Over-Inventoried - The Killer

Before moving into the new season or reviewing the results from the one winding down we obviously should be looking at sales per category, margin and did our buy plan keep our space well merchandised without being over-inventoried. Over-inventoried is the key margin killer in most shops and that being the case worthy of some definition. There are basically three ways to be over-inventoried and any of these situations will keep your shop from realizing its potential.

The implications of each:

A - Over-inventoried in total number of units

Obviously this translates to dollars and has put as many retailers out of business as has lack of business. Pro shops that have backrooms full of unopened boxes or tubs of stock from previous seasons have almost no chance of making any margin as they will be paying any realized profit out for merchandise that is not working for them and at some point will have to give up margin in order to get the level of inventory back to healthy. Overbought pre-books are usually the reason for unopened boxes. Tubs of residual merchandise are usually the result of too quickly removing items from the floor to make room for unopened boxes.

B – Over-inventoried in total number of vendors

Having too many lines or brands of apparel almost always does justice to none. It is also most often the reason for too many units. It comes about as a result of not understanding the space and the number of turns involved for the shop being bought for and/or having the ability to say “No”.

C – Over-inventoried in a particular category

Owning too many units in a particular category not only limits your ability to make money in that category but by definition has to be hurting your potential in some other category either by cramping its space or limiting its open to buy.

A healthy inventory level does not insure success at retail but it does create the most promising opportunity to create that success. It’s like going into the bottom of the ninth with the score tied but your team has the middle of the batting order coming to the plate. There are other factors that will improve your ability to score; a staff dedicated to service and salesmanship for example, but concentrating on the process that will determine that elusive level and your subsequent plan is the key homework for this time of year.

Super Show, Super Bowl

The PGA Show was by all accounts and according to everyone I spoke to a huge success. The week started for me at The PGA Magazine Merchandisers of the Year Conference at Reunion Resort where the PGA Magazine staff once again conducted a first class event with guest speakers such as Allen Wronowski, President of the PGA of America and a fashion show put on by Tehama and Izod G. Merchandisers of the Year awards were handed out to Dennis Johnsen (public facility) Pine Meadow Golf Club in Illinois, Tom Davidson (resort) Circling Raven Golf Club in Idaho and Mark Mongel (private) at Cherokee Town and Country Club in Atlanta. Mark and I spoke briefly and sat in a few breakout sessions together and he expressed his optimism for the coming year and enthusiasm that many of the key players have returned to the show. Mark picks the Steelers by 7. Rick Summers, CEO of PGA Magazine, whose empathy for the betterment of the industry propels these conferences picks the Steelers by 2.

Chris Heyn, CEO of Summit Golf Brands, is particularly excited about the ionized shirts that Billy Draddy has designed for Zero Restriction that “add distance to your game,” feel good and look great. Chris picks Pittsburgh by 6.

Mark Killeen, President of Pima Direct, booked 69% more units at this year’s show than in 2010 and picks the Packers by 4.

Ken Faux with Ben Hogan Wines offers high margin, incremental income and no inventory. Ken picks the Steelers in a great match-up.

Howie Ellis, Sales Manager for SunIce, is ecstatic that their company opened 50 new green grass accounts at the show and confidently picks the Packers by 10.

Patrick Seither says he is gaining traction with GEMS, a service and sales enhancing program for golf professionals and picks the Steelers by a touchdown.

Danny Thomas, the territory sales manager with Eritage, will be providing the Trackman experience as part of his repertoire. Danny played for the Kansas City Chiefs and picks the Steelers by 7.

Rob Stein, managing partner of Donald Ross Sportswear, which was named the new line most likely to be tried this year by a PGA Magazine survey picks the Steelers by a field goal.

Ken Bauer at Bauer International was excited that he saw many customers who thought the time was right for them to step up to the plate and identify with his new ad campaign: the Bauer Works – Reinvent, Refresh, Revive the golf shop to generate sales in 2011. Ken picks Green Bay by 7.

Bob Ford, who needs no introduction, thinks the show was more upbeat than the past few years and has sold 20 of the White R-11’s from TaylorMade in the last two days. Bob thinks the black and gold will easily prevail.

I found the show to be vibrant and more fun than the last couple of years and for the first time in 20 years of going to the show attended Demo Day. It was exciting and I think Bob right in that the white driver was the Buzz. I will be focusing in on some of the above in future entries. My Super Bowl hope is that it ends in overtime. I want to see how the coaches handle the new overtime rules.

At the request of a few of the PGA Magazine MOY attendees I have posted an updated Custom Ball Program entry at the Upscale Golf Shop at pgamagazine.com. If you haven't already instituted the program it is a good read.