Nike from the expert insiders


Nike will be OK.

Their revenue last year was $32billion. Golf made up a paltry $706million of that.

But in golf this is massive news. To follow off the back of the news of adidas putting TaylorMade on the market Nike have decided to stop making clubs.

But what does this mean for golf on a wider scale that these massive names are scaling back on their activities within the game? We asked major industry insiders who for obvious reasons wanted to remain anonymous!

Anyway...

"Nike and adidas will be competing in growth between departments and when the alarm bells of participation decline coupled with decreased revenues gets to top brass it was only going to go one way, especially after the amount of money invested in both R&D and big name players.

"The problem is golf clubs are very expensive. It's the old 80/20 rule where 80% of the new equipment is sold to the top 20% of consumers. When this pool doesn't grow there is only so much of a pie to have and when there is very little product differentiation between all premium brands it's hard to take big chunks in an established market.

"Add to this the desperation of many brands to drive profits in the competitive environment that the product life cycle becomes as low as 3-6 months both consumers and retailers get pissed off.

"Consumers either buy the new driver and get pissed off when a new one comes out so soon and their one is discounted, or they are savvy enough to just wait a couple of months and get it at a big saving.

"Retailers are pissed off because this is even a thing and they are left with a load of old stock. Their margins are tight enough as it is.

"It could be argued what both Nike and adidas have done wrong is to not differentiate themselves from their competition.

"Titleist for their faults position themselves as a player's golf club. Callaway as an innovator. Could or can the same be said of Nike and TaylorMade?

"Nike haven't done this because of Tiger Woods or Rory McIlroy. And although golf's well documented struggles would have led to an easier decision this is simply a bottom line decision.

"Expect them to go hard now at their apparel now where they are doing what they might have done on their equipment side, doing something different and sticking their considerable flag to it.

"Nike don't get many things wrong. If they did they wouldn't be the biggest sports brand on the planet."

Another industry insider at a rival brand told us: "This obviously represents a huge opportunity for us to pick up market share. But at the moment the trade world will be raw. A lot of people have invested a lot of money in Nike and won't be happy."

So it remains to be seen whether Rory and Tiger will have to play The Masters with a hire set but maybe this should be a lesson...

Despite the opportunity for the other brands to take market share the lesson here is anybody can fail. Stand still, don't evolve, innovate or be unique and it could happen to you... And that goes for golf as a whole too.
 

I'm the Managing Editor at The Club. I like putting and Rioja. I dislike my low slice.