Beefing Up Pro-Shop Security
One of the most interesting aspects of the club business is its sheer diversity. Most small businesses require managers to have a few good skills. The club business, on the other hand, demands that a variety of things be done very well. Sales, marketing, finance and programming are just a few examples of the assortment of skills required. If the club has a pro shop, then inventory management, retailing and accounting all come into play in a big way.
Pro-shop security is an important issue because the pro-shop business is so tough to begin with. Think about it: The pro shop must have all its inventory purchased, retail space built out and staff hired before it has its first customer. Furthermore, most shops have anywhere between 90 and 120 days to "carry" the inventory. In other words, if the inventory turns in 120 days (i.e., three times per year) and the invoices are due in 30 days, the shop will have to "carry" the inventory for 90 days, which is really a hidden cost.
Put that into the context of the club industry as a whole, with its inherent economic inefficiencies, and it's not hard to understand why good pro shops are rapidly becoming a scarce commodity. Despite its challenges, however, the local pro shop is still an important part of sports retailing for clubs and manufacturers. It allows the club to maximize its revenue-earning potential, which helps to offset its capital intensity. For the manufacturer, it is rapidly becoming a meaningful "guerilla marketing" tactic. What better way to differentiate a product than to have someone experience it firsthand under the guidance of a knowledgeable service provider?
Still, to have someone experience the product firsthand, you'll need to protect it from theft. Invest in a security system for the inventory like the big retailers do-the tags that set off an alarm when exiting a store. Even if the tags don't work, they may scare enough people into being honest. If a professional wants anything on the floor, be rest assured that he or she will get past any security system. Also remember to put accessories and smaller items behind the front desk or enclose them in a locked display cabinet. However, don't overdo it; members shouldn't feel like they are shopping in a prison. Chaining racks to the wall and enclosing the shop into a tiny locked area doesn't engender a very pleasant shopping experience.
Another protective measure is automating your inventory. Even with a computerized inventory tracking system, inventory is difficult to track. Also, bar-coding the prices will prevent cashiering errors, which can be one of the causes of what may appear to be inventory shrinkage. Without bar codes, the pro-shop manager must have open lines of communication with the front-desk staff to prevent errors.
As with any department in the club business, the manager can be the difference between success and failure. When the pro shop has a "champion" whose sole function is the pro shop, not only do sales increase, but shrinkage decreases simply because someone who cares is on the beat daily. Giving incentives to the pro-shop manager on profitability also directs attention to inventory management on a regular basis.
Most clubs only do a physical inventory a few times a year. I would recommend doing it monthly until losses are at an acceptable level and then gradually do it less frequently. Each club is unique, and the manager needs to experiment a little to find the right balance of strategies that will reduce losses to an "acceptable level."
An acceptable level is different for each club, but I would like to think that the acceptable level for the manager would be zero. Circulating the monthly loss report to club managers is also a good way of making everyone aware of what the losses are, and a great way to solve inventory-related problems.
As mentioned at the outset, the club business in general, and the pro-shop business in particular, are tough enough without "shooting ourselves in the foot" by not managing inventory properly. By taking some simple inventory management precautions, you can keep inventory loss to a minimum.
-Steve Wild owns Club-Net Inc., which owns and manages three clubs between Chicago and Milwaukee.
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