Tennis Industry magazine

 

Playing Ball

With materials, labor and shipping all undergoing dramatic cost increases, are we looking at rising tennis ball prices?

By Kent Oswald

It took nearly 100 years for the ITF to authorize play with tennis balls covered in yellow felt, departing from the long tradition of white tennis balls.

Tradition, however, seems to be a part of consumer attitudes toward ball pricing. Ask most players what they’d consider paying for a can of balls, and the answers most likely will not go higher than $3, and often much less.

From a ball manufacturer and retailer perspective, it seems that ball prices will have to rise at some point, if nothing else just to cover costs. The rubber core of tennis balls is petroleum derived, the felt cover includes petro-based polyesters, and the packaging is plastic and shipped on vehicles using gasoline. While petroleum prices are most prominent in their rise, everything from man-hours to materials to machines that go into making a tennis ball has increased in price — often dramatically when compared to three decades ago.

But ball prices for consumers have generally remained the same. Has any other price gone nowhere for so long?

The biggest challenge, according to Jason Collins, Wilson’s global business director of tennis balls, is one of perception. “[The ball] is round and yellow,” he says. “Most people believe, ‘How hard can it be to make?’ People are not aware how difficult it is to produce a tennis ball.”

“I wish every consumer who feels $2 a can is the right price for a tennis ball could walk through one of these factories and see the machinery and see the people and see what goes into making one of these balls,” says Hunter Hines, Dunlop’s racquet sports regional manager. “It will blow your mind. You’ll wonder why you’re not paying $15.”

“You can try and squeak out the efficiencies [in manufacturing],” adds Collins, “but at some point there are no efficiencies left to be had. We don’t want to have tennis balls as a loss leader — it’s not a good business model now.”

Price Barriers

Clothing has its style as a price driver and with tennis racquets players can feel technology in their swing. While golfers regularly pay $50-plus for a dozen golf balls compared to $8, they do so for game improvement — they can see their drives go farther or straighter. In tennis the same balls are used by opposing players, and since all have to meet the same ITF specifications, retailers usually find themselves competing on the basis of price or risk customer drift.

According to John Swetka, owner of Swetka’s Tennis Shop in Mountain View, Calif., some people are attracted to premium balls, but the majority view them as a commodity. They’ll say, “Oh my gosh, $2.77 for a can of [premium] balls. I’ll just get the $1.99.”

And that’s the price at which chain sporting goods and big-box retailers have been holding, an area of contention for many pro and specialty shops. Manufacturers have been taking a number of different approaches to salve their bottom line on balls, including tweaking the terms of buying programs and reducing the opportunities for free shipping. The result is often an effective increase in the wholesale cost that does not hit all retailers equally.

As one specialty retailer requesting anonymity said, “How does Sports Authority charge $2.19 for a can that I am being charged $2.25 for?”

Interestingly, Swetka offered an experience that suggested that perhaps some of the concern over price may be a bit overblown in a world of $4 lattes and people driving alone in their SUVs. His store ran a 10-day promotion selling balls at $1.89 a can that did not produce the increase in traffic or sales one would expect if players really were counting all their pennies when buying balls.

The concern of how much prices can rise remains. As Jennifer Parker, business manager for HEAD Penn Racquet Sports, puts it, “We expect retail pricing to rise in the near future, but due to the disposable nature and high volume of tennis balls, we also expect [manufacturer and retailer] margins to remain relatively slim compared to many other sporting goods products.”

Not that there needs to be more uncertainty, but like Swetka’s pricing experiment, TIA research does not indicate a more or less probable consumer reaction to the price increases.

Ball Sales = Participation

The general consensus is that ball sales equate to participation. TIA stats show a 15 percent increase in ball shipments between 2003 and 2007 to 130.6 million units, as well as a similar increase in frequent player participation. (For the first part of 2008, sales seem to have held steady compared to 2007.) In those same four years, total participation is up only 4.6 percent — although the more than 25 million players is the highest count since 1999. Racquet sales rose more than 42 percent and string sales 6 percent, again suggesting that consumers respond to what they are more convinced helps their game.

“Tennis ball sales are an ongoing struggle of margin versus raw dollars — a commodity we have to carry,” says Steve Vorhaus, owner of Rocky Mountain Racquet Specialists in Boulder, Colo. He once offered every high-end ball on the market, but found that a certain cannibalization of sales occurred. He says he was able to satisfy his different customer groups by representing the different manufacturers, but not necessarily with their entire ball lines.

While certain customers are loyal to a particular ball or specific brand, most customers apparently do not perceive the difference. Vorhaus says he has been able to inch up pricing on cans — and increased his sales volume by adding more institutional sales and selling cases at 10 percent off to individuals.

HEAD Penn’s Parker says she’s seeing a trend in the last five years “to larger configurations, packs of tennis balls. Consumers have become more likely to buy in bulk rather than single cans, so we have seen an increase in pack sales.”

But Vorhaus is concerned about the industry’s lack of effectiveness in educating the consumer on the quality of the product: “Since time immemorial, tennis balls have been a low-margin item,” he says. “We have to be price competitive [but] the struggle for those of us who have established a higher baseline is how much higher can we push the baseline?”

“A few years back we saw tennis ball pricing start to increase,” says Jay Simmons, now at Prince as the senior category manager but a longtime veteran of Penn and its tennis ball operations. “Then [prices] went down. Some large retailers out there specify lowest pricing and they felt they needed to cut back.”

While some products are able to maintain lower prices by replacing materials with ones of similar quality, Simmons, among others, does not see that as a possibility, saying he “can’t imagine any materials” that will replace the current felts or core materials making up an ITF-approvable product.

So prices most likely will have to rise, and the industry, with no proven way to explain the cost increase to the consumer, is pinning its hopes for more sales on the current trends of increased participation, as well as programs like the USTA’s QuickStart Tennis format and the ITF’s “Play and Stay” to keep adding players who need tennis balls.

And there is also always inertia (and the attraction of the game) to base one’s hopes on: “People will get used to spending more,” says Swetka. “[They] didn’t stop driving from the price increases to gas. Tennis balls going to $2.29 or $2.45 isn’t going to keep them from playing tennis.”

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About the Author

Kent Oswald  is a contributor to TennisNow.com, producer at the JockBookReview.com and a former editor of Tennis Week magazine.

 

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