Friday, April 5, 2013

Custom Branding

Every golf shop owner and staff at some point in time has considered developing a "private label" brand. If one were to get out the legal pad and list the pluses and minuses, the pluses - margin, uniqueness of product, marketing of the facility, etc. certainly outweigh the negatives. The one big negative that is the elephant in the room however is the stigma that "private label" brands have historically been perceived as inexpensive, low quality goods. The only other caveat that could be viewed as a negative is that while some golf apparel brands do sell themselves, custom branded apparel would need to be sold at least initially, and then perform well enough to sell itself.

I thought it would be great to examine custom branding in this forum with probably its most articulate spokesman and one of the true gentlemen in the golf apparel business – Mark Killeen.  Mark is the CEO of Full Turn Direct and he has formed a Pro Staff Advisory Board who will participate in this discussion. The board consists of the following:

Greg Lecker – Sawgrass Country Club
Shim LaGoy – Orinda Country Club
Nick Papadakes – Old Elm Club
Matthew Hall – Turtle Bay Resort
Dow Finsterwald, Jr. – Colonial Country Club
Nick Wolfe – Waynesborough Country Club

Mark, before we talk about product, margin and marketing tell us if you will about the history of deciding to pursue this niche of the business.

First Craig, it is a pleasure speaking to you as always and thanks for the opportunity to do so. The genesis of our business is really quite simple. Golf shops sell apparel that is adorned with their embroidered logo. If you ask most shops, they will tell you that if they removed their logo, the product would not sell. Their members, guests and customers are telling golf retailers every day that the compelling reason the purchase decision is made in their shops is because of the clubs own brand.

Product differentiation is a core competency of every good retailer today. Across the entire retail spectrum, retailers are sourcing product that reduces competition. Custom branded product is how most retailers execute this strategy. We saw very early on that there was a huge void in the specialty and golf market for a company to offer product that offers the retailer differentiation.

Let’s get the elephant out of the room. I know the Full Turn Direct product line well enough and long enough to know that only the highest quality products are being sourced.

I understand the elephant and unfortunately the perception has been a reality in the golf market in the past. We approach the concept with a product first strategy, not a price first strategy. We take the responsibility of customizing every garment with our customers branding very seriously. Our products must be commensurate with the brand value of our customer. The bar is set high in golf, particularly with our customers.

As an example, we use only SUPIMA registered cotton in our luxury shirts. This raw material is less than one half of one percent of all cotton grown in the world. Our performance shirts are equally impressive as we have chosen to use a unique process of infusing the micro poly yarns with charcoal from bamboo which we call Eco Tec. The charcoal keeps the shirts odor free and the bamboo moves moisture very quickly. As you know, most companies use a chemical coating on their polyester shirts and those coatings can wash out very quickly. That is why you hear the complaint of performance shirts holding odor. That never happens with our EcoTec.

We also take a collection approach to our merchandising, which is not easy to accomplish when we are customizing every garment. The old concept of “private label” was to offer a series of solids and basic stripes. We believe our customer’s own brand value demands so much more and we give it to them! The line consists of some of the finest cashmere sweaters and accessories available, ultra-fine micron Merino sweaters and knits, classic Supima golf sweaters, quilted micro poly windwear and a country club short program. To further the knit classification, we also offer special fabrics every season. For Fall 2013 we developed a very unique luxury garment that also performs naturally. Our LuxSpun golf shirt is a blend of the new micro-TENCEL for easy care and Supima cotton for the luxury hand feel. We then plated the fabric in pure white Mulberry silk which is naturally anti-microbial. This is one hell of a golf shirt!

Dow Finsterwald noted, the overall quality of the golf shop sends a message to the customer. Our great brands at Colonial help our Custom brand and our Custom Brand helps our brands. What I like best is the fact that my shop is the only place our members or guests can find our custom collection. Now, our own brand is being asked for regularly by our customers.

Greg Lecker – As for quality, the Full Turn EcoTec is the only shirt my staff can wear and I don’t have to open the windows for staff meetings! It is a great shirt that really works. It is amazing.

Obviously the margin and the flexibility to promote that extra margin provide the most important aspect of developing custom branded product in the shop.

The margin conversation is a very interesting topic. In the early months of our company, we spoke of margin and the value of margin at length. Many customers found that emphasis objectionable as they felt the priority was margin, not the quality of the garment. That was certainly never the case. I guess in a way we were taking the quality issue for granted. Today, we let our customers discover the margin opportunities. There are certainly times when we review the comprehension of the margin equation and highlight the value we offer with complete shipments, no substitutions and of course how we can help reduce the shops competition. After all, it is not the initial margin that counts, it is the maintained margin at the end of the season.

Matt Hall – COGS on hard goods keep going up and that is putting more pressure on me to improve my soft goods margin. Custom Branding is how I have been able to accomplish a meaningful improvement in profitability.

Nick Papadakes - I am a margins junkie, primarily because of the way I was trained as a young pro.  When I first started here we had miserable margins; sales were decent but the profit was very low.  By restructuring the buying plan to offer products like those from Full Turn, that could maintain and hopefully increase sales, we were able to better our margins by over 15%. 

Another way to look at margins is that we have more dollars for promotions while maintaining profitability. With the off course big box stores and discounters full of branded product at low prices promotions are here to stay.

Shim LaGoy – I can offer more value when promoting my custom apparel, because I don’t have to compete with the $19.99 shirt at the sporting goods stores.

I have used hang-tags in some interesting ways depending on the facility and what is most relevant to be marketing to the consumer.

We take the same strategy with our branding trim as we do with the product itself. Hangtags are customized including full color photography and we use the finest damask woven labels. On performance products, we are now using a heat seal label application that has become very popular.

Nick Wolfe – We have changed our hangtag every couple of years to keep our presentation fresh. Our members now look to our custom collection as ‘their” collection. We have developed a real following of our members.

Shim LaGoy – The great thing about our custom collection is it immediately generated conversation between our staff and members. Now, there is a real sense of pride in carrying our own custom shirts and sweaters.

Nick Papadakes – We are using our custom collection exclusively to celebrate our centennial. It is very exciting to know that such a special event logo will appear only on our own shirts.

Custom branded product is by definition a differentiator but I think it’s important to talk about how it has evolved in other retail channels.

Well custom branding certainly has evolved in every market segment and in almost every product category. As the products offered have improved, so have the sales results. Today, custom branded products are driving not only profitability, but sales volume in retailers at the top end of the market like Nordstrom and Saks as well as the mass marketers like Costco. The real lesson here is that when done correctly, the consumer responds very favorably to custom branded products, which in turn means the retailer becomes more successful.

I have been asked many times why we started this business and I often refer to a business failure of mine. Years ago I was part of a team that built a multimillion dollar branded business with Nordstrom. We were fortunate as well to build similar businesses with Macy’s and Robinsons in the same market. Despite successful sales, my business with Nordstrom started to decline. They would politely mention that it was difficult for them to grow the business with me while I was growing the business with their competitors who were more promotional. Eventually, Nordstrom stopped buying completely. I will never forget the merchandise manager saying to me, “We just don’t think it is a good business strategy to allow our competition to determine our profitability.” He was right and golf shops today need to be very aware of the competitive pressure on them as well.

Golf shops have a very unique opportunity as each one already has a valuable brand. In almost every case, I can assure the Club Professional or Club Merchandiser that their brand value is greater than they think. Are some club brands greater than others, for sure, but that does not mean they all can’t benefit from a great focus on their own brand…they can and more and more clubs are doing it every day. We are very grateful for the opportunity to assist along the way.

If your staff enjoys and is properly trained to engage customers in conversation about your inventory as opposed to the "hang it and hope" modus operandi then you can do well with custom branding from Full Turn Direct. The Supima cotton and EcoTec stories are great fabrication stories to be able to tell and Mark continues to upgrade the line, always looking for the newest and best and developing his own.

The hang-tag on apparel is a valuable marketing space and I have worked with Mark, his wife Rollie and their staff to design them to market what was most relevant to the facility's business from tournaments, outings and corporate sales to real estate. The ability to use the suggested retail - give something of value away as promotion - and still make full retail margin is a true competitive edge in today's marketplace.

I have spoken at the Full Turn Direct sales meeting and spent time with the reps. They are accommodating and want your efforts in custom branding to be successful. The banner to the right will take you to the web-site and I'm sure Mark or any member of the staff would be good conversation if you are considering this avenue as a way to improve business.