Originally Posted by NJpatbee
Having worked as a consultant for a number of companies that sold products to Walmart, Walmart typically sets the price it will pay for items. If your standard products do not meet their pricing expectations, they will offer to purchase specially branded items including golf balls, or their own brand for items such as razors, healthcare products, or clothes. Walmart buys in extraordinary volume so you must be large enough to accept a smaller profit margin on a large quantity if items. They are also one of China's largest trading partners which adds more pressure on price.
DSG however, is not a Walmart in spite of its multi-billion dollars in sales. It can cut some deals based on volume with the major golf manufacturers and also makes Maxfli and Top-Flite golf balls, allowing them to be extremely competitive. Their mistake was gambling on increased sales of club sets and drivers and loading up their inventory. In addition, many people (including myself) never looked at Dicks as a replacement for their local golf shop or golf pro for custom fitting, resulting in the failed PGA Pro initiative. However, they do offer mostly brand name current releases of golf products. They will stay in golf, but with a much more tempered and realistic offering.
Very good and accurate post above.
The PGA hire allowed them ( DSG) to secure lines such as ping, titleist, Cal and TM. many of which would not offer their premium equipement to DSG. otherwise. These premium brands were nervous selling to DSG, only when DSG announced to them that they were hireing qualified PGA personnel to sell! did these brands allow their product in their stores. Otherwise it would have been all lower line product and in some cases ( ping) none at all. It was the correct strategy, unfortunately a "perfect storm" arose in golf for the worse effect all retail. DSG also keeps the lights on for some manufacturers as well. I'm sure there could be a couple of golf companies that are beyond worried if this business goes south, which it will. Next up will be the small specialty dealers, many of whom are too dumb to sell anything, instead they provide golf equipement by stocking it on the floor. Our regional premium family owned 5 store chain of golf only retailer this year alone is down almost 30% month to date and there is still the fall.
There is a Glut of golf gear out there, some speculate as much as 3+years worth with out so much as making one more golf ball, driver, golf bag or putter.
Worse and this is where some people just don't understand the relevance of the retail and wholesale, as well as golf courses.......is there is no back fill of new golfers in the pipeline. guys my age ( 55 ) will play for the next 20 years, or so. Guys 30 will do the same. There really isn't a rightful percentage of 10-20 year olds playing golf, interested in golf that will be the future consumer of golf.
Fewer kids and young adults are playing now than in the early 1960s.
This is not short term problem- more like a decade or so.....
Its not weather related- but it can further impact rounds.
its not Tigers fault, because he did not boost participation, rather he will be known for boosting television ratings and purses.
DSG decision will negatively I mpact wholesale, manufacturing and smaller retailers- it will not help the distribution Channels
Too many manufacturers, making to many products in too high of quantity against a rapid shrinking consumer base.