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Should I Have an “End of Season” Tennis Shop Sale?

by Ed Shanaphy

For those of us in tennis or fitness who “own” our merchandise shop and do all the buying and selling within our own company, August is a perplexing month where we are always left asking: Should I have a sale before I close up shop?

Tennis RetailEvery year, starting in May, I hear it from a summer member: “I’ll wait until August when you put everything at half price.” It’s part of the seasonal gossip at any club: When is the shop sale starting?

Running a retail operation at any time is a tough job. Stores come and stores go in malls, on high streets, and online. But, year after year, Directors of Tennis and Fitness are expected to have a wonderful shop, offering all that every member could possibly need or desire, and then in four months if at a seasonal club, break down the shop, close the club and go into hibernation for 8 months. All while maintaining cash flow and, hopefully, showing a profit.

Well, it’s mid August and I am debating whether I should have a sale or not. Almost every other pro I know says: “By all means get rid of your inventory and start afresh next year.” I say: “Not so fast!”

There are several factors that any retail operation has to look at when conducting any sale, and having worked in the entertainment, marketing and distribution worlds, I’m well aquainted with carrying inventory. I pulled out the 1998 financials from my entertainment company this week to look at how I handled inventory and retail twenty years ago. Inventory was $1.7 million in a warehouse at a fulfilment center. What did I do twenty years ago that might affect how I look at a “Sale” at my tennis shop in 2018?

In trying to summarize I find myself thinking of four distinct questions.

  1. What Is My Reason For Having A Sale?
  2. What’s Is My Inventory Level Compared To Years Past?
  3. Can I Incentivize Usage or Traffic With A Sale?
  4. What’s My Cash Flow and Profitability?

Am I having a sale just because it’s August? Do my members expect a sale? Perhaps. And sometimes, I would think, that understanding and acceding to member expectations is a good thing. However, to have a sale every year, would mean that many members might wait until the sale to make their purchases – purchases you would have made more profit on had they made them earlier in the summer. But if I have a sale every year, members do expect it and will wait.

We are lucky in some respects, as retail operators in a tennis or fitness facility, that we don’t have to carry overheads like utilities and therefore can really look at the profit margin per item as a true profit margin. Or can we? Have you added in the payroll cost of your front desk staff if they are on your payroll, selling merchandise? How about freight? Have you added that cost to your bottom line in your books and singled it out against retail sales? Are you depreciating the costs of fixed items like racks and hangers and Point of Sale software if you require that?

I also like to look at my inventory levels versus the previous year. In a growing environment, it’s natural in a positive and growing business cycle to have a larger inventory. I need to look at what I carried the last year on my financials while also looking at freeing some space in storage and in the shop with older items going on sale. If you have monogrammed or embrodiered inventory, I find it’s not worth giving a big discount as one has to consider that the shop is really the only point of sale for such personalized goods. Also, sneakers and trainers don’t really change in fashion year to year and can be held over 8 months and look new the following Spring.

What I did in marketing was use a discount or sale to bring traffic to my website or phone ordering lines and mailbox so I could get a second mailing or insert back to the customer with their sale order. Perhaps creating traffic for further full-price sales is my favorite reason for offering a sale. But how can I do that at a country club?

Well, there are several things you can do. Let’s take for example a tournament coming up on the weekend. Most Directors of Tennis get a percentage of the tournament fee – if you’re not you need to renegotiate your package! I tend to offer discounts on sale merchandise to tournament players that weekend and market that. Incentivize them to play in the tournament and the higher turnout covers the discount of my stock through collected tournament fees. But there’s more…

I do the same thing early in the season to help cash flow. I hold an early Adult Camp where all campers get 15% off merchandise if they do two or more days of the four day camp. Use the merchandise discount to gain more members per court and per professional to lower your on-court cost percentage. I usually sell about 40 percent of my held inventory which shows me what is going to sell early in the season and usually pays for my initial purchases in regards to the shop.

Profit also has an affect on how I view my inventory.  If I am showing a larger profit than expected for for the summer or year – a year with little rain or no staff issues – I might sit on my stock and write some of it down. If I am showing a small gain or a loss, I will help my cash flow and sell off as much of my merchandise I can late in the summer.

It’s a four-pronged attack when looking at inventory and retail sales, and each year is a different story. So, take all of the above issues into account and do what is best for you given your situation.

 

 

 

 

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A Club’s Profile Is Just The Start

What Is A Club Profile?

Clubs are far and wide across our nation. Established country clubs in the Northeast with golf courses and old stone swimming pools are quite different from a yacht club in Florida which offers yachting, tennis and social amenities set in a gated community. Again, a tennis-only club is different from a golf club. Average ages of membership and length of memberships held vary widely from club to club.

How do each of these clubs fall into a general hiring process? They don’t. Plain and simple.

Having worked with so many clubs, the term “Director” or “Department Head” has various meanings – all defined by the particular club and its management structure. For demonstration purposes, and to keep it general and not even club specific, a Director of Sailing is quite different from a Director of Tennis. Sailing Directors are rarely seen instructing adults or offering much in the way of any adult programming. Programming and instruction for yacht clubs mainly focuses on juniors. The Sailing Director is asked to hire young, college-age instructors, find and organize those instructors’ housing for the summer, and run a program that aims at getting juniors age 8 to about 17 (they have to be over the age of 8 to be insured on the water) on the water and learning to sail.

With that in mind, many clubs place a major focus on their junior programs, sometimes with good motives, but oftentimes, with monetary gains in the mind of the present Director of Tennis or Golf. Junior programs, by far, outweigh adult programming in terms of revenue to most Directors of Tennis across our country. An industry standard that we have seen is something in the region of a 75/25 ration in favor of junior programming. Sometimes, this is how the club over years has structured itself. At other times, it is that the Director sees the junior program as his or her main revenue stream.  Often, the adult program is left behind – ragged and uninspiring. We see it far too often.

That’s why the first item in any process of finding a new Director of Tennis (or Sailing or Golf for those clubs that offer those sports) is to create a Club Profile. This profiling is imperative in understanding the ethos of the club. Sometimes we call it the “vibe” of the club, but both words help to describe how we unearth the actual essence of the club.

Through meetings with the board, committees and active members, we can glean the strengths and weaknesses of the Club. Without a bias and a truly objective eye, we focus on where the club is failing, where it should be more even-handed, and where it should be in the next five to ten years.

The Club Profile is divided into two parts, one statistical and one part motivational.

Club Profile Part A: Statistical

These figures we glean easily enough from club management. Below are some of the statistics we look at – but we would also look quite intensely at usage and revenues which are clearly club specific.

  • Total Number of Present Members
  • Total Number of Members 5 Years ago, 10 Years Ago, and 20 Years Ago
  • Number of Member Categories and Change In Those Categories By Year Over Past 10 Years
  • Waitlist Numbers Growth and/or Decline
  • Ages of Members, Spouses and Children
  • Ages of New Members, Spouses and Children
  • Length of Membership Held
  • Projection of Membership Numbers and Age of Members: 5, 10, and 20 Years.
  • Tennis Court/Golf Course – Usage by Member Category, Age and Season
  • Tennis/Golf Revenues – Broken down between Instruction, Tournament Play, Guest Fees, Special Events, Socials, Fees, etc.

These questions and more will help to understand the type of Director of Professional that is required. The average age of a Director of Tennis in the United States is 48 – is that the right age for a club that is based in New York City and focuses on squash with a membership mainly of young people working on Wall Street? Probably not. But perhaps it is if that Director then hires two strong, younger professionals who are great players and teachers.

Club Profile Part B: Motivational, Change and Club Environment

Part Two of any Club Profile is a written survey and subsequent meetings with active members, the board and committee. Our “Club Profile Request” which we offer to all board and committee members helps to discover and uncover hidden ideas and agendas. Through this 25 to 50 question document created specifically for each club we work with, we discover the present programming and currently held ideas and opinions of members and the club’s governing bodies. We find where boards, committees and active members feel their club is failing and where it is strong and why they believe they require (or in some cases do not require) a new tennis or golf professional. And, more importantly, we uncover the various board and committee’s factions, so we better understand the entire situation prior to starting any recruitment process. This entire process aids us and allows us to better educate and work with the club’s governing bodies as we progress through any changes of employment or management structures.

Questions such as: Is there a teaching ethos at the club or do most members just use the club for their doubles games? Are tournaments catering to the same small group of members or do tournaments receive club-wide participation? Does the tennis committee represent all the various groups and demographics using the tennis courts? Does the Greens Committee overstep its job description and squash the Golf Committee? In this gated community, have house prices gone up or down and how has that affected the membership? These are simple enough questions, but we need to know the answers to these general questions before forging ahead.

The Club Profile is perhaps one of the most important documents and processes in any situation where a club believes it might be time for a new Director of Tennis or Golf… or Sailing. It is an investigation into the club itself, the board and the committees and why there is an apparent disconnect with present employee. Sometimes, communication and lack of oversight can create a hot-bed of resentment toward present employees. Sometimes, present employees are not fulfilling the clearly stated job description. Reasons for a disconnect are many.

However, the reasoning behind the disconnect, the apparent or non-apparent need to address issues, the desire for change, and ideas for the future all dictate why the present management structure may or may not be working. How to find a better-suited Director or professional in the future, if that is indeed required, is the responsibility of the governing bodies of the club. Understanding those bodies’ motivations and goals will help find and retain the right professional for the present and future.