Going for the Green

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On the other hand, operating expenses were also higher. Wages, salaries, and benefits, projected at $415,000, were actually running about 8% above projection. What Maxwell called his "controllables," all his variable expenses from insurance to cleaning supplies, begged for more control. They were about 10% more than the $408,000 he projected. Thus, while Maxwell had originally projected a pretax profit of $81,000 on sales of $2.4 million in 1996, he now foresaw earning $298,000 on $3 million.

Water Hazards. Higher sales and higher expenses somehow fit Maxwell's go-for-broke modus operandi. "I'd rather sacrifice profit up front for sizzle," he says, adding, "people are bored by the malls. They're looking for something different." That Maxwell has given them something different one can't dispute.

"Roger is a great merchandiser," says Izod's Pedersen. Whether that means he's a great merchant is another question. One frequent comment among knowledgeable ICOG shoppers is "He's got a lot of inventory." That, Maxwell insists, is part of the strategy. "It's important to establish the right momentum and look. A smaller inventory wouldn't convey what I'm trying to do. It would say 'small shop.' We need the extra space, the extra sizzle."

Maxwell also acknowledges that his biggest inventory item, apparel, which accounts for 54% of sales at a 50% gross margin, "doesn't age well." He immediately reduces slow-moving clothing by 50% to get it off the shelves.

Another issue confronting Maxwell is price. At ICOG you don't have to look far to find $140 Bobby Jones golf shirts and $600 cashmere sweaters. On the other hand, Scottsdale is not exactly the South Bronx. The typical visitor to Maxwell's store appears to be a 60-year-old male golf fanatic, eager to drop as much as $140 on daily greens fees at one of the local resort courses.

In the next six months, Maxwell confesses, he must bring greater discipline to the business. He has started by grooming three key employees, each of whom will oversee a different section of the store. Next he needs to upgrade inventory control. "We have to computerize the back end of the business to get a firmer grasp on what's selling and when," he says. Since ICOG carries many expensive, one-of-a-kind items that might wait a long time for the right buyer, Maxwell insists that managing inventory will always be an art as well as a science. Therefore, he focuses as much on increasing sales and raising gross margin as he does on selling items that will move quickly. "I'm willing to sacrifice some profit for sizzle and uniqueness," he says. "If we take away the sizzle, then we really lose something."

In fact, Maxwell sees the uniqueness of his inventory as a competitive barrier to entry. He gathered unusual items for almost two years before opening the store, which has given him a head start on finding sources that competitors would have to cultivate. Would specialty retailers be prone to knock him off? Maxwell sees ICOG's emphasis on presentation and atmosphere coupling with his own knowledge of the game to create a unique asset. Potential competitors, he claims, would be better off doing a licensing deal with him. Besides, he thinks there are only about five other golf-intensive parts of the country where such a concept would work at the same scale: Myrtle Beach, S.C.; Carmel, Calif.; Dallas; Atlanta; and Naples, Fla. Once ICOG becomes profitable in Scottsdale, Maxwell will consider opening in one or more of them.

With his visitors' log of 15,000 names, Maxwell has a mailing list. He intends to produce and mail a catalog this fall, a $200,000-plus investment.

Maxwell is starting to see the same people in his store every month or so; many of them have become steady buyers. He makes them ICOG "members," which gets them their own membership card along with special invitations to preview new merchandise.

Maxwell casts his retailer's eye across the store. "The merchandise has to move around a lot," he says. "It has to look different each time a person comes in. If we can do that, we'll be OK because we're already catering to a clientele that's attracted to the unusual."

EXECUTIVE SUMMARY

Company: In Celebration of Golf, in Scottsdale, Ariz., a specialty retailer with one 13,000-square-foot location.

Concept: Build a one-of-a-kind, high-end store to attract golf addicts as well as their gift-seeking families and friends.

Projections: Revenues of $3 million in 1996, with a pretax profit of $298,000; revenues of $3.6 million in 1997, with a pretax profit of $774,000.

Competitive advantage: A high level of service and the owner's ability to source hard-to-find merchandise

Hurdles: Tracking -- and moving -- a varied and extensive inventory containing some high-ticket items that will wait a long time for the right buyer.

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