The $17,000 Shop Credit

Depending on the facility, shop credits either won by or awarded to members/regulars can vary from zero to a significant percentage of the overall business. I’ve talked to many pros who say their members hold their credit until the end of the year and they manage their Christmas business and end of year inventory on the outstanding credit still to be redeemed. Because of cutbacks in trying times many tournament favors are now shop credits instead of especially bought favors. The point is shop credit is important at most facilities and like any other part of the business deserves to be looked at as a part of the business worth creatively attempting to increase.

The football season is almost here and its high profile marketability provides an opportunity to create some shop excitement. The following example can obviously be tweaked according to facility and clientele but let’s call our hypothetical approach “The Big Game”.

Place a clipboard on the shop counter with the appropriate sign –up sheet where you list the ten NFL games that are going to be involved in this week’s random drawing. Anyone interested in participating signs up next to one of the ten slots on the sign –up sheet and owes $25 to the pot. Our signee can play as often as he wants but only once per sheet. When the sheet is full we move on to the next sheet hoping to fill as many sheets as possible.

On Sunday morning before the games each sheet will have the ten games involved drawn and posted next to the name on the list corresponding to the number of the draw. Ritualistically every Sunday morning this drawing is performed in the shop in front of any crowd that might form and until each name on each sheet is paired with a game. Each sheet is its own pool and has a winner. The winner per sheet is the guy or gal with the highest total points per game on the sheet. The winner wins $250 worth of shop credit.

The interest in wagering on football needs not be documented here, it is incredible. Even members or regulars who aren’t fans of the game or trying to pick winners may find this a fun $25 endeavor. It’s difficult however to find ten to one odds on football wagers without betting multiple games so you have some appeal to die-hard gamblers as well.

The staff could be incentivized to talk up the clipboard and sign people up and the interest in the Sunday morning ritual of drawing games to names could have people stopping in who may otherwise not be in the shop.

Four sheets per week is $1000 worth of shop credit. The real beauty of the concept is that it is a seventeen week season. Multiply 8 sheets per week times 17 weeks and you could be talking about generating 10% of this year’s revenue in some shops.

The New Polo Regime

I had the opportunity recently to visit the Polo offices and showroom at 615 Madison Ave and visit with Tom Nolan the new head of Polo Golf. If you are currently a customer and have not made this pilgrimage, you should consider making the effort. In fact you should put it on your short list.

Tom, you obviously bring a fresh enthusiasm to Polo’s place in golf. What are the basic tenets of the new regime?

My basic philosophy in life, not just here at Polo golf, is always putting the customer and servicing the customer first; making sure that people are treated the way they are supposed to be treated. I think that was something that was lost to some extent in past years and so we’ve really made a focus of it, of treating the customer the right way, the way we’d want to be treated if the roles were reversed and it seems to have already made a big difference both in the way we are perceived and from a business standpoint.

On the design side, Ralph Lauren drives everything we do, and what we are. On top of Ralph’s vision, we have some very talented golfers involved in designing the product, and one of the overall themes right now in this division is that we have “golf people” involved in all aspects of the business, and all the product is “golf right”. We have so many talented designers involved with Polo Golf, RLX and Ralph Lauren Golf and everyone involved now has golf in their DNA across the board from the people selling the product to those designing it.

The division is being run by people who have been in the golf business for over a decade and who speak the language of golf professionals and understand their business. I think the most important quality of a sales rep is to be a good listener and we really have made a point of listening to the industry’s needs. We’ve been looking at the marketplace, seeing what the needs are, and really listening to what we’ve been missing, looking at what we are doing both better and worse and addressing it. The nice thing about being part of a company as large as Polo is that we have the resources to move quickly and address things we need to fix and go out and fix them instead of just talking about fixing them.

You have a lot of new sales associates and there seems to be a lot of new found empathy for the customer in the new force. I’m assuming from what you’ve been saying that comes from the top.

We have a lot of new sales reps and in that same vein of “golf DNA”, our three newest reps; two in the NY Metro area and one in Chicago, all were former assistant golf professionals. We are only hiring people and only want to work with people that we feel “get it”, that get the golf business and do have empathy for our customers, because the market is as tough as any of us can remember. People have fallen on hard times, and we need to be respectful of that. Myself and the entire sales force understand and are sensitive to what’s going on. We have our finger on the pulse of the industry and handle ourselves accordingly. It is certainly harder to sell apparel than in years past and we want to do what we can to make it easier to do business with us.

Given the nature of our company, how widely dispersed our product line is and how big we are I think there are a couple of things from a perception standpoint that work against us and perception is rarely the reality. A lot of what I’ve heard in the market place about Polo being such a big company, that golf which is such a small portion of the overall business that the company does not really care about golf or catering to the golf customer. That is simply Not true! The reality is that it doesn’t make a difference whether golf is 1% or 99% of this company from a revenue standpoint. The reason that golf is so important to Ralph Lauren and the reason we’ve been around since 1987, which is a long time in golf apparel years is because the people that are drawn to golf, that play golf; those customers that are going into the Pro Shop and buying a shirt, a rain-suit, a pair of slacks or shorts are not just the best customers at that pro shop but the best customers of our organization. They are successful, their wives buy expensive dresses, they wear $5000 suits, they drive the finest automobiles and if we don’t own their business on the golf course or tennis courts we don’t own them anywhere. Those people are our best customers, and it’s why we care so much. The relationship of the golf business as it relates to the size of the organization is completely irrelevant and I think it is important to put that out there.

There was a perception of arrogance that Polo was only in interested in doing business with shops that would commit to big minimums. There are a lot of golf facilities out there and there is no facility that is not right for our business, but having said that we are very protective of the brand. Since 1967 Ralph has worked very hard at building what we are today and we will always be protective of the brand but we don’t have minimums. That might not have been the story in the past and as I said I can’t really speak to that but it’s certainly not the way we operate now.

No brand in the apparel industry has the panache of Polo. How should this translate to golf?

For fifty years the brand and Ralph have stood for something special that is predominately defined as quality, the same quality you find in a purple label suit is found in our golf garments. We are very particular and will never cut corners. The customer that goes into a golf shop or a Ralph Lauren store immediately recognizes that the brand stands for superior quality. Not coming from the apparel industry my perspective is the same as that consumer’s and I think it translates quite well.

My first week here I went to Greensboro NC where we have a 1.2 million square foot distribution center that includes a huge research and development facility, and I know for a fact that we are the only company in golf apparel that has such a facility. We test every aspect of a shirt’s performance including pulling on buttons until they rip off, washing knits until they fade and cataloging the results in a library that represents 50 years of such testing. It’s the reason that no one in the industry is more knowledgeable of what goes into making a quality golf shirt and why I’ve historically paid $85 for a high quality knit. I left there realizing that no matter where I work for the rest of my golfing career I’ll never wear anything other than Polo and that it’s our job in sales to get the message to our customers and to their customers that not all golf shirts are the same, that ours are clearly the best and that I had the opportunity to see the attention to detail first hand. It’s what separates us, and I believe what our customers expect.

When a consumer walks into any retail environment they know without question that Ralph Lauren stands for unparalleled quality and the translation that you speak of is one of confidence on the part of the professional staff that they are merchandising product that justifies the price and enhances their image. Again it is our responsibility to see to it that there are equipped with the information to tell that story.

The reality is that the golf consumer in most cases can afford an $85 golf shirt. I think too often and we are guilty of it, we in the industry view the line with a much narrower lens than the customer. A $400 cashmere sweater is a lot of money to me, and many of our reps, but it is not a lot of money to anyone who can afford to join a high-end club. In fact, that member is buying that sweater somewhere so it might as well be at a golf shop. The shop that gravitates to the less expensive product lines isn’t accomplishing anything really but the erosion of their own margin. It is human nature to want to spend less but relative to value. Regardless of the economy the shop that believes it can’t sell the higher price spread could easily be losing as much business as it is creating with $55 shirts.

It sounds as though you are promoting one of the basic messages that I deliver to partnered vendors that they provide product knowledge seminars and retail sales pep rallies to their customers.

We have as good a sales force as anybody out there, I really do believe that. I’ve always looked at our team as a part of my family that works hard and really gets it. They are all genuinely concerned not just about the company but their customers and one of things that I have been trying to do is free them up a little to do just this kind of thing and treat people the right way. It is our job to educate the marketplace and we realize that a golf professional wears many hats and needs help in this arena. I know that a golf pro’s main job isn’t selling apparel, but it may be 10% of what they do. I can say for a fact that no one knows how to retail and merchandise like Ralph Lauren. No one has the resources and can tell the retail story better than we do and we need to be doing it more often and helping our wholesale accounts achieve their goals thru education whenever we can.

What do you see as the most important aspect of the customer/vendor partnership and how do you see Polo enhancing this?

Everyone uses the word “partnership” and there are a lot of aspects that are involved to being a partner. Being a “partner” means you stand by your customers in good times and more importantly help them thru the tough times. I don’t want to be another vendor, I want to be a partner, and everything I’m doing and will do is to emphasize this. One of the things that I changed when I got here was our presentation method. It used to be that if you wanted to see the line you came to us. That concept seemed counter intuitive to me. If I am going to buy anything why should I be the one travelling and taking time away from my business to help yours?

We launched a catalog for the first time in 23 years; everything we have been doing is in an effort to make it easier to do business with us. We were listening - we needed a catalog - we now have a catalog.

We know our product and brand are as good as there is - period. There are a lot of companies out there that come and go and there are a lot of them that have made nice businesses of being brand imitators of Polo but at the end of the day there is only one Polo. We know that our brand is where it needs to be and we never have issues with people not knowing us or not recognizing the pony or what Ralph Lauren has meant to them. We all grew up with the Pony, and it really “means” something to people, and it stands for something, its authentic, its real, and its powerful. What we needed to do was be better partners and treat people the right way, provide better customer service and get people excited about our brand in the world of golf again. We have a great customer service team in Greensboro and we are addressing the little things, customer service issues where we were lacking, the phone calls and hand-written notes, all the little things that go into showing customers how much we appreciate the business and how much we genuinely care about them. We‘ve made some monumental strides in a short amount of time and it is being recognized.

Tell us about RLX and where you see performance brands positioned in the future.

One of the things that we have that is unique to us and that is a huge advantage is that we will never react to the marketplace. We’ll never go outside of what is our DNA as a company and launch a tech shirt within Polo golf, it’s just not what we are about, it’s not what the Polo golf customer wants. We have the unique ability to do that, where others cannot. As a company, a decade ago we launched RLX in ski as Ralph Lauren Extreme and had a lot of success with it and you may have noticed at the Olympics a lot of the athletes were wearing RLX ski outerwear. We learned a lot as an organization about building outerwear and about waterproofing, wind-proofing, weatherproofing and really doing it the right way. Four years ago we launched RLX in golf and when it first came out it was very progressive, very limited in color palette, very European in fit. The fabric was a little bit thicker than it should have been, the colors were limited, the sleeves were short. It had limited success and the following year got a little better and then last year it got really good, and will just get better from here.

Charlie Schaefer came in as head designer for RLX and we talked a lot about how to make this better and what we’ve done has really evolved the brand within golf and made the shirts look more like relevant golf shirts. It’s still a little more progressive and I think that the golf customer that wants a tech shirt is probably a little more progressive. Interesting to me also is that prior to getting involved with this product I had always equated performance fabrication with thinner fabrication. Given a choice in performance shirts between a thin and thicker fabric I would have probably bought the thinner one. As a consumer I would have thought this to breathe better, to perform better it has to be light, but the reality is that performance fabric is man-made so you can make it any density you want. The reality is, the thinner you make it the cheaper it is to manufacture, but also when you wear it the clingier it becomes, not all golf customers that prefer performance do well with clingy. We feel we now have a denier that provides optimum drape for most golf customers. The RLX shirt is a quarter of an inch shorter in the sleeve which is of course negligible but the shirt is slightly more progressive in fit, call it slightly European, slightly heavier with a better drape and ten years in the learning and 99% of golf consumers couldn’t tell a difference, but again perception was it was a small fit, but it’s just not accurate.

The outerwear in RLX is phenomenal and is a story we need to be telling. RLX outerwear has grown exponentially. It is the best performance outerwear in the marketplace period. We’ve learned a lot in ten years in ski but everything we do in RLX and in Polo golf is always with golf in mind, we don’t just build product for look, It’s for function. With our outerwear we have stretch where it needs to stretch, under the armhole for example to accommodate the backswing, performance for golf is not just about fashion. We treat all of our man-made fibers for anti microbial and all of our dark grounds have “cold-black technology” in them which is what BMW uses to treat dark seats with to keep them cool in the sun. We acquired the patent and this is now unique to us that our dark performance shirts reflect the heat as a white shirt would. It is hard to forecast how well RLX is going to do but the sell-throughs have been incredible from the blue blood clubs in the Northeast to the very progressive clubs in LA the sell-throughs across the board have been fantastic. We’ve never strayed from the integrity of the brand and pretended to be something we’re not. RLX is a performance brand and that’s all it will be and that’s in large part where the market is now.

In Polo golf we launched our Heritage lisle which is our un-mercerized cotton shirt. We call this our cotton performance and it also has done phenomenally well. It is an un-mercerized Peruvian Pima cotton shirt that we believe very strongly in and it also has sold through incredibly well. Cotton in its raw state is natural performance and when you mercerize it you trap in the heat but this shirt breathes, it dries readily and is easy care.

The challenge with tech and I believe we have done a nice job with this is you don’t want to be too techy. It’s upsetting occasionally when you go to a nice club and you see guys walking around that just don’t look right. We feel like there is a swing back to people being a little more clothes conscious and dressier on the golf course whether it’s tech or cotton, with golfers getting back to the kind of pride in appearance that you see in the pictures of Arnie, Hogan and Snead. Interestingly for example we have put a big push on cardigans and are doing well with them, we think it’s swinging back that way and dressing up to some extent. Look at this year’s US Open winner for example, a young guy in his 30’s sporting a cardigan and he looked phenomenal.

The strength of the brand and its marketability are second to none. It has always struck me as synonymous with success and very all-American e.g. Davis Love and Tom Watson. Are there new and exciting marketing plans for the future?

We are the American brand, no question and all of our tour professionals really do represent the brand well. We signed Webb Simpson, we also have Morgan Pressel , Luke Donald and Jonathan Byrd. Luke Donald has been a great ambassador for RLX exclusively for the last few years. We just signed Matteo Manssero, the number one amateur in the world who recently turned professional . At 17 he was the youngest ever to make the cut at the Masters. He’s a nice kid who is incredibly mature for his age, he’s going to be wearing RLX exclusively and he’s so proud to be a part of the team. When we look at our ambassadors whether it’s Webb, Davis or Tom, Luke, Matteo or Jonathan Byrd it is important that they look the part but it is also important that they represent the brand well and who we are and what Ralph has built and that they are good quality people and Matteo is all that from a marketing standpoint. He’s a hell of a player, finished 20^th in his first event out there.

A huge announcement that will be coming out soon is that the USGA has just chosen Ralph Lauren to be its official Apparel Vendor starting with Congressional in 2011 and running thru at least 2014 at Pinehurst. This to me, is as big a statement as we could make. When the governing body of the game of golf in the United States had to choose an apparel company to partner with, they chose Ralph Lauren. This will be an amazing partnership and one we are all excited about. If that doesn’t tell you how committed this company is to its golf division and how relevant Polo Golf, Ralph Lauren Golf and RLX is to the marketplace now and for the future, I don’t know what does.

In everything we do whether it be signing a new player or a partnership with the USGA, We will always work tirelessly to represent all the things we stand for – authenticity, classic, traditional , timeless, American - all of which are cornerstones that Ralph built the company on. Being a big company we have the horse power, no pun intended, to do these kinds of things and do them the right way.

I think it safe to say that the industry welcomes your business acumen, love of the game and respect for the customer. What do you see as Polo’s major contribution to the sport?

On top of our new relationship with the USGA, we have been partners with the AJGA for 16 years now. We are involved with a lot of the local PGA sections as well. It is our responsibility to give back, and Junior Golf is really important to me. I don’t know if it’s talked about enough that we have had this involvement with the AJGA as long as we have. We sponsor the Polo Golf Junior Classic which is their final “major” of the year. We sponsor the Polo Golf Junior Rankings, which all college coaches use to recruit players, etc. We are one of the sponsors for the Ace Grant for underprivileged kids that want to get involved with Junior golf but don’t have the financial resources and we do it for a number of reasons – it’s the future of the game and tomorrow’s customers and it’s going to be what shapes the game. It’s an involvement that develops brand awareness and loyalty at a young age. When I was a kid it was Titleist and Polo and they were two brands that I was just never going to have because I didn’t come from a family of any financial resources. They both stood for being the best and for quality, and they were two “reach brands” and you can’t create a “reach brand” out of nowhere, it has to have a history and most importantly, authenticity. Polo has that, it stands for something and means something to a lot of people. The company is authentic, Ralph is a real person, it’s a real American Company and you can’t create that affinity and attachment to a brand that we have, it’s not creatable, it has to happen naturally and it has to be organic, to be authentic, and that’s what we’ve done and I feel like our relationship with Junior golf, with the USGA, with PGA Sections, with golf pros, top amateurs, all just reinforces that. Our contribution to the game I hope at the end of the day is to have well trained people enhancing the brand by helping to revitalize golf retail, treating people the way we would want to be treated and that’s really all we could ask for.

That’s a good answer to a tough question. What is your best advice for pro shops weathering these troubled financial times

The first thing I would say especially for those guys that own their own shops is I know it’s scary but you can’t be afraid. The golf analogy I can think of is that you’re never going to hit a good shot when you’re afraid to swing at it. It just isn’t going to work, you have to have confidence in your ability and your partners. There are a lot of analogies to playing golf and selling golf shirts. You have to have faith in your members first of all and you have to be creative. There are a lot of guys in a bad state of mind, I hear all the time: “the economy stinks”, “ it’s not getting any better”, “the members aren’t buying anything” and I don’t know what I’m going to do and I’ve got so much inventory. I’m not discounting those feelings or saying they’re not true, but you have to be creative , you need to always be evolving, you can’t be afraid to sit on inventory, nothing looks worse than retail that’s empty, nothing looks better than a full pro shop. Now, I know it’s difficult but you are going to sell inventory if you’ve done the right things and it’s the reps job to be helping with this process. But I would say to the golf pros if you really have partners out there you shouldn’t be afraid, you should trust them. First of all, most shops should probably have less vendors than they do in their shops. In my opinion, no golf shop should have more than 4 or 5 vendors and if you trust those 4 or 5 vendors who ever they are, and go deep with those guys knowing you’ve made the right choices and at the same time be creative with the members , do trunk shows or cocktail parties or whatever you want to do to endear yourself with them. It’s also important to isolate your best customers and have them become brand ambassadors for the club. At my club I’m proud of being a member there and I want to buy stuff in the shop, and also support my pro because I care about him and his business. You also want to have choices to buy something you’re going to want to wear and like the way it looks and I would also just reiterate to golf professionals out there that this idea of price resistance doesn’t exist to the extent we all think it does. The member paying to be a member can afford an $85 golf shirt, the price doesn’t matter. It may matter to the pro and his staff, to me and to the rep selling the shirt, but not to a guy who can afford a membership at a great club. I’m in a lot of shops and the ones that do it right and have good members – I don’t know if I’ve ever seen a guy look at a price tag. We‘ve created this price issue, it’s really about attitude.

It is indeed about attitude and Tom’s is incredibly refreshing and savvy. Success in pro shops has to with the three ‘P’s – product, people and presentation. Polo under the new regime is poised to regain its leadership role in golf as the brand most associated with the game and its retail.