CARLSBAD, Calif. – It was only fitting that the King of TaylorMade-adidas Golf make a proclamation in the testing centre/social area/driving range known as the Kingdom, which is right across the street from where his decrees usually take place at company headquarters.
The King’s decree was based on the excess inventory that is piling up out there in a tough economy, so “2009 is going to be the year of the retailer. We can’t focus on the consumer” declared outspoken company president and chief executive officer Mark King.
“(Excess inventory) actually is more devastating than a 20 per cent downturn when you’ve got stockpiles of inventory and all of your cash is in inventory,” said King. “We need to make sure we’re liquidating inventories and, as we launch new product, you can’t get stuck with the old product.
“You’ve got to be aggressive to move those through,” said King, adding that the challenge of excess inventory has already forced a change in tactics for TaylorMade.
“Where we’re being aggressive is more at retail than traditional advertising,” he said. “For example, in the U.S., we cut our advertising budget back by 30 per cent from the original plan. Some of that money was just cut out, but some of that money was put back into retail promotions.”
“I don’t know if it’s going to work, but we’ve got a plan and we think it’s going to work and that’s what we’re driving to,” said King.
“We want to stay as aggressive as we can because most of our competitors are not aggressive right now. They’re scared. They don’t know what to do. They don’t have the strength of new product like we do,” said King. “They’re just kind of reeling back in as much as possible and we really haven’t taken that stance.”
Where TaylorMade-adidas has been aggressive is in the introduction of new products, led by the new r9 driver and Burner irons, and the acquisition of an iconic golf apparel name in Ashworth, a deal that was completed late last year.
King says even sales reps from rival companies were looking forward to the release of the r9, just so the buzz it created would drive traffic into retail outlets. He adds that TaylorMade’s target audience is the golfer committed to making new equipment purchases and they are still out there despite the economy.
“That’s what drives our business,” he said. “If they’ve got $500, they’re spending it on a new driver, not anything else.”
King adds that the acquisition of Ashworth could be the beginning of a trend across the entire golf industry in the current economy and that consolidation could include some big names in equipment, as well. While there is nothing on the horizon now, King says the company is always looking at anything that may strengthen it.
“I think we’ve got big potential. We want to be the biggest golf company because I think when you’re the biggest, you’ve got more market clout and you’re able to do more things. We constantly look at everybody and everything,” he said.
“We were kind of sniffing around Ashworth for two years and when the deal got so good that we couldn’t pass it up, then we jumped in and said, `Hey, we’ve got to do it now,’” said King, adding that 15 new players on tour could soon be wearing Ashworth, with its familiar Golf Man emblem.
“They’re excited to put Golf Man on. They like the Golf Man, so I think it’s going to take us a little while to get the product really where we want it, but I think by 2011, we’ll be feeling really good about the Ashworth business,” said King.
As part of the Ashworth, the company also got distribution rights to the Sunice brand which has been developed by the Fletcher Leisure Group of Montreal. Fletcher will also continue to distribute Ashworth in Canada as part of an existing agreement.
“The problem with all these smaller brands is that you can only dedicate resources to so much. We think the Sunice brand is a wonderful brand, the products are great. Our challenge is how are we going to sell and distribute it at a greater level?” said King.
In the end, says King, TaylorMade-adidas will weather the economic storm due to factors such as brand power, the company’s global reach, its strength in apparel, concentration on products and innovation and the fact that it’s a growth company which attracts investors.
“I still think we’re going to come out of this with higher market shares because we’re going at it trying to provide solutions to our retail partners and, right now, our retail partners will listen to any potential solution to driving people into their stores.”