COVID-19 and the Impact on Golf’s Indoor Brands

As we’ve discussed, COVID-19 is having an impact on the golf equipment industry, but it’s not all doom and gloom.

What was true last week remains so this week. Golf retail is in a mostly static, entirely unprecedented situation. Everyone is in a holding pattern, though it’s not at all clear for how long. May? June? July? Who knows?

If there’s a uniform agreement, it’s that golfers are ready for whatever is next, insofar as next just means we’re past whatever this is. Not over, just beyond.

Everyone is anxious to move on, but we’d be remiss not to discuss several companies who are off to tremendous starts in 2020, in no small part due to COVID-19. It’s awkward because no one wants to celebrate while others are cutting staff or trying to stay afloat, but it’s a reality nonetheless.

The Situation

Many of us are stuck in a COVID-19 haze somewhere between stay at home orders and “How is it still Tuesday?” So, even though the latest National Golf Foundation report shows 48% of courses open for business, the golf season hasn’t started in earnest. Not even close.

The more common picture involves a basement, garage, living room, or backyard. Add a putting mat, hitting net, training aids, and some online instruction videos, and for most of us, that’s what the 2020 golf season looks like so far.

When golf, as it’s typically played, isn’t an option, golfers find some way to stay engaged. When forced to adapt, that’s exactly what happens.

Product Cycles

Golf equipment sales start slowing down in the fall, and generally, this is when activity picks up for hitting nets, putting mats, and other things that allow us to get our golf fix during the winter months. In the spring, right about when we stop to try and smell the Azaleas, the switch flips. Golfers roll up the putting matt or put the sheet that doubled as a hitting net back in storage.

But for the first time in a long time – maybe ever – that’s not happening. Again, we have COVID-19 to thank. Many of the indoor product companies are back-ordered for weeks, while others are setting up new factories in countries not named China to try and expedite production. It’s a level of demand that offers a nice boost in the short-term, but is it sustainable?

Putt Out

The PuttOUT Pressure Trainer is a staff favorite at MyGolfSpy and still holds the unofficial title as the “most addictive” training aid in golf. Once upon a time, PuttOUT hoped to sell 5000 units. Now it’s pushing up against 300,000. Sometimes it’s a blessing to underestimate. Given the initial success of the devilish device, it’s no surprise that PuttOUT had to restock both the parabolic ramp and putting mat several times this spring, the last of which came in early April.

PuttOUT is a division of Therefore Design Consultants. The primary purpose of the firm is to help clients navigate the journey “from ideation to production” across an array of product categories. To date, PuttOUT has been a pleasant surprise but certainly not the primary revenue generator. As such, there’s some situational irony that is difficult to ignore.

The majority of Therefore’s paying customers are more typical businesses that rely on a healthy economy and receptive consumer base to contract out for design services. As with most private sector businesses, the future is one big question mark. Cost-cutting is a vital part of most short-term COVID-19 strategies, and this likely includes third-party consultants like Therefore.

As that picture clears, what seems most certain is more golfers than ever are investing in at-home practice setups. It’s a trend without a visible end in sight, so what started as a half-cocked fun side project now might be Therefore’s most profitable short-term asset.

Big Moss

The abrupt tsunami in demand for putting mats is a simple case study on the difference between want and need. Before you go entirely off the rails, I get that no one needs a putting mat. For that matter, I don’t need a freezer stocked with McConnel’s ice cream either, but whatever.

Before March 2020, I’d wager most in-home training setups were a matter of convenience. They provide a handy, secondary option to work on something golf-related during the long, seemingly endless winter months. In the current situation, at-home practice is, for many, the only game in town. And so long as everything is operating behind a patina of uncertainty, it’s fair to think this might not be a one-off occurrence.

Our #1 putting mat of 2020, Big Moss, is a simple product with a simple name. At face value, it looks pretty basic, but that’s the point. It’s engineered for durability and intended to give golfers a putting/chipping solution that looks, feels, and behaves like a tour-level putting green.

As a consumer, it’s frustrating when the product you want it out of stock, but so far, lack of inventory has been less of an issue for Big Moss. Owner Tony Persico has been at this for 20+ years and built his factory with the ability to scale up production as needed. As of today, Big Moss is fulfilling orders and shipping within a few days. That doesn’t mean the situation is without challenges. Anytime you have fewer employees on hand, it means everyone has to wear more hats. Several years ago, Persico ditched the answering service that, while convenient, couldn’t really engage with potential customers and explain product details the way he could. So, he’s now the owner, office assistant, customer service department, and part-time putting mat builder.

Most companies outsource some piece of the manufacturing puzzle. As a result, any disruption in the supply chain can cause delays in production. Because a putting mat isn’t a consumable product, some golfers won’t be willing to wait for the next batch. Never underestimate the ability of availability – or in this case, the ability of scalability.

GET FIT FOR YOUR GAME WITH TRUEGOLFFIT™

Unbiased. No Guesswork. All Major Brands. Matched To Your Swing. Advanced Golf Analytics matches the perfect clubs to your exact swing using connected data and machine learning.

SEE MY RESULTS

Wellputt

If all of this had happened a year ago, Wellputt could just have easily ended up on the wrong side of COVID-19 story. Based in France, Wellputt set up a warehouse in Florida during the fall of 2019. Bringing distribution closer to the growing customer base in the US made sense objectively and financially, but no one could have predicted this.

When the economy ground to a halt in March, Wellputt had a fully stocked warehouse. Inventory is beginning to run low and needs replenishment. If there’s a financial equivalent to striking while the iron is liquid-magma hot, this was it.

Considering the alternative isn’t something Wellputt wants to spend much time thinking about. That said, what seemed to be a smart, if not routine business decision at the time might end up being something far more significant.

Many companies are seeing a surge in demand from the at-home golfer, but Wellputt is also experiencing something else. Its products are designed around training concepts and include graphics suitable for several practice drills. As such, Wellputt works to differentiate itself from competitors by working with teachers like Cameron McCormick (Jordan Spieth’s instructor). It’s also received bulk orders from several clubs using the mats as a way to stay in touch with members and continue short-game instruction.

Perfect Practice

Ed Mileto and Oren Kantor started Perfect Practice with modest goals. With access to materials more typical of the textile industry, the duo felt it could come up with a putting training aid that gave golfers (particularly really, really good ones) something that rolls like the courses played on tour.

The company experienced solid, if unspectacular, growth over the last several years and all indications pointed toward 2020 being a banner year. Without any external debt obligations to satisfy, Ed and Oren took every available cent of capital and placed a large order just before the Chinese New Year. Based on even their most optimistic projections, this should have been enough inventory to last through Father’s Day in mid-June.

It didn’t even make it through March.

Before the onslaught of buyers, there were several days of serious trepidation. With restaurants, theaters, and brick and mortar retail shutting down, no one was buying anything. The worst-case scenario seemed most realistic. Ed and Oren had purposely overbought and had a warehouse full of putting mats with no one to buy them. Closing up shop and liquidating everything appears far more probable than what actually happened. Sometimes the truth is stranger than fiction.

The production capacity of the supplier is 20,000 units per month. Perfect Practice sold more than 10,000 units in a single day. And even though it can’t meet all of the current demand, Ed and Oren expect orders to continue pouring in. In this case, people are willing to wait a bit to get what they want, and with 90+ PGA Tour pros vouching for the product, many want the Perfect Practice mat.

This unexpected windfall is giving Ed and Oren some latitude to think beyond the second quarter of 2020. With new and broader ambitions, the plan is to immediately sign a major name as the face of the brand. Beyond that, the hope is to expand the product line to include various accessories and see where that leads.

After all, you can’t sell just putting mats forever, right?

Proactive Sports Group

Often a single company will work as a distributor for multiple brands. ProActive Sports Group serves in that capacity for both ClicGear and its in-house brand of putting mats, along with several others.

The market response to the Varispeed putting mat mirrors that of other companies. A tense, but short period where everything seemed to be falling apart, followed by a brief but fevered run on every product in stock.

Hindsight is always 20/20, but ordering as many Varispeed putting mats as it could before the tariffs kicked in, proved to be a prescient move. It’s the primary reason there was enough stock to take advantage of the short-term uptick in demand.

Clicgear

Same result. Different impetus. A year ago, I called for the death of the traditional 2-person golf cart. If this is the end, I sure didn’t see it going down like this. Nobody did. Under a cloud of COVID-19, the entire industry is reevaluating how golfers should best access the course. For now (and the foreseeable future), that means more walkers and fewer riders. It also means pushcart sales are up. Way up.

Even courses that historically patronized such mediocre forms of transportation are asking to buy a small fleet. Without caddie services, members might have to get used to the look of pushcarts next to valet parking.

Starting the second to last week in March, “it went absolutely nuts,” says Todd Hansen, National Sales Manager for ProActive Sports. “It’s been that way since.” Clicgear expects the demand will continue for the foreseeable future. Clicgear’s inventory will be thin in April, but Hansen anticipates being able to better fill “at once” orders in May. Even so, every pushcart on order (roughly 1500) already has a buyer.

Consider the perspective of course professionals and general managers. Given everything that’s in flux, a fleet of pushcarts might not be anywhere on the priority list, but if this drags, some courses will certainly give some thought to having a fleet of pushcarts on hand. It’s counterintuitive to think about spending money when you’re not making it. That said, without the option of riding carts, they’ll invariably seek the next best option.

Sun Mountain

As a brand, Sun Mountain has its hands in several cookie jars. Like many others, its pushcarts sold out quickly. But that’s not the interesting part. Typically, Sun Mountain sells over 90% of pushcarts through on/off-course retailers. However, online shopping was up 265% in March. What’s more is an unexpectedly significant number of people went online to order replacement parts (tires, brakes, handles) choosing to fix, rather than replace, an existing cart.

If consumers are content to purchase directly from the manufacturer, how might this change the nature of distribution and typical big box retail?

Finn Scooters also operates under the Sun Mountain umbrella. Single-rider vehicles remain intriguing, but courses aren’t flocking to them as the short-term solution for getting golfers around the course more efficiently.

On paper, a single-rider cart makes arguably too much sense in our COVID-19 environment. With one golfer riding in every cart, why not just have a single-rider option? It’s more efficient, less damaging to the course, and in my experience, a hell of a lot more fun.

That said, adding a fleet of vehicles involves more moving parts than buying a 12-pack of pushcarts. It’s also roughly 15x more expensive. Pushcarts are a short-term solution. Single-rider vehicles are an investment. Moreover, lease agreements on standard 2-person carts generally last three years. Course executives make budget decisions at the end of the golf season, not in May. So, even if a course wanted to order a small fleet, funds for this year have likely already been allocated – and with fewer golfers on the course and restaurants closed, there’s less revenue coming in for many.

Beyond that, courses need storage space and infrastructure to charge vehicles. And all of this assumes a course has a clear understanding of projected usage and determined whether it should lease, buy outright, or look at revenue sharing.

Even with this vast set of unknowns, a course in Oregon just ordered 12 cycles. That’s three times the average order for a new course.

Competitor, Phat Scooters (based in Tempe, AZ) set a sales record in April. Only one of its models is golf-specific. The others range from general neighborhood cruising and commuting to the portable Phlex 2.0.

While the sales are 100% real and at the end of the day, the money all spends the same, circumstances are just bizarre. Maybe unpredictable is a better word.

Models are built around assumptions, but whatever this is renders so many of those assumptions nearly useless. It’s more like climbing over a mountain only to be able to see the next peak. What lies beyond that is anyone’s best guess, but somehow every company and golf course needs to plan for it. Or at the very least, try to.

PARTING COVID-19 THOUGHTS

I loathe the term new normal because it doesn’t really tell us anything. Some things will look the same. Others will not. The landscape is continually evolving, but with any change comes opportunity.

The pockets of positivity are out there. That doesn’t dismiss the dire circumstances in which many find themselves, but the two aren’t mutually exclusive.

Whatever happens over the next year will leave an indelible mark on the industry. It may also come to be known as “the year dad built a mini-golf course in the backyard.”

It’s all a little bit weird. And even though over half the courses in the US are open, it’s anything but business as usual. Budgets, projections are all out the window. We’re all faced with different realities – or as someone said, we’re not all in the same boat, but we’re in the same ocean.

A year from now, things will look different. Some changes will be small and probably go unnoticed by most. Others will be impossible to ignore.

If there’s a single certainly, it’s that we’re all running out of reasons to explain a shoddy short-game.

The post COVID-19 and the Impact on Golf’s Indoor Brands appeared first on MyGolfSpy.