Tommy Armour Isn’t What You Think

This is how it typically goes with so-called House Brands – a large retailer pays $X for a familiar name, thinking it can make $X + a decent profit before letting it go the way of 8-track and fidget spinners. It’s not the worst business model, but often it amounts to little more than a prolonged liquidation. As long as the retailer makes can turn a decent short-term profit, it’s a win. That said, house brands rarely have a future; they’re the equivalent of scrap metal.

This is where Tommy Armour’s story diverges from expectation. The resurgent Tommy Armour is the private label house brand of Dick’s Sporting Goods, and it’s anything but walking the plank toward the inevitable. The guts of operation suggest a far different reality – one which is positioned to honor the history and heritage of the Tommy Armour name while pushing back on the new reality of $500+ drivers by offering cutting-edge technology and a value-centric marketing message.

INSIDE

Stripping away names and logos, equipment design boils down to materials and construction. The rest is more or less window dressing. Looking at the 2019 Atomic line – and more specifically at the metalwoods – we get an objective glimpse at why Tommy Armour should be held in the same regard as domestic brands like Tour Edge, and JDM stalwarts PRGR, OnOff, Yamaha, XXIO, and Ryoma.

The common thread binding these companies together is Performax, a decades-old club manufacturing factory and the only golf R&D facility in the world to use a brazing process (Tour Edge uses the term combo-brazing). This process is costly but has significant advantages in club production. It also simplifies the conversation because there’s a single known supplier. If the equipment is brazed, it came straight outta Performax.

Before we get too far ahead of ourselves, let’s pause to answer the obvious question: What is brazing?

When adhering different parts of a club together (think titanium cup face to stainless steel body), there are effectively two options – welding or brazing. Welding melts and fuses two base metals by applying concentrated heat at the joint. It’s cheap, heavier and requires finishing to remove excess material.  Brazing, on the other hand, uses a lower-temperature filler metal to bond the two base metals. Brazing is quite a bit more expensive, but it saves valuable weight and doesn’t require grinding, which creates greater consistency from part to part.

For this reason, brazing is more common in top-tier JDM products where higher production costs, which translate to upper-end retail costs, are expected, if not welcome.  Performax uses a proprietary bonding agent that was developed in conjunction with a leading aerospace company. The 99% silver agent is used to join dissimilar metals (titanium to steel or tungsten to titanium), whereas a 99% pure nickel agent is used to braze steel to steel or titanium to titanium.

Performax leverages its brazing process for popular JDM brands Ryoma, PRGR, OnOff, and Yamaha among others. Current generation model fairway woods from these companies typically start north of $600/club. Exotics by Tour Edge, which also partners with Performax, runs $299 at retail for the 2019 CBX 119.

But can a $250 fairway wood from Tommy Armour sit at the same table as these more expensive and established brands?

According to Performax owner Jackson Chuang, “100% yes.”  If you want to know how good the meat is, always ask the butcher.

In fact, there’s an argument to be made that the Tommy Armour Atomic fairway wood not only has more value at its given price point ($250) but is ostensibly a better club. Chuang notes many of the Japanese brands are more prescriptive and partner with Performax because of its production capabilities (brazing) more so than its R&D expertise. As such, Performax has little input on the overall design, which means at times maxing out performance becomes secondary to achieving the particular look that Japanese companies mandate.

Dick’s took a different approach – one which gave Chuang and his team immense freedom. In this case, the only design parameter given to Performax was to ensure the final design could go mano a mano with any fairway metal on the market.

The first step for Chuang was to select higher-grade DAT55 titanium for the face. Because material costs are less of a factor (we’ll discuss why in a moment), Atomic fairways utilize a classification of titanium a notch above the commonly used 6-4 or 15-3-3-3.

Titanium is lighter, stronger and more flexible than steel, but because it’s more expensive, many OEMs opt to only use it in driver construction, where the larger geometry of the clubface, makes titanium essential for pushing CT limits.

Approaching design limits isn’t without some risk, and Chuang notes most brands stress-test prototypes up to 2,000 shots, however; the Atomic fairway wood survived a 4,000-shot durability test before its launch.

When R&D can save weight (lighter, stronger materials, brazing) engineers are liberated to explore different materials, structures, and ultimately challenge conventional CG locations – a fact not lost on Tour Edge. To win the fairway distance battle, Tour Edge knew if it could reduce spin by placing the center of gravity where other OEMs couldn’t, it would have a substantial performance advantage. This was a major driving force behind the construction of the CBX, CBX T3 and CBX 119 which was fundamental to Tour Edge establishing a presence on PGA Tour Champions.

If the materials, processes, and designs work for several scrutinizing OEMs (and have for decades) there’s no reason the same shouldn’t be true for Tommy Armour’s Atomic.

MAKING A MOVE

In 2006, Dick’s purchased Golf Galaxy for $225 million and scooped up the assets of Golfsmith and Sports Authority at auction in 2016 for just under 100 million combined. Now Dick’s employs over 30,000 in its 700 stores across the United States. In comparison, WorldWide Golf Shops (parent company of Edwin Watts and Roger Dunn) has 80 stores in 20 states. PGA Superstore operates roughly half that number with 41 stores in the U.S.

With roughly 8.5 Billion in annual revenue, Dick’s Sporting Goods is the largest sporting goods retailer in North America. I’d wager we can file that last bit under “Stuff you already knew.” As such, Dick’s has certain advantages, namely scale, and volume – which allow it to do pretty much whatever it wants with the Tommy Armour line of golf equipment.

Part of the context is the trend of increasing equipment prices across the board, coupled with a newfound willingness on the part of the consumer to place performance ahead of marketing. Nowhere has this shift been more apparent than in the ball market where Dean Snell is the perfect case study. Very simply, Snell spent decades acquiring the experience, knowledge and distribution channels necessary to make good on his promise to start a ball company which would provide consumers a tour-level ball at a fraction of the price. In doing so, he exposed a gap in the market.

Should Dick’s ultimately find success, it will be because it can satisfy similar requirements, though the execution will have to be a bit different.

In terms of R&D, Dick’s went top-shelf in working with Performax. It’s difficult to overstate how important this relationship is because, among other ancillary benefits, it gives Dick’s and the Atomic line a clear talking point to establish instant credibility in a market where it can otherwise take years to be taken seriously.

So, while the Atomic fairway costs as much (and likely more) to produce than most of the competitive set, the rack rate is 15%-20% below the $300 most major OEMs have established as the going rate for current models. It should also be noted that, apart from TaylorMade’s M5 (priced at $400), those same OEMs opt to use high-performance steel rather than titanium. Titanium is lighter and stronger than steel, which is why Dick’s is committed to using it in all Atomic metalwoods and both sets of Atomic irons.

The lower prices (Atomic driver retails at $399) are a welcome respite for golfers who aren’t inclined to drop $549 for TaylorMade’s M5/M6 or $529 for Callaway’s Epic Flash; however, historically value priced equipment has often been commensurate with lesser technology. Because of Dick’s unique situation, Tommy Armour doesn’t have to build-in costs to cover expensive tour sponsorships (and associated marketing costs). It can price equipment well below its competitors and still make the necessary margin. According to several industry insiders, 8%-10% of MSRP (so roughly $50 on a $500+ driver) isn’t out of the norm to allocate as a kickback to help fill the marketing/advertising coffers. Additionally, because Tommy Armour is an internal brand (the term house brand doesn’t really apply) Dick’s is effectively its own wholesaler. There isn’t another mouth at the profit trough that needs to be fed.

Dick’s is a big box retailer, and as such, caters to the widest swath of golfers. Its ubiquitous presence (average of 14 stores per state) means it has more reach than any other golf retailer. As a result, Dick’s has a significant leg up on competitors in the retail game, where exposure and volume are valuable commodities.

On paper, there isn’t a red flag or worrisome void in the approach Dick’s is taking with Tommy Armour, but success is anything but guaranteed.

MOVING ON

To bolster its chances, Dick’s has tasked David Michaels, a Senior Product Manager for Dick’s, with developing and growing the Tommy Armour brand. He provided MyGolfSpy with some insight as to what the future might hold. The salient point in that is that Dick’s is putting a robust amount of horsepower behind the Tommy Armour brand now and for the foreseeable future. It also suggests Dick’s has a larger vision for Tommy Armour which, if achieved, will put it in the same performance class as the biggest OEMs in the game.

To revitalize the brand, Michaels will need to play to its history while including enough modern technology to compete on more than just price with the mainline brands. Tommy Armour is best-known for its 845 Silver Scot irons which sold roughly 600,000 units in the 1980s and 1990s, and alongside Ping’s Eye irons, dominated the iron market. Like A-ha (Take on Me), however; the 845s were Tommy Armour’s one and only big hit.

Today, there’s talk of a re-release of the 845s. The nostalgia play has worked for others in the industry lately and could do the same for the Tommy Armour brand, particularly if Dick’s opts to go with a single-piece forged design that plays to a more discerning golfer. It could make for the kind of quick win the brand needs to gain some buzz.

To become and remain viable, Dick’s must find a way to get a hook in the most demographically average golfer who isn’t inclined to pay top price for new technology. This collective group carries a mid-high handicap but isn’t necessarily brand loyal – and least not to the degree that it alone dictates equipment choice. Value (cost vs. performance) is what often drives purchasing decisions for this segment of golfers, and this is precisely where Tommy Armour has a competitive advantage.

To this end, Chuang says a brazed driver isn’t out of the question. The weight savings created by the technology could open doors for geometry and mass properties benefits. Moreover, if Dick’s can tell a compelling story while keeping the price $100-$150 below bellwether offerings from the Big 5, it might establish a virtual mini-monopoly at its price point.

Because of what Chuang sees day to day, he isn’t particularly enamored with or influenced by brand names. He understands that what matters is the critical interplay between materials and design. Prices are set by OEMs and to a degree can mislead. When the patina of logos and labels are removed, what’s left is a raw product designed by engineers.

Tommy Armour may have a long way to go before the general golfing population holds it in the same regard as the Titleists and Callaways of the industry, but on paper, it might not be as far off as one might think.

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