American Golf – Uncompetitive or what?

[Grant85]

The thing about American Golf is that, similar to John Lewis, they have big stores where you can legitimately go and touch, feel, smell, try items before buying.

In golf terms this is something that should not be taken for granted.

Plenty of consumers will basically use this as a demo opportunity then scour the internet to save £5 or £10. Obviously you might save more. But ultimately shops cost money to run. Staff, rent, rates, stock, damages etc. All eats into the profit, compared with the online stores that probably sell some stuff on the back of folk having a few hits at AG.

 

[Slab]

I recently invested in a set of Wilson D7 irons, after having been persuaded by one of their staff to try them. I was all set to buy them but needed to PX my Mizunos, JPX 850 Forged in excellent condition. Their part exchange offer was £138 the “PGA guide price”.
I thought this offer was derisory so went to a local pro. Not only did he offer me £175 but, without prompting, offered me the Wilsons for £50 less than AG.

I eventually sold the Mizunos to Golfbidder for £220 & saw them offered for sale a few days later for £320. I’m unsure where AG got their figure from but I would have thought that, had they taken them in part exchange, and I would have accepted £175, they wouldn’t have incurred a loss on the deal.

If this is the way the new regime propose to do business I think that it will be just a matter of time before the business goes int administration again.

also, the staff in the store couldn't have cared less about losing the deal. They either have no authority to move from the laid down deals or aren't bothered. I was less than impressed.

When trading in something 2nd hand its ‘worth’ or value has a couple of different meanings. The one I’d expect any retailer to use is ‘what is it worth to them’

Clearly to AG your clubs worth to them is currently at the bottom end of the market scale. The worth to your Pro was a bit more and the worth to golfbidder was more still. All were below what you believe you would have got on ebay but didn’t want the hassle. I don’t see a problem. To one retailer your clubs may have been a golden egg, to another they’re just a battery farmed omelette ingredient

How do you know AG wouldn’t have incurred a loss? How did you compare the cost of AG re-selling your clubs versus the cost for your pro or golfbidder to sell you clubs?

Maybe AG have 40 sets of those bad boys sitting on shelves up & down the country with a current rate of sale that means it'll take 3 years to shift them & they're losing value ever month, what do they need 41 sets for?
Maybe your pro instantly had a buyer in mind he knew would part with £300 the very next day (that would kinda make his £175 offer seem a bit derisory!)
Golfbidders entire business model is based on selling 2nd hand gear (or outdated new gear) and for that reason that's where I'd expect the best retailer trade in price to be available because otherwise the shelves would soon be empty

But that's not AG's business model, they're trying to sell new gear and I think maybe your expectations have made you overly critical of them in this case




p.s I'd have given you £250

 

[HomerJSimpson]

The thing about American Golf is that, similar to John Lewis, they have big stores where you can legitimately go and touch, feel, smell, try items before buying.

In golf terms this is something that should not be taken for granted.

Plenty of consumers will basically use this as a demo opportunity then scour the internet to save £5 or £10. Obviously you might save more. But ultimately shops cost money to run. Staff, rent, rates, stock, damages etc. All eats into the profit, compared with the online stores that probably sell some stuff on the back of folk having a few hits at AG.

There are many things I don't like about AG but you are right, the ability to actually see and try a product is a valuable commodity. However where the second part of your post about using it as a demo opportunity before buying elsewhere can come down to the lack of product knowledge of the staff and in particular the data produced on their in-store monitors and the ability to accurately decipher it to the benefit of the customer. This is where I have had numerous issues. Get that right, get engaged staff and the brand could be very good. As it stands in its current format, I can see the smaller stores eventually going and only those attached to clubs/ranges and the main city centre ones where footfall is greatest remaining. Perhaps that isn't a bad thing but to lose the ability to see a product would be a big loss

 

[Grant85]

There are many things I don't like about AG but you are right, the ability to actually see and try a product is a valuable commodity. However where the second part of your post about using it as a demo opportunity before buying elsewhere can come down to the lack of product knowledge of the staff and in particular the data produced on their in-store monitors and the ability to accurately decipher it to the benefit of the customer. This is where I have had numerous issues. Get that right, get engaged staff and the brand could be very good. As it stands in its current format, I can see the smaller stores eventually going and only those attached to clubs/ranges and the main city centre ones where footfall is greatest remaining. Perhaps that isn't a bad thing but to lose the ability to see a product would be a big loss

I agree, I have had issues with staff not knowing much about the clubs they were selling and certainly not being pro-active enough at using the launch monitor equipment.

No doubt you or I could do a better job, but even if they paid their staff £10 an hour - which they probably don't - I'm sure you or I wouldn't even consider working there.

Of course, an online retailer has no one to provide any knowledge, and a golf pro likely has a limited range of stock.

 

[need_my_wedge]

When trading in something 2nd hand its ‘worth’ or value has a couple of different meanings. The one I’d expect any retailer to use is ‘what is it worth to them’

Clearly to AG your clubs worth to them is currently at the bottom end of the market scale. The worth to your Pro was a bit more and the worth to golfbidder was more still. All were below what you believe you would have got on ebay but didn’t want the hassle. I don’t see a problem. To one retailer your clubs may have been a golden egg, to another they’re just a battery farmed omelette ingredient

How do you know AG wouldn’t have incurred a loss? How did you compare the cost of AG re-selling your clubs versus the cost for your pro or golfbidder to sell you clubs?

Maybe AG have 40 sets of those bad boys sitting on shelves up & down the country with a current rate of sale that means it'll take 3 years to shift them & they're losing value ever month, what do they need 41 sets for?
Maybe your pro instantly had a buyer in mind he knew would part with £300 the very next day (that would kinda make his £175 offer seem a bit derisory!)
Golfbidders entire business model is based on selling 2nd hand gear (or outdated new gear) and for that reason that's where I'd expect the best retailer trade in price to be available because otherwise the shelves would soon be empty

But that's not AG's business model, they're trying to sell new gear and I think maybe your expectations have made you overly critical of them in this case




p.s I'd have given you £250

This is pretty much what I was trying to say. The value they place on an item does not have to match or even be near the value you place on it.

I disagree. If you're comparing it with the car trade you could liken Golfbidder to We Buy Any Car. I recently changed my car & the part exchange price I was offered for mine was within pounds of the We Buy Any Car price. Selling to Golfbidder isn't like selling privately, it's like selling to a dealer who expects to make a profit when they sell the clubs on. If I'd chosen to go through the hassle of selling on EBay it's likely I'd have got more but I just coupdn't be bothered, I just wanted them off my hands.

As Slab says above, it all comes down to what each dealer/ trader (golf or car) values theitem at. One will give you more than another, but none of them have to offer the same value, or indeed be close in their valuations. The good thing for you is that you get to choose which one to accept or go with, and in this case, went for something that offered you more.

It doesn't mean that they have a bad business model, holding tons of second hand stock on the shelf that they can't shift is probably more likely to damage their profitability, especially if they want to get away from selling second hand clubs. It is just not in their interest to offer you a high price for the used clubs, and to me that's fair enough. As I said above, I've heard their staff suggest to customers, me included, that I will get a better price selling privately or via Golfbidder. If I want to just get the deal done, I may just accept their offer, if I want the extra £20-£50 etc. I may be happy to advertise, box and lug them to the post office and ship.

 

[Orikoru]

I always wondered who shops at American Golf? No idea how they are still in business

I do when somebody gives me vouchers for them.

 

[Oddsocks]

One thing that has been overlooked in this case is buying power. While smaller pro shops may work on smaller margins to “ make the sale “, we have to acknowledge AG as possibly the biggest outlet in uk golf sales.

I bet they do not get the same commercial terms as a normal pro shop even if they are part of a buying group, the add the fact that they would get sales growth incentives, growth rebate incentives and so on, my guess is on any day they could if the wished blow any independent out of the water on price.

While it’s bad news for the customer, I have to respect their standing on this. In the past they have always so on price and thus creates an unstable model that in short bit them and cost them the business.

They’ve stripped it back, redesigned the model and want to establish them selves for the right reason:

It in stock or can be within days, we cover all brands not just two or three like your club pro, most of our shops are attached to ranges and have trackman for demo data, we offer finance agreements to purchase. The list goes on but the facts are they know their place and offering and as it should comes not at full RRP but at a credible price.

It’s not a race to be the cheapest as this costs people their jobs long term when stores close!

 

[Slab]

This is pretty much what I was trying to say. The value they place on an item does not have to match or even be near the value you place on it.



As Slab says above, it all comes down to what each dealer/ trader (golf or car) values theitem at. One will give you more than another, but none of them have to offer the same value, or indeed be close in their valuations. The good thing for you is that you get to choose which one to accept or go with, and in this case, went for something that offered you more.

It doesn't mean that they have a bad business model, holding tons of second hand stock on the shelf that they can't shift is probably more likely to damage their profitability, especially if they want to get away from selling second hand clubs. It is just not in their interest to offer you a high price for the used clubs, and to me that's fair enough. As I said above, I've heard their staff suggest to customers, me included, that I will get a better price selling privately or via Golfbidder. If I want to just get the deal done, I may just accept their offer, if I want the extra £20-£50 etc. I may be happy to advertise, box and lug them to the post office and ship.

Yup and as Oddsocks also says there's a human impact in job losses

Let’s say someone is looking to buy a set of irons priced at £400
Let’s say the cost price to the retailer was £200 so a potential mark up of 100% or £200 (I have no idea what the mark up actually is)
Let’s attach a net profit figure of £150 on a £200 profit margin (after a % of all the running costs are taken off)
Now let’s say Mr Punter wants to trade in some clubs and is offered bottom book price of £150

The retailer has made no money yet, his entire profit is now invested in speculating on what he can eventually get for some 2nd hand clubs & instead of having some nice shiney new clubs sitting on the shelf he has some good condition, but clearly used, non-current old stock with an ever decreasing value and a more limited market to sell to rather than his normal customer profile. Remembering that to get the original £150 net profit the retailer invested in buying 2nd hand gear he’ll now need to sell the 2nd hand irons for more than that, let’s just say £200. But because it’s not current stock his usual customers aren’t as interested so they sit a while waiting for Mr Right…

If he does this too often he has insufficient profit & funds to buy any other new stock without an extended line of credit (which costs money and effects investors) or until he sells the 2nd hand gear which isn’t really his business, plus valuable floor space is given to an overstock of 2nd hand gear and footfall is reduced from customers who were only there looking for new stock which in turn drops turnover even more

To begin with the retailer used to punt all this 2nd hand gear off to a 3rd party outlet (at a much reduced rate & below the expected retail price needed to return the net profit of £150) but given the volume of 2nd hand stock the retailer now has, the 3rd party will be limited to what they can take themselves regardless of how cheap its being offered & very quickly they have to stop buying from both the retailer and the general public they normally buy from, until they can make some sales themselves or the price they offer to buy at is now ridiculously low (which reduces retail prices on 2nd hand stock and also takes another potential customer away from the first retailer who might otherwise have been able to sell a new set of irons to all the folk now buying 2nd hand bargains

Retailer has made no money or runs at a loss, goes out of business and without the turnover from the biggest retailer the manufacture has to put up cost prices to all other retailers who in turn have to increase retail prices in line so the public are paying more

All the while Mr Punter who took the clubs in for part exchange originally is having a bit of a moan because he reckons they were actually worth £200 trade in price

 

[Bunkermagnet]

As with all things in life, if you don’t use it you lose it.
Buying from an online instead of a local pro or bricks and mortar chain just because something is £10 cheaper with or without free postage will only lead to the loss of the physical venue to look and try stuff.
I am not advocating we should be gladly pay over the odds, but we must accept some responsibility for wanting the cheapest all the time, rather than accepting that personal service and physical presence costs.
I still don’t like AG, but they have their place and serve a purpose.

 

[r0wly86]

Yup and as Oddsocks also says there's a human impact in job losses

Let’s say someone is looking to buy a set of irons priced at £400
Let’s say the cost price to the retailer was £200 so a potential mark up of 100% or £200 (I have no idea what the mark up actually is)
Let’s attach a net profit figure of £150 on a £200 profit margin (after a % of all the running costs are taken off)
Now let’s say Mr Punter wants to trade in some clubs and is offered bottom book price of £150

The retailer has made no money yet, his entire profit is now invested in speculating on what he can eventually get for some 2nd hand clubs & instead of having some nice shiney new clubs sitting on the shelf he has some good condition, but clearly used, non-current old stock with an ever decreasing value and a more limited market to sell to rather than his normal customer profile. Remembering that to get the original £150 net profit the retailer invested in buying 2nd hand gear he’ll now need to sell the 2nd hand irons for more than that, let’s just say £200. But because it’s not current stock his usual customers aren’t as interested so they sit a while waiting for Mr Right…

If he does this too often he has insufficient profit & funds to buy any other new stock without an extended line of credit (which costs money and effects investors) or until he sells the 2nd hand gear which isn’t really his business, plus valuable floor space is given to an overstock of 2nd hand gear and footfall is reduced from customers who were only there looking for new stock which in turn drops turnover even more

To begin with the retailer used to punt all this 2nd hand gear off to a 3rd party outlet (at a much reduced rate & below the expected retail price needed to return the net profit of £150) but given the volume of 2nd hand stock the retailer now has, the 3rd party will be limited to what they can take themselves regardless of how cheap its being offered & very quickly they have to stop buying from both the retailer and the general public they normally buy from, until they can make some sales themselves or the price they offer to buy at is now ridiculously low (which reduces retail prices on 2nd hand stock and also takes another potential customer away from the first retailer who might otherwise have been able to sell a new set of irons to all the folk now buying 2nd hand bargains

Retailer has made no money or runs at a loss, goes out of business and without the turnover from the biggest retailer the manufacture has to put up cost prices to all other retailers who in turn have to increase retail prices in line so the public are paying more

All the while Mr Punter who took the clubs in for part exchange originally is having a bit of a moan because he reckons they were actually worth £200 trade in price

While all true the point the OP was making I believe is that the staff do not seem to have the authority or perhaps the inclination to change things up. Whereas a pro or smaller business owner may decide to lose £20 worth of profit to make the sale, AG aren't bothered.

I didn't read it as a dig per se at AG or their model just that they were rigid, either because they staff weren't particularly interested or didn't have any authority. Which is fine, if that's how the management want to do it, but in this case it just lost them a sale and the local pro picked it up

 

[Slab]

While all true the point the OP was making I believe is that the staff do not seem to have the authority or perhaps the inclination to change things up. Whereas a pro or smaller business owner may decide to lose £20 worth of profit to make the sale, AG aren't bothered.

I didn't read it as a dig per se at AG or their model just that they were rigid, either because they staff weren't particularly interested or didn't have any authority. Which is fine, if that's how the management want to do it, but in this case it just lost them a sale and the local pro picked it up

You might be right but for me the main point was the 'derisory £138 offer' with an expectation it should have been more and it was seen as uncompetitive compared to others
The comment about staff conduct was included at the end as an 'also' item (to be honest I'd expect staff in a chain store to be far more rigid than a sole trader anyway)

 

[r0wly86]

You might be right but for me the main point was the 'derisory £138 offer' with an expectation it should have been more and it was seen as uncompetitive compared to others
The comment about staff conduct was included at the end as an 'also' item (to be honest I'd expect staff in a chain store to be far more rigid than a sole trader anyway)

maye derisory was a bad choice of words, but AG's offer was 26% less than the pro and nearly 60% lower than Golf Bidder. For whatever reason AG's offer seems very low. Of course they don't have to offer anything and is there want. But if someone offered me 60% less for my clubs than another company I would probably scoff

 

[Maninblack4612]

As with all things in life, if you don’t use it you lose it.
Buying from an online instead of a local pro or bricks and mortar chain just because something is £10 cheaper with or without free postage will only lead to the loss of the physical venue to look and try stuff.
I am not advocating we should be gladly pay over the odds, but we must accept some responsibility for wanting the cheapest all the time, rather than accepting that personal service and physical presence costs.
I still don’t like AG, but they have their place and serve a purpose.

One of the advantages AG has over online retailers is the ability to take part exchange clubs. If they make themselves so ultra uncompetitive I don't doubt that they will lose profitable sales. This is obviously the strategy of the new management. The previous double value trade in policy was obviously stupid but they seem to have lurched too far the other way, in my view.

 

[happyhacker]

One of the advantages AG has over online retailers is the ability to take part exchange clubs. If they make themselves so ultra uncompetitive I don't doubt that they will lose profitable sales. This is obviously the strategy of the new management. The previous double value trade in policy was obviously stupid but they seem to have lurched too far the other way, in my view.

PX golf clubs is not an advantage for AG. They'd much rather realise their stock into cash rather than have a continuing, depreciating asset in lieu of said cash.

 

[GB72]

Other than to attract people away from other retailers, I have never understood why AG do trade ins. Golfbidder etc have a model based on second hand clubs. They buy them in, put a margin on top and sell them. People use Golfbidder because they are in the market for second hand gear.

People going to AG, on the other hand, are generally looking for something new and so the second hand option is not going to get much of a look in. So, unless someone sees a real bargain, AG are going to find it harder to shift the second hand clubs. This would result in offering lower prices. You also have to take into account that every second hand sale has to the potential to take away a sale of a new club. As such, they will need to look at margins similar to a new club sale. There is also the issue of store appearance. Having dozens of second hand clubs in store means that the place looks untidy and cluttered.

You also have to look at the ethos of what AG is selling. At the moment golf companies are pushing new technology and custom fitting. To then try and promote old clubs with no fitting element is a direct contradiction to the message that they are trying to put across when selling new clubs.

Really not that surprised that AG are not that competitive on trade in prices. That said, based on the more impersonal service associated with a 'high street' retailer, I would expect their prices on new clubs to be close to the lowest prices online.

 

[r0wly86]

PX golf clubs is not an advantage for AG. They'd much rather realise their stock into cash rather than have a continuing, depreciating asset in lieu of said cash.

but because of their poor offer, they have ended up with no sale at all. So instead of a sale with slightly less profit, they have ended up with no profit whatsoever.

 

[Slab]

but because of their poor offer, they have ended up with no sale at all. So instead of a sale with slightly less profit, they have ended up with no profit whatsoever.

But had they made an acceptable offer (min £175) they would have made a sale but had no profit (or ultimately even a loss) because the original profit is now wholly invested in speculative 2nd hand gear

 

[GB72]

But had they made an acceptable offer (min £175) they would have made a sale but had no profit (or ultimately even a loss) because the original profit is now wholly invested in speculative 2nd hand gear

That is it. It is all about cash flow. Investing your profit in a second hand set of clubs is no real use to a company especially as the profit can drop considerably or even be non existent if the clubs do not sell.

 

[r0wly86]

But had they made an acceptable offer (min £175) they would have made a sale but had no profit (or ultimately even a loss) because the original profit is now wholly invested in speculative 2nd hand gear

Either way, they now have nothing, no sale, nothing. All they have is stock, I doubt this will be a singular event.

I don't know what AG's turnover is, but can they afford to keep lose customers, especially with so many online competitors that are cheaper.

I understand where you are coming from, I just don't agree with the business idea. Golfbidder show that second hand sales work, why don't AG set up an online shop for their second hand gear.

Cash flow is all well and ncie, but if you keep losing customers in the end you are boned. Plus with AG's reputation of staff who don't know a lot about the clubs means that better informed golfers steer clear of them anyway

 

[Maninblack4612]

But had they made an acceptable offer (min £175) they would have made a sale but had no profit (or ultimately even a loss) because the original profit is now wholly invested in speculative 2nd hand gear

The week before I sold mine a mate of mine bought the same clubs I sold from a local pro for £350. If AG couldn't have made money on both the new sale & the PX I'm a monkey's uncle.