no bailouts.

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The auto industry didnt come crashing down due to inventory.
The irony in this is their release cycles have not changed either.

I saw this same thing this weekend. I went to a golf shop in Iowa City that was ranked in the top 100 fitters by golf digest I believe. I was actually surprised by their amount of inventory that was older. I did talk to one of the sales people who said starting at the end of February they will have the new stuff coming in and having reps there. I will wait and go back, but I was hoping for more. There is a Golf Galaxy in Des Moines that I could go too when I get time.

Inventory is tricky. We're a Pro Shop that sells a fair amount of product, most of which is from demo days and product launches. The inventory we keep on hand tends to be wedges, drivers, and putters. Generally speaking, those items tend to be the ones that can be adjusted to fit people from stock (lie, loft, etc). Irons, hybrids, and fairways are generally ordered, only takes a couple of business days generally.

As far as buybacks. The more you sell, the more they buyback.

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I've seen the same thing in most small towns around here except for one big glitch. The old inventory on hand is rotting on the shelves...and the price still hasn't been discounted. Like, Cleveland Classic 290 and Titleist 910D2 for $349.00 as an example. Good luck with that nonsense.

Do shopowners have the luxury of forecasting sales and ordering accordingly? Or do the larger OEMs force them to buy product by the crate and not by the item if they want new products?

fupresti said:

That seems odd because I thought most OEMS will do buybacks with commitment to purchase new product.

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From what I've been told the loss one the original purchase price is too much of a loss to consider selling back to Callaway. Then you have to buy new products and the viscous cycle of more inventory continues. I've also heard this same thing said about taylormade since both these OEM sell direct to consumer.

I wonder, did that same shop have old inventory of Titleist and ping?

JB said:

The auto industry didnt come crashing down due to inventory.
The irony in this is their release cycles have not changed either.

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Ya, but the OEM's can not keep up this pace of rapid release's. Sooner or later there is nothing to gain. I hope I'm wrong, but there is no way the gains they are all claiming from release to release is true. Like I've said before, if I gained every yard claimed during the past 15 years on driver release's alone, I would be driving the ball 750 yards........

The profit margin is better if they can sell the older club than they would get in company credit returning it and they probably figure they can order a newer club if someone really wants it.

My local Golf Galaxy has a good amount of XR stuff still in stock, but also turns a bunch of the new Callaway, too. I was thinking about an 816 fw a few weeks back, they had 2 in stock in the exact config I was looking at. I went back 2 days later and both were gone. They have a ton on TM R15s in both driver and fw, too. I'm just north of Charlotte, NC, and the weather has been very conducive to golfing until just recently.

HoosierGolfer said:

Ya, but the OEM's can not keep up this pace of rapid release's. Sooner or later there is nothing to gain. I hope I'm wrong, but there is no way the gains they are all claiming from release to release is true. Like I've said before, if I gained every yard claimed during the past 15 years on driver release's alone, I would be driving the ball 750 yards........

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The gains have nothing to do with release schedule.
They are compared to when most golfers change clubs and the disclaimers say so.
They said the same thing about computers, cell phones, and every other consumer product.

FWIW, go back 30 years and look at the marketing. It was FAR worse than it is now with outlandish claims.

There are always gains, technology changes rapidly. Whether they are the same for every person or any person, I will never understand the idea that choices are bad. All it does is bring the consumer more options and better prices.

JB said:

The gains have nothing to do with release schedule.
They are compared to when most golfers change clubs and the disclaimers say so.
They said the same thing about computers, cell phones, and every other consumer product.

FWIW, go back 30 years and look at the marketing. It was FAR worse than it is now with outlandish claims.

There are always gains, technology changes rapidly. Whether they are the same for every person or any person, I will never understand the idea that choices are bad. All it does is bring the consumer more options and better prices.

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Choices are good and I love Callaway Golf, but not for a second do I believe the NEW XR line is enough different than last years to warrant the cost of buying new clubs. This is true in all things we consume. It is for this reason my vehicle is soon to be 6 years old. Will I buy a new one, sure at some point but it is not needed today as there is nothing to gain.

Try selling last years XR clubs. You might as well give them away.

HoosierGolfer said:

Choices are good and I love Callaway Golf, but not for a second do I believe the NEW XR line is enough different than last years to warrant the cost of buying new clubs. This is true in all things we consume. It is for this reason my vehicle is soon to be 6 years old. Will I buy a new one, sure at some point but it is not needed today as there is nothing to gain.

Try selling last years XR clubs. You might as well give them away.

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Nor do you have to.
Others think they are.
But as I have said all along and this has nothing to do with a company, a release schedule has nothing to do with it, inventory does.

There is no difference if a company makes 5 new products and 10,000 each of them or a company makes 1 new product and 50,000.

Everybody wants the most choices for least amount of money with every purchase they make regardless of product. Thats the way the mind thinks. Its strange to me that people root and ask for new brands, and yet not new products, when the end result is exactly the same number of products.

Its like someone asking Ford to only make the Focus, because that is the one they like and not the F150, Fusion, Escape, Mustang, C-Max, Fiesta, Taurus, Edge, Flex, Expedition, and Transit Connect. And then god forbid Ford puts every single one of those models out every single year.

With all of that said, everybody has a right to their opinion, at the end of the day, I think most of it comes from personal feelings about wanting the newest.

My take on it is that clubs are eye-candy. All clubs must conform and club makers have to figure out how to make them different without making them too different. Every model that the OEM's produce is targeted to a certain level of play. Features and benefits fit the club to those parameters. Guys that play blades, aren't worried too much about a thin topline, whereas higher handicap players feel more comfortable with a thicker topline. They change it just enough to make it interesting. Sometimes it wouldn't surprise me if the performance factors were secondary with features and benefits plus marketing taking over the primary goal.

Just to be clear - I didn't mean to begin the age old debate about release cycles, resale value, whether golf clubs should be investments, etc. My intent to was to discuss inventory management on a local vs. national level, using Callaway as an example because they seem to have done exceptionally well with their company-wide inventory strategy, but I was surprised to find that my local shop's inventory situation (perhaps for good reason) seems to be more like what we've seen from other OEMs--a lot of older inventory on the shelves, but not much of the new stuff.

bigskyirish said:

Just to be clear - I didn't mean to begin the age old debate about release cycles, resale value, whether golf clubs should be investments, etc. My intent to was to discuss inventory management on a local vs. national level, using Callaway as an example because they seem to have done exceptionally well with their company-wide inventory strategy, but I was surprised to find that my local shop's inventory situation (perhaps for good reason) seems to be more like what we've seen from other OEMs--a lot of older inventory on the shelves, but not much of the new stuff.

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I for one didn't read your post and immediately think release cycles, etc.....:act-up:

ChetSteadman said:

My local Golf Galaxy has a good amount of XR stuff still in stock, but also turns a bunch of the new Callaway, too. I was thinking about an 816 fw a few weeks back, they had 2 in stock in the exact config I was looking at. I went back 2 days later and both were gone. They have a ton on TM R15s in both driver and fw, too. I'm just north of Charlotte, NC, and the weather has been very conducive to golfing until just recently.

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Inventory decisions have always interested me. I realize end caps are premium and most stores (golf included) layouts are designed to keep consumers looking at various items on your way to your actual item of interest. For example, that's why milk is located at the rear of a grocery store.

Locally, outside of the pro shops at the various courses, Golf Galaxy is the only store (other than Sports Authority) available to service the areas 2+ million population. However, that one Golf Galaxy is rapidly becoming a golf clothing store that sells shoes (any brand you want as long as its FootJoy). I briefly walked around in Golf Galaxy on Sunday. The newest Callaway clubs (irons, hybrids, or drivers) were XRs and the newest Pings were G25s. I haven't looked at their Nike, TM or Mizuno displays since Oct but nothing appeared to have changed. None of the boxes of Srixon balls were marked "spin skin" and there were still empty spots where the Bridgestone RX and RXs should go. The "Duck Dynasty" balls were gone, though there were 10 boxes of Mojo's and a few of Sponge Bob available.

Now I'm not involved in the industry so take my comments with a grain of salt. But unless GG Corporate HQ is planning on leaving this market of 2+ million people, somebody is really doing a poor job of ensuring that this store is properly stocked with inventory. Yes, I'm impressed that you have 2 racks of "Happy Putters" (?) and 10 Scotty's but the 4 Betti's and handful of Odyssey and Pings just don't cut it.