Monday, July 18, 2016

Right to the Bottom Line

The electronic payments industry has continued to grow and evolve with new technologies, but the risks have grown substantially too. This is an important part of green grass retail which rarely is discussed. Although new technologies enable business owners to accept electronic payments in new ways to grow their revenue, the requirements of businesses to protect card data and the risks of fraud, breaches and chargebacks have grown even more. As the payment processing marketplace has become more risky, it’s also become more competitive. Profits have eroded from traditional pricing methods causing a proliferation of “unbundling” of discount rates, new fees to be introduced and new pricing methods. Unfortunately these market changes have increased the potential for merchants to have poor experiences with providers due to information being explained poorly or not at all.

Technology continues to drive growth in non‐cash payment acceptance and helps create new opportunities for merchants to grow sales, revenue and enhance their customers shopping experience. One current trend we’re seeing is the increase in mobile processing using smart phones and tablets. The cost is often significantly lower to start up when compared to older technology using wireless POS terminals. This is largely due to merchants often already having smart phones or tablets, which eliminates the up-front equipment and recurring monthly service costs of wireless coverage. Today, it’s more important than ever for business owners to select the right business partner to provide their payment processing needs. The “right” partner should really act like a “true” partner, to not only identify opportunities to leverage today, but also prepare merchants for the future. It's unfortunate many merchants focus on their “rate”, only to find later they’re paying more on other billing items that offset the savings they were expecting. As a result, too many merchants have processors impose questionable billing and contract terms, don’t help merchants leverage technology to grow revenue and aren’t guiding merchants along the turbulent path of securing card and business data. 

Greg Lecker at Sawgrass Country Club and myself had an opportunity to meet with Scott Knabusch who is a managing partner of Merchant Pro Express and discuss this aspect of the business. This entry is an effort to transcribe the essence of what was a rather long but fascinating conversation.

Scott, I hear a lot about risks from accepting credit cards and have seen multiple breaches in the news. But isn’t security better today than in the past and wouldn’t fraudsters target big companies versus the regular “mom and pops”?

In short, yes, security is better today than in the past, but technology has also helped fraudsters develop new tools to commit fraud and hack into systems to steal credit card data and cardholder identities. Protecting cardholder data is now a responsibility shared by all three players, credit card processors, merchants and cardholders. The days of merchants relying entirely on the credit card processor to provide security alone are long gone. Remember, if fraud or worse, a data breach occurs, the reputational damage alone could put a merchant out of business before even factoring in any financial impact from fines and penalties. So let’s look at the three players responsible for protecting data and what each can do. First, most have already heard about “chip cards.” The chip embedded in the card creates a unique code for each transaction using an algorithm which protects the cardholder at time of purchase. Essentially the only way a fraudster could commit fraud with a chip card is to steal the actual card. In comparison, the information stored in the magnetic strip can be loaded on a blank card and used to commit fraud. In Europe and Canada, EMV chip cards use “chip and pin”, a 4 digit pin number much like a pin for debit transactions. However, the U.S. standard is “chip and signature” currently with pin likely to come as an enhancement in the future. As of October 1st, 2015, the card brand associations (Visa, MasterCard, Discover and American Express) regulations shift the liability on fraudulent transactions from the bank that issued the card to the merchant.

So now merchants carry the risk and financial liability of potential losses if they aren’t processing using chip reading equipment or POS software. This is not a required regulation, but a shift in liability and only applies to card present transactions today. So merchants can still swipe the traditional magnetic strip. They just take on the added risk of losses should they have any transactions determined to be fraud and they didn’t process via a chip. Two additional security solutions that the industry is slowly adopting include tokenization and point‐to‐point encryption. Tokenization protects data at rest, such as while stored in a payment software application and point‐to‐point encryption secures data in motion, such as during transaction processing. Arguably the most important point is to think of these three security measures like a bridge and you need all three security measures for the most secure and stable bridge. Without anyone of them, the bridge becomes unstable and is not secure. The ideal payment partners in your market will provide education on security as it relates to your specific business, what you’re already doing well and where you have potential risks. The role of the payment partner is to identify opportunities to improve securing card data, discuss the cost implications with the merchant and help guide the merchant to make the best decision for their business.

When I ask multiple business owners how they select their payment provider and keep their costs down, many cringe suggesting it’s all too complicated and confusing. Why do you think that is and how can merchants select better partners and understand how to minimize their costs?

Craig, unfortunately many merchants have had poor experiences and it’s typically caused from the same few repetitive issues. For example, some providers have very confusing agreements and billing, while even those that don’t, they may have a sales representative that isn’t trained well or is intentionally avoiding sensitive questions for fear of losing a potential sale. The first suggestion would be to select a partner with a sales rep who is industry certified to hold the highest standards of education and integrity. This certification is called, CPP or “certified payments provider”, and is much like other industry’s that require passing a test to help certify a degree of integrity and credibility.

One common risk to avoid is the long contracts sometimes required. They can be for terms as long as 3 or 5 years and include expensive termination fees, worse yet are the fancy formulas called “liquidated damages” resulting in thousands of dollars when cancelling with those providers. Use common sense, if everything is disclosed openly and discussed freely, then you’re probably working with an honest and educated sales rep. However, if terms are hidden on the back side of agreements in fine print or not disclosed at all, then you need to avoid these providers and sales reps. Unfortunately, some merchants get fooled by sales reps who only show savings from part of the billing, but don’t show other costs that may be higher than the merchants current provider and result in less savings than promised or none. One way to prevent this is to request “interchange and assessment pass through cost” with a small, but fixed mark‐up. The mark‐up is called out, clear and the rest should be cost. You also want to specifically ask that no “surcharges” of any kind are included in your pricing. It’s not uncommon to have these fees included that are pure profit to the processor, but communicated to the merchant as if they’re “just cost”.

Lastly, many merchants find their monthly billing statement confusing or don’t understand it at all. This is partly due to the significant proliferation of pricing categories, called “interchange”. However, the best industry representatives can educate their merchant rather easily by help identify what costs are within control and which are not. Many merchants remain confused about what they are paying simply because their provider has never offered to review a billing statement with them.

How can merchants today leverage technology to help grow their business and simplify the customer experience?

Technology has been a positive influence on business by offering new solutions to grow sales, lowering costs of older technologies and improving the convenience factor. One great example of this is through mobile processing. Today, most merchants already have a device they can use in a smart phone or tablet or can buy one for hundreds of dollars, not thousands. With a simple wifi signal to connect to, these mobile devices can process payments without all the higher equipment and coverage costs. Today, many golf courses are replacing the costly wireless terminals used on their beverage carts with a mobile device or adding one if they don’t use one currently. Not only does this open the potential for more sales but the cart drivers usually make more in tips on credit card transactions as compared to cash. 

More merchants are beginning to use integrated POS software solutions that tie together multiple applications in one portal or business enterprise solution. The evolution of cloud‐based software applications is driving down the cost, thus many traditional “mom and pop” owners can now leverage these advanced solutions too. This results in simplified solutions for the business, employees and the customer. Growth can come from adding a website to sell products and accept payments from as well. Start these discussions early so you avoid investing in a solution only to find your processor isn’t certified with one or multiple components of your website. A comprehensive reporting tool will help consolidate reporting as needed to manage costs across the entire organization and simply the accounting processes.

What costs or fees are avoidable and how can merchants prevent these from being slipped in on their account without knowing or being misinformed?

Craig, to start merchants should watch for avoidable up-front fees and costs. Avoid paying fees like, application fees, reprograming fees, debit setup fees and other start up related fees. Also, try to purchase any equipment up front if you can spare the capital. Most processors offer a leasing option and some reps push terminal leases hard, because that’s where they earn the highest commissions. However, on average a merchant will pay two or two and a half times the cost of purchasing when comparing to the total lease program costs. Purchasing up front will cost significantly less, again, if you can afford to invest the capital at start up. As a good follow up, merchants should read the messages or notes header on their monthly billing statements for any account updates or pricing changes. It’s also good practice to frequently review the “fees” section of their statement. This section is often where existing fees are increased or new fees are introduced when other unrelated costs go up.

What do you typically say to a prospective new partner who explains that they are using the bank down the street and doesn’t want to confront the bank with losing this piece of the business because of the relationship?

In short, banks no longer process credit card payments in-house, they sub contract this service out to the direct processors. Banks specialize in banking, but are by no means electronic payment experts.

This is obviously an important part of all retail which like everything else has become much more specialized and while abused by some, others like Scott Knabusch, Michael Kintz and Merchant Pro Express have found a niche the old fashioned way with expertise, integrity and exceptional service. Some of the things that stick with me as a merchant are the savings go right to the bottom line; you now have a consultant looking at helping you increase revenue, decrease costs as well as having the vision to secure the future; as opposed to the banks that most golf facilities are using who are just middle men transferring data. My experience is that Scott's proposals based on his study of last months processing statement typically can save somewhere between 12 and 30%. The customer service group have over 30 years experience and actually answer the phone. There are occasions where it looks to good to be true - but is. Anyone interested in learning more about the things that Merchant Pro Express can do for their facility can call or email me or contact:

Michael Kintz
Merchant Pro Express

O: 678-825-8721
C: 678-896-1849
F: 866-243-5241
MPX: 516-531-2345 (client support)

Saturday, June 11, 2016

Open to Buy

There is a misconception that seems to be running rampant in the golf industry that a ‘push-button’ open-to-buy plan is the be-all, end-all to insuring success at Pro Shop retail. While it would be nice if this were true it simply is not. Before buying the software or placing your financial future in the numbers this type of reporting provides, let’s tear the concept down a bit attempting to understand both its limitations and plusses.

Saratoga National GC


Planned sales + Planned Markdowns + Planned End of Month Inventory – Planned Beginning of Month Inventory = Open to Buy at Retail

Prudent inventory control is obviously critical to ensuring that there is adequate stock on hand to produce the amount of sales that hopefully can be generated. The above formula can be used as a guideline as to how to replenish that number of units and/or dollars but does not pretend to establish what those levels should be.

Being over-inventoried in total units or dollars or owning the wrong type of inventory will determine markdowns and limit cash flow but is only realized by comparing it to what is healthy and then buying or not according to the formula, or more to the point common sense.

 Being under bought will create missed sales opportunities but can only be properly avoided if the Planned part of the above formula is based on solid principles and an analysis and understanding of the shop’s sale history, space and fixturing.

My point is that most shops would certainly be better run using an OTB formula and plan as a guideline as to the coming month’s inventory needs but only once the proper Opening Inventory Level (OIL) is determined, realized and adjusted according to peaks and valleys during the course of the season. The magic push-button formula is the simplest of math that is probably best calculated by hand and then adjusted according to tournament schedules, special orders, off-price opportunities, fast-selling items, mark up variations and count-and-fill categories. Also most pro shops think through they’re buying as a seasonal activity based on number of turns as opposed to a monthly decision based on what usually manifests itself as partial needs.

Another concept that is tossed around in the industry but rarely understood and properly utilized is that of count-and-fill. The phrase immediately brings to mind the maintenance of the proverbial solid shirt program but redefining and instituting its new meaning across all pertinent categories can lower inventories and insure against loss of sales more effectively than open-to-buy reports.

There are many important categories where par levels can be set conservatively and count and filled often so as to reduce needless inventory but have full size runs of adequate selection when needed. Gloves, balls, shoes, socks, peds, rainwear, basic shorts and of course solid shirts are just a few of these categories with solid shirts worthy of an updated look.

A typical solid shirt program five years ago was three shelves in a wall unit with 8-9 skus or colors of a Fairway and Greene lisle or perhaps a Polo pique folded in stacks of six shirts each with one medium, two large, two x-large and one xx-large. The par level included back up if the business demanded. Par levels are best determined using the two-week rule. Keep on hand all sizes per sku in the number of pieces per size that may be sold in a two week period. Most shirt companies that have sold you on the idea of using their in-stock capabilities will fill in between 7-10 working days, which makes two weeks worth of inventory a good working plan. Someone of course needs to take ownership of the program, understand its significance and call the partner vendor with a fill-in once a week.

Five years later a few things have changed. Solid shirts are still of major importance and now include performance or polyester shirts as a category which are best displayed hung on a four way or perhaps shoulder-out by color on a bar in a wall. There are also actually fewer vendors willing to make the financial commitment to in-stock inventories of basic product.

Mendham Golf and Tennis Club

Many facilities are using the solid shirt category as the key ingredient in an effort to build their own brand with private labeling and add significant margin to these sales. Full-Turn has developed an in-stock program of mercerized Supima cotton that includes basic feed stripes as well as solid shirts and has done away with any complicated rules about fill-ins. You can call in whatever you need, have it embroidered and shipped ASAP and be proud that your highest margin shirt in the shop is not being offered down the street since it is your label and it is made of the finest cotton on the planet.

Selling a rain-suit and immediately calling in an order for its replacement should be SOP. I go to clubs that own size-runs of 6 to 8 different gloves. I’ve never heard an argument for more than two that made any sense to me. Owning 40 pair of shorts at the end of June but being out of 36 and 38 is the same as being out of business – the open-to-buy report however may not provide for this fill-in.

Count-and-fill categories properly merchandised and maintaining all other areas of the shop as they need to be re-merchandised and reloaded is a function of open-to-buy that is not explained by the formula or its reports. All aspects of retail are relative to the shop, its space and personnel but I would not invest in OTB software unless my shop was grossing at least 1.5 million/year. I would however make every effort to understand the concept as the valuable guideline and tool that it is.

The principals involved in determining the Opening Inventory Level (OIL) mentioned above and the importance of creating par levels for the proper categories of goods so as to establish the correct planned inventories are developed in the “Merchandise Buy plan Guide”. The importance of basing these planned numbers on the principle of space and an understanding of a healthy turn is the reason I wrote this guide.

Wednesday, May 18, 2016

Traditional goes Casual – An Important Trend

A year ago I posted an entry I called Shoe Time of Yearand since then have participated in a dozen Retail Sell-Through Boot Camps put on by PGA Magazine around the country. The point of the article last year was the following:

Preparing for the new season involves identifying the categories that are most affected by new beginnings. Everything starts with the staff understanding the product and the importance of the category and wanting to discuss their knowledge with the customer.

There are a number of consistent topics that have come up at all the boot camps but the two I want to tie in to this years version of Shoe Time of Yearare the fact that the game of golf is generally becoming more casual and that life-style categories are becoming more important to properly identify as to which are appropriate for your clientele and how best to merchandise them. I was discussing these more casual/lifestyle topics and their significance as points of conversation among everyone in the industry with Greg Lecker at Sawgrass Country Club and he asked me if I was familiar with Canoos. I was not, but quickly became a fan. Boat shoes designed to play golf in made immediate sense to me not only because they perfectly fit the above equation of casual and more life-style product, but because boat shoes have been in my closet and a go-to shoe for me for forty years. Greg introduced me to Matt Freedman and Josh Hannum and this interview is the result.

Matt, Josh we want to talk about the product and the retail potential, but first tell us what inspired you to consider building this timeless and yet unique product?

Craig, like yourself and millions of other Americans, we wear boat shoes and loafers every day of our lives.  Boat shoes as a category have been the #1 selling shoe style in the US for quite some time.  As young professionals, there was rarely a time that we wore anything else.  We found ourselves at times going right from work to the driving range or to our club to try and sneak 9 holes in after work, and there were times when we didnt have traditional golf spikes with us to change into.  So I (Matt) one day got so fed up with both not always having golf spikes with me, or not really WANTING to change into golf spikes that I would never wear otherwise.  So I began playing my rounds in the very boat shoes and loafers that I would wear to the course.   I was very comfortable, and felt like the shoe completed my outfit because it was what I was wearing anyway, but due to the bottoms being flat they would slide severely as I would swing.  So after a rogue hot round in early March in the Northeast in 2009, I went home to my garage and ripped apart every pair of boat shoes I had, went to Home Depot to get the proper tools and began to screw golf spikes into the bottoms.  At first I failed miserably, except for one pair, which I wore for about three weeks worth of rounds and that held up fine.  I shared the idea with Josh, who was a close friend, golfing buddy and worked in the fashion business.  We hit the ground running making pairs for each other and then friends & family who were asking.  After a few months, the orders got to be too large to fulfill making in our garage, so we found several manufacturers around the world to help us.  About 3 years of prototyping, editing and patent filing later, Canoos was born on October 31 of 2012.

As Ive mentioned I dont ever remember being without a pair of docksiders or boat shoes in my closet, the style is as classic as any you could name. You mention on your web site that “Canoos will make sure that if you choose leisure golf apparel, it will be the highest quality hand crafted apparel there is.” Speak to the quality of Canoos if you will and to the obvious comment from the low handicapper about support and grounding.

The quality in our current product the Tour 2.0 is truly second to none in golf.  We can say this confidently as well about our Made in Maine product (launching Fathers Day 2016) because we personally have met the families of the folks who hand sew every pair of our shoes.  The leather is sourced diligently by the founders and so is every component.  From every stitch of thread, every eyelet, every inch of lace, every ounce of rubber, the suede for the shoe bags, the corrugate for the boxes, even down to the last (the mold that the shoe is built around) are all hand chosen. 

The reason it took us so long to build the prototypes and bring the product to market is because boat shoes were not made to play golf in, originally.  The difficult part was taking a shoe that has such a low profile, is so malleable and so casual and totally reconstruct it to stand up to the performance demands of tour professionals.  We made a number of design enhancements to a traditional camp moc style boat shoe like adding an Ortho-Lite insole for added comfort, protection and arch support.  We made the bottom spike-less, but made the bumpy bottom pattern in such a way that it will give you more grip than most spiked shoes in the marketplace.  We can say this, because our tour pros have tested side by side at our HQ and publicly.  We chose a leather that will stand up to dew, and be water repellent.  In summary, the current Canoos Tour 2.0 Shoe as you see it, and the Made in Maine Canoos Clubhouse Shoes will be performance marvels as well as casual travel companions.

 I mentioned your web site which I think is not only well done and informative but fun. The monthly featured club write-up is a particularly unique feature. What other marketing plans can we look for and how do you see your distribution and customer base fleshing out?

This is the most fun I get to have in my professional life other than designing the shoes themselves.  The fact that were in an industry where were able to celebrate relationships, partnerships and folks who respect the heritage of the game we love makes us the luckiest guys on the planet.  Were two young guys who have grinded in corporate jobs for the first 10 years of our careers praying that one day we could work in the golf industry with a product that we both obsess over.  That dream has come true for us, but with that comes an overwhelming responsibility to uphold the traditions, the respect and the honor of the game.  So, the best way we know how to do these things is to research, surface and report on the best parts of the game both on and off the course.  We think it’s equally important for us as a brand to celebrate the things that we love about the game even when were not playing. The best cocktails, the best cigar lounges, the best poker rooms, the best hotdog at the turn, the best cart girls. The little details that we may remember long past the 96 we just shot.  There are clubs, people and elements of this game that the masses dont know about, yet deserve to be celebrated.  Our duty as a brand is not only to give our customers the absolute best quality product and customer service that we can, but to celebrate the lifestyle that were so privileged to live.  We deem this initiative the Canoos Country Club.  It is the digital version of your real life Country Club, where we can virtually go around the world and see things that remind us of why we love this game.  Our goal is to make this website a collection, a general store or mercantile if you will that functions as a digital pro shop based on all of our findings from around the country.  All folks have to do is subscribe to our newsletter to receive content updates like this, and stay tuned on the website for some incredibly big happenings in 2016.

Josh, what are some of the ideas as to how you see this being best merchandised in the shops and what are some of the promotional programs we can expect to see?

As a boutique company heavily focused on our green grass partnerships, we are very sensitive about who the shoes are merchandised with and how. Everything we do from a point of sale display, to our catalogs that ship with our orders, to supporting collateral is “on brand” for us and reflects the nautical and leisure roots of the company. Our best successes have been when our shoes are merchandised with other boutique brands embodying the lifestyle and fashion of the shoes.

Our customers are blown away over the comfort and functionality of the shoes once they try them on, so we are focused on creating seeding programs, trunk shows and fit trials. In addition, we are very excited to partner on tournaments where we can outfit the participants or offer the shoes as gifts for winning long drives and closest to the pins. Most importantly, we aren’t going to spread ourselves thin. We want to create an industry best experience both for our partners and their members.

Canoos has developed product in categories other than shoes tell us about those and perhaps any planned for the future?

Canoos is a shoe company first, but over the years our customers have always asked for more ways to spread the word via product.  We are incredibly humbled and blessed to have folks who actually care to do so!  Joshs background is in global apparel sourcing for one of the largest houses in the world, so he has spent his career honing his expertise for this role.  We take a very similar approach to making other products as we do making shoes.  There are times where we manufacture things ourselves, in some cases we like to partner with other similar type brands who are best in breed to co-label a piece or two.  Our goal is to take our time and only launch things when were as proud to get it on our customer as we are with our shoes.  Things to look for in the future are more styles, colors and types of shoes for men, women and children as well as socks & other companion products for our shoes.  As the brand grows and listens to our customers for feedback and product suggestions,  were really taking an organic, customer first approach by observing what guys are wearing on the course and around the club when we visit our retailers.  The best outfit is the one that the gentleman or lady is confident in.  As our brand grows, you can expect pieces that will be classic & coastal inspired with a focus on fit and comfort.

Canoos were invented to look your best while being incredibly comfortable on AND off the course. In that spirit we vet partnership opportunities to introduce product in core categories that complement the shoes. Moving forward, expect more of these partnerships introduced and more American made products.

Matt, Josh this has been great, tell us about your sales plans going forward and the best way to contact you in order to become partners on Canoos product. What are you plans for upcoming shows?

The trajectory of this brand is 100% a direct result of the talent on our team.  We have a culture of winners that is bred by hard work, family atmosphere, and the tireless focus on our customers.  We put a very strong emphasis on relationships, and focus on strong green grass and independent retailers who really take their brand seriously.  We have always gone above and beyond to support our partners in wholesale with customization options, quick turn arounds, low minimums and a vast display catalog to support sell through and end-consumer experience.  Our goal is to build a personal relationship with each Pro or shop owner who carries us so that person is comfortable having the Founders cell phone numbers in their phones as well. 

There is a wholesale page on our website which goes directly to both founders Matt & Josh & AJ our President for those who are interested in learning more about Canoos. Our emails are also listed below for readers of this blog to reach out directly:

Matt Freedman -
Josh Hannum -
Anthony Lopardo -
Craig Kirchner –

I’ve partnered up with Matt and Josh to provide retail consultation and merchandising ideas to the Canoos sell-in effort at the green grass level and so I’ve added my email to the list of contacts. We want to make the vendor partnership much more than just ship the shoes and hope. The golf boat shoe is a natural at resorts and is certainly a great new idea as a tournament favor. Shoes sales at most clubs are somewhat cyclical until something new happens. Something new that has an incredible heritage is by definition worthy of being taken serious by green grass shops. Once you’ve tried a pair on you will want to teach in them and tout them as this year’s traditional/casual/lifestyle item. Please call (443-309-3005) or email me if you would like to discuss the different programs and ideas that we have to help drive your retail effort.