News & Opinion

Golf retailers tout service amid online push

BLOOMFIELD HILLS, Mich. – Last summer, when I visited Carl's Golfland, one of the premier golf retail stores in America, I got a behind-the-scenes tour that included passing by the storage of enough golf shoes for Oprah Winfrey to comfortably hand a pair to everyone through the gates at this week's Farmers Insurance Open. ("You get a pair! You get a pair!")

Derek Bildstein, vice president of merchandising at Carl’s Golfland, is selling those shoes on site and via online orders in record numbers. He told me that the store's average selling price of footwear has increased $6 in the past year and $18.50 since 2015. 

Speaking in broader terms of the golf retail space, he added, "It's the best I've seen it in golf since the late ’90s."

This may sound like hyperbole, or simply one store bucking the trend, but Carl's Golfland is not the only golf retailer experiencing a healthier balance sheet after a period of consolidation, most notably the failures of Sports Authority, Golfsmith (which subsequently has been absorbed by Dick’s Sporting Goods) and the bankruptcy of Edwin Watts before them. 

While many of the industry's struggles are the result of a shift to online shopping, massive overbuilding also has played a role. The National Golf Foundation’s “Golf Retail Report” cited a 15-percent decline in off-course golf retail locations in 2016. (The biggest effect came from the closure of Golfsmith and almost 2 million square feet of retail space.) Meanwhile, PGA Tour Superstore keeps growing. The Home Depot of golf – in fact, PGA Tour Superstore is owned by Arthur Blank, the Home Depot co-founder – added four stores in 2017 and tripled its store count over the past seven years to 31 brick-and-mortar locations in 14 states, while posting a record year in 2017, with an overall sales growth of 23 percent. (The company’s 2017 performance included a 15-percent comp store sales growth – same-store sales compared to the previous year.)

Tom Stine, co-founder of Golf Datatech, which has been tracking retail sales for hard goods since 1995, says that unit sales in nearly every high-profile category (balls, drivers, fairway woods, hybrids and shoes) were down in 2017, but the average selling prices rose at very elevated levels. (Final numbers for 2017 still were being calculated, Stine said.) Whether that is promising news or a harbinger of trouble depends upon whom you ask. Higher average sale prices may have discouraged golfers from buying as many new products, but those higher prices have been a boon to manufacturers and retailers who enjoyed little pricing power and lower margins.

"As long as you're taking dollars to the bank,” Stine said, “it's a good thing.”

In hard goods, some of the higher price points can be attributed to the success of PXG, which has proved there is demand for a super-premium-priced product.

"It helps everybody," Bildstein said. "We used to sell a little bit of Miura, but PXG comes along and our customers aren't afraid to try $3,000 sets of golf clubs. All of a sudden, $1,500 sets look reasonable." 

Equipment makers appear to have learned from the consumer backlash to seemingly non-stop club launches and the cascading of prices that led to inventory issues and eventually retail channel corrections. Oversupply led to aggressive price cuts to clear merchandise (for example, the $299 driver from a year ago selling for $99). Without a strong narrative about the technology in newer models, the casual and sophisticated golfers alike chose to buy equipment at close-out prices.

The most promising development for golf retailers is customer acceptance that the latest technologically innovative drivers will command higher dollars. In 2017, golfers didn't balk at paying $499 for the Callaway Epic driver and similarly-priced clubs from competitors.

"Callaway’s Epic driver was the best driver launch we have ever had," said Jill Spiegel, senior vice president of merchandising for PGA Tour Superstore.

Another beneficiary of the off-course channel contraction: green-grass shops helped fill the void and met consumers’ need to see, demo and buy new clubs. 

But on the eve of the PGA Merchandise Show in Orlando, Fla., the golf-retail landscape still appears to be shifting. Like so much of the retail industry, there is concern that there could be more pain ahead. Credit Suisse estimated 8,640 U.S. stores across retail closed in 2017, and as many as 25 percent of U.S. malls will close by 2022.

The shift toward more online sales is among the trends causing reverberations among golf retailers. PGA Tour Superstore has seen its Internet business surge by 42 percent in the past year. Which brings us to the elephant in the room: Amazon. 

Golf Datatech recently released a study of the overall effect of the United States’ largest online retail site on golf’s equipment and apparel markets. It analyzed the attitudes and opinions of 1,200 serious golfers and found that the golf sector is being affected in much the same manner as other consumer products sold by Amazon – especially to Amazon Prime members, who don't pay shipping costs – for items to be delivered to their door. From golf balls to gloves and shirts, plenty of products can be re-ordered or selected at the press of a button.

"The ‘Amazon Impact’ is real, and it needs to be watched closely," Golf Datatech’s Stine said.

Interestingly, convenience was the top reason cited, ahead of price, for shopping for golf products on Amazon. As the retail giant becomes an ever-expanding force in selling golf merchandise, Amazon hasn't made much of a dent in golf club sales, which usually require trial. That is why custom-fitting should continue to be a difference-maker for brick-and-mortar stores. GolfTec, Club Champion, Hot Stix, Cool Clubs and True Spec have created a niche with high-end specialty fitting experiences. PGA Tour Superstore, for instance, made a multimillion-dollar investment in 2017 to upgrade its in-store simulators. Dick Sullivan, president of PGA Tour Superstore, said that his company gave 50,000 in-store lessons, fitted more than 100,000 customers and changed 750,000 grips last year. 

"You don’t see Amazon giving lessons or putting grips on; we’re unique that way," Sullivan said. "We don’t just sell product; we provide a different level of service."

Time will tell whether that will be enough to be a difference-maker in the eyes of golf consumers making purchasing decisions.

Adam Schupak has written about golf since 1997 for the likes of Golfweek, Golf World and The New York Times. He is the author of Deane Beman: Golf's Driving Force. Email: golfsdrivingforce@gmail.com; Twitter: @adamschupak