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Bag Boy Company Interview

Craig Ramsbottom, President
www.bagboycompany.com
Founded in 1946, The Bag Boy Company has become one of the most respected brands in golf by building a reputation for unmatched quality, unbelievable durability and unsurpassed innovation and design. The Bag Boy Company designs, manufactures and distributes a full line of innovative golf bags, push carts, travel covers and accessories designed for a golfers’ on-course convenience and comfort. The Bag Boy Company is owned by Dynamic Brands, parent company for golf brands such as Bag Boy®, AMF Golf and Slotline Golf.

Click the play button below to listen to the interview.

Hey if Chrysler can do it, why can’t Callaway?

Callaway Golf announced the start of a new Gas Giveaway promotion which offers a free American Express® Fill It Up® gas card with the purchase of a new FT-i,® FT-5® or Hyper X™ driver from authorized U.S. Callaway Golf retailers . With the purchase of one of these clubs at authorized Callaway Golf retailers between May 15 and July 15, 2008, consumers will receive by mail up to a $100 card value American Express Fill It Up card to help defray the cost of gas at the pump.

This promotion follows the introduction of a similar one by Chrysler last month. If consumers buy a Chrysler, a Dodge or a Jeep, they won’t pay more than $2.99 a gallon for fuel for the next 36 months. It’s limited to 700 gallons per year (approximately 12,000 miles annually).

Equipment Spy Finds Nike’s Sumo2 Driver Illegal

Nike calls it a “voluntary product return”, I’d call it overstepping, pushing the envelope, or a violation of the sacred rules of the USGA. No matter how you want to describe it, Nike Golf has gotten itself into, as the Brits would say, a sticky wicket.

How could this happen in the dog eat dog world of golf equipment?

They were ratted out by a competitor. Who? TaylorMade? Titleist? Cobra? I’m guessing Callaway. Not that I have any evidence to pin it on them, but who better to put the fear of “non-conformity” into the hearts of equipment buyers but the company that could gain the most from this year’s square driver competition but Callaway.

And how would they gain by this bit of corporate espionage? Take the wind out of a competitor’s sales (nice play on words there I’d say) by tipping off the USGA that their competitor is trying to gain a market advantage by selling (unofficially mind you) a NON-CONFORMING driver. Callaway can look like the good guy by reporting Nike to the authorities, increase its sales at the expense of its competitor in the meantime, and cause Nike to spend money and time recalling thousands of bad drivers. Ouch!!

Based on what I hear and read, Callaway’s FT-i Square Driver is kicking the Nike Sumo2’s butt where it counts: retail sales. Reference the latest Golf Magazine and you’ll see that they rate the TaylorMade r7 SuperQuad higher than the square drivers (Nike finished third). For whatever reason, even before this golf manufacturing “spy” committed corporate espionage, Nike’s product hasn’t been getting the same respect or publicity as Callaway. Even Tiger Woods doesn’t have the new Sumo2 in his bag. How bad is it when your top spokesplayer snubs your product?

More evidence of getting caught red-handed is Nike’s own website www.nike.com/nikegolf. Upon entry, a video pops up of president Bob Wood explaining that Nike is voluntarily complying with the USGA by removing and replacing these NON-CONFORMING drivers. If they weren’t guilty, my guess is a corporation as large and as savvy as Nike would drag out this thing in court, do like the White House and “out” the spy, then stall until the selling season for this driver is past (about six months). Also, Nike is only instituting this recall for 34 days (from March 26 to April 30) so they are not being very generous when it comes to returns for customers affected by this situation.

In the dog eat dog world of golf equipment, being the “hot” product for the season is golden and can mean a make or break year. It is also accepted that pushing the technological envelope is de rigueur. Being caught with the goods just might trash this year’s sales of the Nike Sumo2, as well as sully their hard fought reputation. An “unauthorized manufacturing variance” that Nike hoped wouldn’t be noticed looks like its going to cost them big time.

Golfsmith Expands its Virtual Footprint

Golfsmith, the leading golf equipment retailer is now providing the underpinnings of the EPSN.com website. They will be the official golf and tennis supplier of EPSN.com and will provide all the marketing, sales, fulfillment and administrative support as well as 30,000 golf and tennis products to the site’s 18 million monthly visitors. This is part of an ongoing effort by EPSN.com to capture more of their site visitors’ retail spending.

What I found interesting was that Golfsmith, without the need to open a new bricks and mortar store, can expand its online footprint. Like Amazon.com, which provides content and infrastructure and fulfillment to other websites like Borders.com and Target.com, Golfsmith is re-purposing its entire inventory to another audience, thus growing its incremental sales without having to make a huge investment. Likewise, ESPN.com can offer more “value”, in this case an online retail store, to its site visitors with little financial investment.

According to Alexa.com, the site ranking website, ESPN.com is the 38th most visited site on the web, while Golfsmith.com is at 15,559th. In comparison, GolfGalaxy.com is 96,559th and Dick’s Sporting Goods leads the pack at 7,127th.

Generally, online deals of this nature have a payout to a site like ESPN.com of 10-20% of gross sales. This seems like a win-win for both players in a slow growth market and another arena that a Golf Galaxy or a Dick’s Sporting Good should be playing in.

Is TaylorMade Losing It’s Edge to the Square Driver?

The “hottest” marketing trend in the driver world today is the square-headed driver. Both Callaway and Nike officially hit the market with their entries at the recent PGA Show. Yet, TaylorMade appears to be sticking with their moveable weight concept they introduced in 2004. Does this mean that TaylorMade is losing its edge in the driver market that it’s owned for years?

According to president and CEO of TaylorMade-Adidas Golf who was quoted at the PGA Show, “the square-headed driver phenomenon will be over in about 90 days.” Wow! That’s a big time shot over the bow of Callaway and Nike who are relying on their “squares” to help push driver sales in 2007.

What seems to be really occurring is the creation of two retail pricing levels. The first at $300 and a second at $500. Mr. King at TaylorMade is probably right in that the square driver phenonmenon will quickly fade and be replaced by something new in 3-6 months. Look at the last three Ping gererations with the G2, the G5 and now the Rapture all coming out in the last eighteen months.

TaylorMade’s entries for 2007 are a throwback to their earlier Burner (retail price $359) which is targeted to price-conscious “bomb and gouge” player that focuses on speed to satisfy their need for added distance and the r7 SuperQuad (retail price $499) which should attract bigger budgeted golfers more concerned about course management and accuracy versus power.

In comparison, Callaway’s entries are the Big Bertha 460cc (Retail Price $299) and the FT-i Series (retail price $499). Even Nike gives you two pricing options with its SasQuatch Sumo Square Driver (retail price $499) and the SasQuatch Sumo Driver (retail price $299).

If square drivers take the market by storm, expect to see new iterations of the concept extending into fairway woods and perhaps hybrids. If not, you’ll see those hot “squares” in the discount rack for $299 by May 1st.

Ping Finds Itself in Hot Water over Military Rebates

In late September, Karsten Manufacturing, maker of Ping golf clubs, has gotten itself into some hot water by forbidding retailers from offering a discount to active-duty and reserve members of the military.

The controversy exploded when Ping terminated its relationship with Bonaventure Discount Golf and Gordon Lakes Golf Course, both located in the Atlanta area, for selling Ping clubs at a 10% discount to military personnel.

Ping, well known for protecting the retail price of their premium golf products, had cut off these two golf retailers as well as another 60-plus military golf courses, for selling at a discount. Based on Ping’s actions, their pricing policy is sacred and a retailer that violates this policy, can, and often is, barred from selling Ping products.

Well, it appears that Ping had a mea culpa. On October 3rd, they relented and offered up their own, albeit lame, discount to military personnel. Ping would offer a mail-in rebate of $80 on a set of irons (retail price $749-1099) to these customers. Instead of getting the discount in-store, the military personnel customer will have to mail it in and wait 3-6 weeks for a check.

In a partial defense, according to Ping Chairman & CEO John Solheim, “For the last year, we’ve been looking for additional ways to support the troops,” Mr. Solheim said in a prepared statement. “On three occasions we’ve sent hundreds of free clubs for the troops to enjoy during their limited leisure time, but we wanted to provide them additional benefits.”

My take is that Ping got caught in a brewing PR fiasco that had to be quieted as soon as possible. Ping has had little interest in reducing their lofty pricing, but felt it was better to appease the media jackals than tell their retailers that they were wrong.

However, those retailers and military golf course pro shops that offered an unauthorized discount and had their accounts closed will not have them re-opened at this time according to a Ping spokesperson.

Wouldn’t it have been better for Ping just to say “We apologize and are sorry?”

Dynacraft Will No Longer Exist

Yesterday I was ordering golf components from Hireko Golf and found out that Dynacraft, the equipment company based in Ohio that Hireko purchased last year, is disappearing in the same way as the Passenger Pigeon or the Dodo: its becoming extinct.

According to an Ohio-based customer service person that took my order, “…Hireko is no longer shipping orders from its Ohio location. Now, all orders will be coming out of California.” I asked if that meant they were closing the facility and the employee said that “…yes, as I understand it, only the tech support people will still be here.”

Although the Dynacraft brand will still exist, it appears that the company that used to be Dyanacraft is history. If Hireko is closing the Ohio facility, then basically what they purchased was the customer list, the brand name and inventory.

It’s a harsh reality in the golf equipment industry with the recent demise of Royal Precision shafts (bought by True Temper), 2nd Swing Golf (currently being liquidated) and the end of Dyanacraft as an independent company.

It is my guess that this is only the beginning of a downward trend for equipment manufacturers and retailers.

Mitchell Golf Equipment’s New Program Found Lacking

On October 1, 2006, Mitchell Golf Equipment Company, the clubbuilding industry’s largest supplier of club building equipment, announced their Mitchell Partners Program. The company predicts that this will become the largest network of clubbuilders in the country. Although well-intentioned, this appears to me to be just a thinly veiled attempt to extract money from clubbuilders.

According to the terms of the program, if a clubbuilder pays $500 to sign up, he/she will receive a couple of window decals, a wall plaque and an in-store banner. Oh, and don’t forget the 10% discount on Mitchell equipment (training classes excluded).

Oh the surface this might sound nice, but you already have to have made an investment in at least two Mitchell machines to bend irons & putters as well as a shaft frequency analysis machine.

If I were a clubbuilder, I can’t figure out why I’d want to do this. I can go to Golfsmith’s Golf Clubmakers of America (GCA), the Professional Clubbuilders’ Society (PCS) or even to Mitchell Golf School and get training in clubbuilding. I don’t think it takes a rocket scientist to figure out how to use a Mitchell piece of equipment. So what’s in it for the clubbuilder?

I’m guessing that Mitchell is hoping to persuade a few hundred independent shops to pony up $500 (that’s $100K with just 200 participants) to get a few signs, a couple of decals and permission to use the Mitchell logo. This isn’t going to help a clubbuilder struggling to attract business. A customer doesn’t care if their clubs are bent with a Mitchell shaft bender or in a simple vice. What they do care about the skill of the clubbuilder.

A better use of this $500 investment would be to help the independent shop with some new innovative ideas instead of just trying to get more of their money. Maybe Mitchell should consider offering some Marketing 101 or Customer Service 101 training. Perhaps a tutorial to help shops take advantage of new technology like the Internet, blogs or video podcasts. Even offering a class called “E-Mailing Golfers for Fun & Profit” would be more useful than a 10% equipment discount on stuff clubbuilders are already buying.

I fear that with the announcement of 2nd Swing’s liquidation, True Temper’s weak sales, Hireko’s acquisition of Dynacraft and the endless malaise in the golf equipment industry, this program isn’t going to bring anything new to the table.

2nd Swing Golf Files for Chapter 11

I just found out that 2nd Swing Golf based in Minnetonka, Minnesota (my home state) declared Chapter 11 bankruptcy on August 23rd. Founded in 1997, they’ve expanded to more than 50 stores selling used golf equipment. It looks like the end for these guys. According to the Minneapolis/St. Paul Business Journal “The company has retained an investment banker Morris Anderson & Associates of Chicago, and is seeking a party to buy 2nd Swing as an ongoing business or handle a shutdown”.

As cutthroat as golf retailing has become, these guys are probably going to fall victim and be liquidated. When a company announces they are trying to sell themselves or close down, it can’t be good. They would have tried to unload the company privately and avoid the negative publicity associated with a bankruptcy.

If the financials were even halfway decent, a chain like Nevada Bobs, Edwin Watts, Austad’s or even Dick’s Sporting Goods would swoop them up in their time of need. Even for just the real estate.

Unfortunately, 2nd Swing couldn’t pretty up their balance sheet when they tried to do an IPO in 2003 (three times actually) and just a year ago they laid off 1/3 of their corporate staff and closed about 20 stores. Their demise shouldn’t come as a surprise with a flat golf retailing market for the last five years.

I alluded to the weak state of the industry in a previous March, 2006 posting Clubbuilding War Breaks Out as well as Dick’s Sporting Goods opening its prototype standalone golf concept store.

I’ll continue to explore the state of golf retailing in a future posting as well as on my podcast.

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