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Retail Forum

By: Jeff James

Listed Under: Feature

Published: Wednesday, November 12, 2008

A perennial problem for retailers is estimating and placing forward orders during traditional sell-in periods - an issue that’s recently been brought to the attention of ‘Sports Insight’ by Mark Goodman (pictured). Mark and his wife, Karen, run three branches of Top Spin Tennis in East Anglia.

Mark explains: “One issue that I know both suppliers and retailers are struggling with in racquet sports is that the traditional autumn sell-in for summer delivery is less and less relevant.” According to Mark, this situation has been caused by several factors:


• Manufacturers are now launching products all year round.


• In the global sports market new products are seen much earlier by the public, thus creating a huge demand. This demand increases further as a result of the extensive marketing campaigns devised to promote the products.


• Because of internet shopping, it is no longer acceptable to launch new products in America first and then the UK. This situation results in both the UK arms of global manufacturers and UK retailers losing sales as people buy from the States.


• It is now common for tennis players to swap racquets during their short break in November/December to start playing with them in Australia in January. These racquets are usually not part of the autumn sell-in.

These factors cause the following problems:


• Retailers are cautious not to place large orders in the autumn, but manufacturers offer the biggest sales incentives at this time.


• The demand created for new products cannot be met as manufacturers can’t cope with a global launch - the ‘head of steam’ created by the new product launch is then lost as deliveries are delayed.


• Traditionally, discounts are based on the level of buy-in during the autumn. Now manufacturers are selling new products at different times of the year, these discount calculations become much more complex.


• It is very difficult to budget, as retailers need to keep some budget back because there will inevitably be new launches just before or during the actual season, rather than six months’ prior. However, keeping the budget back means a smaller order in the autumn and therefore smaller discounts, even though overall spend in the year is probably the same or greater.


• Sales reps have increased problems to sort out - they do their usual sell-in, knowing that they will probably have to deal with cancelled orders as product will be out of date before it is delivered the following summer. There is also another sell-in to be arranged for the new products during the season. This takes time, and if the product is available immediately it’s inevitable that some retailers will get the product before others - just at the crucial selling time.



Says Mark: “Two manufacturers who I know are trying to address this are Wilson and Yonex. Wilson has said it will be doing two sell-ins - one in May for its performance racquets, which will be available from July, and one in the autumn for its commercial racquets. This approach in itself raises many questions.

“I believe Yonex is looking at moving much of its tennis buy-in to the All England Badminton Championships, where the company has a large showroom and has traditionally done its badminton sell in from. But doing badminton and tennis in one go takes a long time - and is quite tiring for all concerned. This year many of the racquets sold in the autumn sell-in were obsolete by the time the All England came along in March.”

MANUFACTURER'S RESPONSE

JONATHAN BALLARDIE, SALES AND MARKETING DIRECTOR OF WILSON RACKET & TEAM SPORTS
As one of the leading sports equipment brands, Wilson is concerned about many of the issues raised here. We are aware that mid-season ‘surprise’ launches can lead to frustration for some retailers. Therefore, our strategy for introducing new Wilson tennis racquets for the coming year has been developed with the retailers in mind after listening to their concerns on a global scale.

In the UK Wilson has opted to bring forward the launch of its performance rackets and bags from the conventional timing. Instead of visiting retailers in September with a new range for the following spring, Wilson has chosen to bring that visit forward to May. Retailers will then be asked to give a commitment on the new performance models for delivery from June to August. We will then visit them again in the autumn to secure a pre-order for the following year. We have decided on this strategy for a number of reasons:

• It will take advantage of the peak sales around the Wimbledon fortnight, as traditionally there is high demand for new products during this period.

• The new performance racquets will be available in the market in the midst of the tennis season when the weather should be good and the courts full of players.

• We do not believe that consumers should have to wait until September or October to buy new racquets, so this strategy allows us to get the racquets into retail outlets from May, which is much closer to the racquet launches in other key markets around the world.

• Should one of the Tour players switch to a new racquet, which invariably happens at the beginning of the year - for example, Djokovic switched to the [K]Blade Tour before the Australian Open - it would not be a wise business decision to wait until October to launch the same model here.

All of our customers have been informed about the new launch timing as we maintain an ‘upfront and honest’ policy with our customers. Our sales team has alerted customers to the fact that we will be contacting them in May with a new performance range. We have committed to that timeline, which allows our customers to budget accordingly. In the past there have been new racquets introduced in February or March that could cause budgeting problems for retailers. Commercial racquets will remain on a launch timing in the autumn of each year.

Customer discounts are based on the pre-order commitment and those discounts are held for 12 months from September. When we call on customers in May with the new performance racquets, the customer will not have to worry about the discount as it will be based on the pre-order from the previous September. Then in the autumn, during the re-presentation of the performance range with the new commercial range, the commitment at that time will dictate the discount for the following 12 months. This should enable retailers to budget more effectively and simplify the discount calculations.

We believe that this strategy will help ease some of the issues which retailers have raised with us. We will continue to develop this strategy by taking on feedback from retailers on how they feel this is affecting them.


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