All Systems Go?
The economy appears poised for “reasonable” growth, and signs are pointing to a bullish ennis market, too.
By Mitch Rustad
With the frenzy of a heated presidential election and the war in Iraq, the state of the U.S. economy has at times been treated like a media afterthought; not forgotten but drowned in a sea of more urgent headlines.
As we head into 2005, the economic reports remain mixed and anything but explosive — consumer debt remains at record levels and interest rates are heading up. But many analysts suggest that the overall economy (which grew by 3.9 percent in the third quarter of last year) is again poised for moderate growth and modest gains in employment in 2005.
What exactly does this mean for tennis retailers? One of the country’s leading financial watchdogs, Gary Wright, CEO of G.A. Wright Marketing, a direct marketing and fulfillment company in Denver, is putting a positive spin on the short-term future of America’s economy.
“I’m reasonably optimistic that the economy will continue to grow,” Wright says. “It’s not booming, but the unemployment rate is low and the economy seems to be growing at a reasonable pace.”
Modestly upbeat assessments like Wright’s abound in economic circles, though that alone probably won’t help anxious tennis retailers sleep a whole lot more soundly at night. However, Wright says that today’s economy does show clear signs of favoring the niche retailer who’s done his homework.
“Our research has shown that specialty retailers with a narrow niche have been doing well, especially when they focus on specific areas,” says Wright, including thorough knowledge of your customers, what those customers want, and especially a significant focus on customer service. “I’d look very carefully at your service component and make sure it’s superior to the competition.”
Economic indicators and retail strategies aside, a more cohesive, well-oiled industry is one of the biggest reasons for optimism in 2005, according to Kurt Kamperman, the USTA’s chief executive of Community Tennis.
“Regardless of any economic indicators, our goals for tennis are still very much the same,” Kamperman says. “If I was a retailer looking at 2005, I’d be sure to remember that last year tennis launched several major initiatives,” such as the Tennis Welcome Center program and the US Open Series of professional tournaments, along with the major “Come Out Swinging” ad campaign — all of which generated significant exposure for the sport.
“We had over 100 million media impressions from the ads, mostly in non-tennis media, and the celebrity involvement was incredible,” says Kamperman. “We even have Donald Trump pushing tennis.”
Kamperman expects a snowball effect as both initiatives head into their second year. “We’re locked and loaded and we’re going to take it to an even higher level in 2005,” he says. “Effective marketing takes repetition, and we’re going to create even more awareness. As a result, I’d be somewhat bullish right now if I were a retailer.”
Recent projections by the Tennis Industry Association should provide more encouragement: Though total participation numbers are flat, total “occasions” or number of times played increased slightly, meaning a rise in more frequent players. That’s backed up by projected tennis ball sales, which are up about 6 percent for the year.
“This is one of the best indicators of how tennis is doing over a full year,” says Jim Baugh, president of the TIA. Baugh also notes that pre-strung racquet sales were up — by an impressive 12 percent — a sign that interest among new players could be on the upswing.
“We had a good year in 2004, and I see nothing on the horizon that should change this around,” says Baugh, who projects a 5 percent growth in racquet sales in 2005, with overall participation growth expected to match those numbers.
That optimism is echoed in the court construction field, too. The December Technical Meeting of the American Sports Builders Association (formerly the U.S. Tennis Court and Track Builders Association) drew a record 350-plus attendees to the event and trade show in New Orleans. Many — from court builders to materials and equipment suppliers to surfacing companies — said they had more business in 2004 than they’ve had in previous years.
“Tennis is on an upswing — all my contractors were busy [in 2004],” says Carl Peterson of J.A. Cissel Manufacturing Co. “We’re designing more facilities than ever,” adds Sheldon Westervelt of Global Sports & Tennis Design Group. “Tennis is up, business is good,” says Teri Wysocki of M. Putterman. “We’re having a great year,” adds Drew Stewart of Bakko Bak Bords. “There were a lot more construction projects in 2004, and we’re optimistic for next year,” says Rob Righter of Nova Sports USA.
In 2005, the USTA will provide more money for the Adopt-a-Court program to upgrade and repair existing facilities. And a new USTA program kicks off that will offer seed money for new projects.
HEAD Penn Racquet Sports’ Kevin Kempin says the recent uptick in sales of luxury goods bodes well for specialty retailers, and for tennis itself, and he’s encouraged that tennis balls and racquet sales revenues are both up for the first time in several years.
“As an industry, we have our eyes on the ball,” Kempin says. “There are definitely some rays of sunshine out there.”
Questions and Challenges
Some clouds remain on tennis’s horizon, however. Baugh says Tennis Welcome Center “ambassadors” will be implemented to help local clubs improve their interaction with fledgling players in 2005, as only 51 percent of TWC facilities saw an increase in new players this year. “We have to improve the quality of our delivery systems,” Baugh says.
A continuing question mark for many is how to best manage the internet explosion. Recent statistics by the Pew Internet & American Life Project say that a whopping 128 million Americans go on-line, and of those 78 percent research a product or service before buying it, and 65 percent buy products on-line (in higher income families, these percentages are even higher).
But using the internet as a viable marketing tool without stepping on retailer toes remains a minefield for the manufacturers.
“It’s like not advertising in a magazine,” says Katie Curry, vice president of marketing and merchandising for The LBH Group, which includes Lilys of Beverly Hills, LBH, Wimbledon and Fancy Pants apparel brands. “We need to be careful about how we support our independent retailer, but also have an online presence. You have to let people know you’re out there.
“It aggravates some of our accounts,” adds Curry, “but the retailers are generating sales through their own websites, and we have to work it into our mix, even if we don’t like it. It’s a sales and marketing tool and it’s here to stay.”
But with unprecedented industry cohesiveness, decent economic forecasts and solid marketing strategies in place, tennis’s fortunes for 2005 are looking up.
“I think we’ve learned a lot last year and that will continue,” Baugh says. “I’m not looking for big booms in the sport, because I don’t think we’re quite ready to handle that. I want slow, comfortable, manageable growth. I think we’re in good shape.”
See all articles by Mitch Rustad
About the Author
Mitch Rustad has been a long-time freelance writer based in New York City.