Tennis Industry magazine

 

SMUs -- Genie in a Bottle or Pandora's Box?

By Mitch Rustad

Depending on to whom you’re talking, special makeup racquets can most accurately be described as:

  1. A super deal for the recreational tennis player.
  2. A secret weapon for big-box retailers.
  3. Instant market share for anxious manufacturers.
  4. A thorn in the side of specialty retailers.
  5. All of the above.

If you picked “e,” you’re probably right. Though they’ve been around for many years, these often-controversial racquets may indeed be very different things to different people, and the jury’s still out on their ultimate affect on the industry at large. Positive, negative or somewhere in-between?

The basic idea behind special makeup racquets (SMUs) is simple. A large department store or sporting goods store will petition a racquet manufacturer to create an SMU, a pre-strung racquet wholly unique to that store. The order is usually for at least 500 to 1,000 units (anything less usually won’t make it worth a manufacturer’s while), and they’re distributed throughout their stores across the country, at an attractive price point (typically $69 to $99), and often showcased in local advertisements. Best of all, because it’s an SMU, a customer can’t compare prices with other stores or specialty shops; there’s nothing to compare it to!

Great Margins, Low Risk

For big-box chains looking to attract tennis customers, and for a manufacturer looking to quickly expand overall market share, going the SMU route can be a sweet deal — great margins and relatively low risk.

One big plus of SMUs for the retailer, says Sam Cook, national manager for Völkl, is “first and foremost, long profit margins. Equally important is the fact that the margin is controlled by the retailer, since the product is unique to that particular store. Since the model is ‘special,’ it’s not advertised by the brand, so it’s the responsibility of the retailer to promote the product, which they are more likely to do given the profitability and exclusivity.”

Dave Holland, senior director of Prince Tennis, explains SMUs this way: “We will do a different name or special cosmetic for a distinct customer, so it’s a unique product for them to promote. It’s also an important one. it allows the accounts to offer a great value and move significant numbers, and the consumer gets a brand-name product at a great value.”

Some specialty retailers, however, may beg to differ. In fact, one says SMUs are hurting not only their business, but the industry as a whole.

“It’s kind of a crap deal,” says Mike Pratt, owner of MP Tennis in Tampa, Fla. “As a small retailer who supports tennis, you hate to see a store that doesn’t support tennis as much enjoy that advantage. In a sense, yes, the bigger stores are supporting the sport, but the manufacturers cater to them because they do such big orders, and the special makeup is part of that.”

Going After Market Share

And in today’s sales climate, big orders are the bottom line for market-share-conscious manufacturers; rejecting an SMU request could be potentially devastating, according to Greg Wolf, president of Midwest Sports in Cincinnati.

“The manufacturers need every percentage point of racquet share they can get,” says Wolf. “If they don’t do it for a big box, you can bet someone else will. They really can’t afford to say no.”

For example, a racquet manufacturer that turns down an offer for 1,000 SMUs will almost certainly lose the 1,000 units because another manufacturer will pick it up. That kind of order will likely move a share percentage point, says Wolf. “That’s the game right now,” he adds.

And the days of obscure, no-name SMUs adorning the walls of big chain sporting goods stores are a thing of the past, says Wolf. “[Big-box stores] are going after a more educated tennis consumer. It used to be just a sideline business, a small niche that was more of an afterthought, but now they’ve gone after it pretty large,” says Wolf. “They want names on the wall that have value and equity.”

But there may actually be a downside for manufacturers. “From a manufacturer’s perspective, SMUs are generally a lower margin product that has the potential to dilute the performance image of the brand,” says Cook.

At least one specialty store owner agrees. “The big-box stores from my area represent a lower cost, cheaper item,” says Chris Gaudreau, owner of the Racquet Koop in New Haven, Conn. “I market myself as service and higher end product; I try not to degrade my image by carrying lower end stuff. When you come here, you’re getting the newest products and the best advice and service. I’m trying to move forward, and I think SMUs kind of look backward.”

Pratt says the mere presence of SMUs creates not opportunity, but confusion, for consumers. “I think we should all be the same arena worldwide. When you have too many models floating around, it confuses the customers, who think they’re getting a premium racquet from a premium brand, so it’s really a disservice to the customer,” says Pratt. “They’re never going to see a pro using it, for example.”

At times, SMUs can even strain the credibility of specialty retailers with loyal customers, says Pratt. “When I tell people I have every racquet from a manufacturer, and when a customer sees [an SMU] in a big box, it makes me out to be a liar,” he says.

Classic Frames, Affordable Prices

On the flip side, SMUs do provide a real sanctuary for players whose affection for a specific frame doesn’t die with the seasons. Without them, players who didn’t stockpile their favorite frames would be out of luck. “There’s still interest in the ‘was, is’ type of racquet, so we don’t want to ignore customers that were happy with a classic,” says Holland.

Holland says the Prince Thunderbolt, Thunderstrike, and Michael Chang Graphite racquets are all examples of “was, is” frames still highly popular with consumers, and there are plenty of retailers stepping up to order them in significant quantities. Because of their low price points, Holland says SMUs also “support making tennis accessible and affordable to new players coming into our sport, all ages and genders, who might not want to spend $100 or more on a racquet.”

And when it comes to the classics, manufacturers have one important, built-in head start: “One of our major costs are the molds, which cost thousands and thousands of dollars,” says Kevin Kempin, vice president of sales and marketing for HEAD Penn. “So after a frame has been out there three to five years, the mold costs are paid for. With that comes the opportunity to spur sales, though it’s not necessarily the most healthy thing for our industry.

“We’ve all scurried a bit to boost sales, and this area has sort of developed as a result,” adds Kempin, who’s also quick to point out that SMUs bring great value to entry-level and even seasonal players who want technology but at a good price point.

Kempin points to two specific areas — less overall racquet sales and no new “must-have” technology — as the main drivers for SMUs in recent years. “When those two things come together, you need a shot of adrenaline,” he says. “It’s not creative or brain surgery, but it had its time and was needed. But we’re trying to back away from that aggressively. We’d much rather sell our new frames.”

And because even the big-box retailers may be backing away from bigger orders, SMUs current impact is rather minimal, according to Kempin. “There aren’t many people who can hit those minimums anymore,” he says.

Wolf, for one, isn’t so sure about that. “With SMUs, it’s good news and bad news, but they’ve been done in one form or another for a long time. They’re here to stay.”

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About the Author

Mitch Rustad has been a long-time freelance writer based in New York City.

 

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