Why are these Major Sportswear Companies Taking a Huge Step Back from this Popular Sport?

 

While many companies put in a considerable effort to expand their reach amongst consumers – be that through increasing their line of products, re-vamping their marketing strategy or otherwise – it pays to know when one has exceeded their boundaries.

It would seem that sportswear giants, Nike and Adidas have reached that point, as they recently announced their plans to exit from the golf equipment business. As industry insiders are aware, the unfortunate truth is that interest in golf has been seeing a decline for quite some time now.

Up until now, notably sponsored-player Tiger Woods, managed to maintain a pretty steady revenue stream. In fact, as CBS News reports, a study carried out by the Tepper School of Business at Carnegie Mellon University in 2009 found that, “in a decade of sponsoring Tiger Woods, Nike’s golf ball unit alone added $91 million in additional revenue and $60 million in extra profit.” Additionally, when Tiger Woods publicly endorsed the brand, about 4.5 million new customers followed his lead. However, during the player’s hiatus from golf after his 2009 scandal, the entire golf ball category lost $10.2 million in revenue, as per the same study.

Cut to 6 years later, Tiger Woods has run his course as the company’s magic spokesman and sales of Nike’s golf division fell by 8% (down from $706 million) in 2015. While they will humbly bow out of selling golf clubs, balls and bags, in a press release, Nike said they would continue to manufacture golf footwear and apparel.

Nike’s decision actually comes at the heels of Adidas’ earlier announcement to take a step back from the golf industry as well. As per Herbert Hainer, CEO of the Adidas Group, “The golf equipment industry was not a growing market for the last several years.” Indeed, golf sales at Adidas were down last year by about a third of their highest peak (made in 2012). As a result, Adidas has decided to stick to what it does best. “[We’ve] decided that now is the time to focus even more on our core strength in the athletic footwear and apparel market,” explains Herbert.

We know the pitfalls of over-promising on things we can’t deliver but there is something to be said for knowing when taking a step back is, ultimately, the best decision for your brand. Cutting back shouldn’t be perceived as a failure (or quitting) but rather making strategic moves to better maximize your company’s time, money, and efforts. Focus on your assets and what you do best.

 

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