A ROUND BALL IN A SQUARE HOLE
The retail conundrum Nike never solved
Other than figuring out how to best leverage Tiger Woods, Nike’s most challenging issue was the structure of the retail golf business, which hindered the company’s ability to reach potential customers.
“Fundamentally, golf is still a relatively small business which does not lend itself to a mass-market
distribution model,” says Hedges. “With less than 7% of the adult population playing the sport and some 50% of golf equipment sold through professionals’ shops, golf equipment brands cannot sustain a prime high street retail position. Across the world, even the largest golf retailers are in secondary locations because sales just cannot support prime locations and the associated costs.”
This created a problem for a massive company like Nike, which usually reaches its customers on the high street or via its own online stores. “Successful golf brands have to work with a very large number of small retailers,” says Hedges, “whereas Nike is more geared to mass distribution.”
This explains why the golf industry remains the realm of golf-only brands such as Ping, Mizuno, Callaway, Titleist and the adidas-owned TaylorMade, which is currently being sold by the German giant and major Nike competitor.
Hedges believes the complexity of the buying process in golf means that the influence of the PGA golf professional holds more weight than an endorsement by a well-known tournament professional – a fact that is evidenced by the still high percentage of total on-course sales.
“The unique facility of having the coach, custom-fitting options and retailing being at the point of purchase means club pros have a huge influence. Our research has shown that a PGA club professional’s personal endorsement is eight times more powerful than that of the top tournament professionals. Golf brands recognise this and use that pyramid of influence by ensuring that the club professional is supported. Massive brands such as Nike tried to engineer their preferred supply chain and business model into a market that could not and would not follow it.”