Last week Dick’s Sporting Goods, the nation’s largest retailer of Callaway and Taylor Made golf equipment, fired all of the PGA Professionals they employed in the golf department at over 560 stores across the nation. Dick’s tried to differentiate themselves from other retailers by employing a PGA professional in each store to improve the customer experience and deliver a higher level of service, but due to the continued decline in golf equipment sales and participation, they were forced to put over 500 pros on the street. They were the largest employer of PGA Professionals after the PGA itself.
Back in May, Dick’s CEO Ed Stack said the company’s overall golf business missed its first quarter sales by $34 million and he expected the downward trend to continue. “We are selling drivers in our stores this spring for $99 that were approximately $299 20 months ago,” said Stack. The golf business accounts for about 15 percent of Dick’s overall revenues.
The way I see it, TaylorMade adidas Golf (TMAG) is at least partly to blame for the layoffs. While driver sales in the first quarter were only down 2 percent from 2013, the average price of drivers was down 16 percent. As TaylorMade’s largest retailer, Dick’s is hit hard every time TMAG releases a new driver model, because it forces Dick’s and other retailers to sell the older models at a clearance price which cuts into profit margins. Small retailers are sometimes forced to take a loss to stay competitive.
TaylorMade released four different driver models last year, and the glut of new products continues, flooding the market with clubs consumers don’t want to buy. Walk into your local Dick’s Sporting Goods and you’ll probably see older model clubs from TaylorMade and others for closeout prices between $99 and $199, far below the suggested retail price. This is all part of TMAG’s sales strategy to put their clubs in as many golf bags as possible, but the industry is now starting to pay the price and the hangover from this glut will have an impact for years.
The great irony of this is none other than TaylorMade’s former CEO Mark King has been the primary spokesman for Hack Golf - an initiative to grow golf by thinking outside the box for ways to infuse the game with exciting changes and attract new players. King recently left TaylorMade to become the president of adidas North America, and speaking to HBO’s Bryant Gumbel for an segment on “Real Sports”, he said “Young people entering the game after high school, 18 to 30-year olds are down 35 percent in the last 10 years. So I don’t like where the game looks like it’s going.”
He’s right. According to the National Golf Foundation, about 400,000 people left the game in the past year, and now over 500 PGA professionals are also looking for work. It appears the PGA of America, Mr. King and his Hack Golf initiative and other industry leaders have their work cut out for them.