The Death of the Great American Golf Shop

Written By: Tony Covey

Most of you have already read One Insider’s View on The Demise of Golf Equipment Sales, and hopefully have a better understanding of the all too unpleasant realities of running a brick and mortar golf business in 2014.

These guys are being squeezed on all sides. Competition includes other shops, big box, online warehouses, eBay, and the golf equipment companies themselves. As the marketplace has evolved, so too have consumers. More than ever we know what we want, we know what we’re willing to pay, and we’re willing to buy before we try.

None of that works to the benefit of the traditional golf shop.

I know my specs. If I can save $40, and get a free sleeve of balls for the convenience of keeping my ass firmly planted in my desk chair, all the better.

As we considered the plight of our anonymous author, and countless others just like him around the country, we found ourselves asking a most uncomfortable question.

Do we even need brick and mortar golf shops anymore?

As the business of golf has evolved around them, the average American pro shop has become a jack of all trades, and a master of none.

The modern pro shop can’t offer the best prices, it doesn’t have the best selection, it can’t keep up with the volume, and the majority simply cannot compete with a growing network of hardcore fitters and builders. Hell, the golf companies are dipping into the little guy’s pocket too.

Even customer service, a traditional strength – perhaps the last great advantage – of brick and mortal, has become devalued by an increasingly ambivalent consumer for whom price isn’t simply the bottom line, it’s the only line.

Brick and mortal is dying. It’s the next victim of golf’s great recalibration.

Big Box and the Internet Retailer

Big Box…Dick’s, GolfSmith, and to an extent PGA Superstore, Edwin Watts (what’s left of them), and even regional sporting goods chains are able to service those looking for a tactile experience (I just want to see it and touch it in real life), or the instant gratification of buying off the rack and taking it home right freakin’ now.

The chains have the facilities to satisfy the guys who want to take a few swings on their own before taking the plunge, and they can provide a drive by fitting experience for those of us who are looking for just a little bit more hands-on help.

For a healthy percentage of everyone else, online is the new reality. There is a growing number of consumers who make-up their minds without ever stepping through the doors of a golf shop. And when they do, there’s still a healthy chance that they’ll go home and buy online just to save a few bucks. Today’s golf consumer is making it absolutely impossible for brick and mortar to compete with the internet.

30-day guarantees (use it, if you don’t love it, we’ll send you something else), better pricing (add to cart to get a price below what the guy down the street can sell it to you for), free shipping, no tax, and the occasional $25 gift cart is more than your local pro shop can offer.

Between tax, discounts, and other incentives, it’s not unusual to save upwards of $50 compared to your friendly neighborhood golf shop…and that’s before we start talking about Open Box Programs.

We love Open Box programs and you should too. There’s no better way to save on this year’s gear. Open Box is often billed as unhit returns, and more often than not that just means that the factory plastic has been removed from the club. The retailers claim it can’t be sold as new.

Save $50 and skip the hassle of trying to get that damn plastic off? Yes please. Ask your brick and mortar guy about his Open Box program. Let me know how that goes.

And Then There’s eBay

The volume of counterfeit clubs on eBay is legendary. Hell, we even wrote an article about it. That was several years ago, and much to the dismay of nearly everyone in the business of selling clubs, things have changed significantly.

It’s an indisputable fact…actually it’s one of the industry’s dirty little secrets, that some manufacturers funnel their excess inventory to eBay. Where the clubs end up might not be on the authorized sellers lists, but the gear is genuine, and it’s not unusual to find brand new stuff for barely above, and sometimes below wholesale.

What makes eBay unique and nearly impossible to compete with is that it’s an entirely consumer driven marketplace. Goods aren’t worth what the manufacturers say they are (listing at MAP is a great way to sell NOTHING), the products are worth exactly what the highest bidder is willing to pay, and not a damn thing more.

eBay is where the consumer wins, and there’s no better gauge of consumer confidence in a given brand than the average selling price.

The old adage “if a deal sounds too good to be true, it probably is” doesn’t much apply to eBay anymore. A US-based seller, with 99% feedback, and thousands of completed club listings isn’t selling counterfeit goods. He’s exploiting loopholes in the current retail model, and some of these guys are doing it with the support of the manufacturers.

Demo down the street, but buy on eBay for 30% less. Brick and mortar absolutely cannot compete.

The Franchising of Custom Fitting

For the golfer looking for a complete custom fitting, it’s becoming increasingly difficult for the traditional pro shop to compete with a growing number of seriously custom fitters.

Not long ago truly being custom fittted for the entire bag meant either paying top dollar to visit a TaylorMade Performance Lab (or something of that ilk), or filling your bag with gear from KZG, Wishon, Swing Science, or some other component company that, if we’re being brutally honest, doesn’t appeal to the average golfer in nearly the same way that the big OEM stuff does.

Those days are over. Not only can custom fitting specialists like CoolClubs (photo above), Modern Golf, Club Champion, and HotStix custom fit you for every club in your bag, they’ll build your new gear on site to exacting specifications.

To borrow a line from one of the guys at Modern Golf, these guys #builditbetter.

They stock heads and shafts from every major manufacturer and often boutique brands as well. Because everything is built to spec, custom fitting franchises can carry less in the way of volume and more in the way of variety.

Net down is never an issue.

A fitting at one of these places offers an experience and a level of true service that the average golf shop simply can’t compete with. Yes, it costs more, but the demand is clearly there, and unlike traditional brick and mortar operations, these fitting specialists have developed a service portfolio that’s next to impossible for big box, online, and even eBay to compete with.

The custom fitting franchises are golf retail’s greatest innovators.

Dear Retail Partner, Screw You.

If there wasn’t already enough competition, retailers are now facing stiff competition from the golf companies themselves. In the golf equipment business, retailers are the middle men…and golf companies have figured out that it makes sense to eliminate them where they can.

TaylorMade, Callaway, Cobra, Mizuno…hell, basically everyone not named Titleist or PING now sells direct to the consumer from the company website.

You want the new Callaway Big Bertha V-Series driver? Why not go directly to Callaway to get it? It’s certainly easier to customize it from the comforts of home then it is to go to the store and have them place the identical order for you.

From the manufacturer’s standpoint direct to consumer can significantly increase profits. A $400 driver costs a retailer $290. Eliminate the middle man, and keep all $400 for yourself. It’s shady as hell, but it’s also just good business.

This isn’t some fad. It’s here to stay. It’s not out of the realm of possibility that you’ll find a TaylorMade store sandwiched between the Gap and Victoria’s Secret at your local mall.

Apple Store, Microsoft Store, Oakley Vault, and lets’ not forget the Nike store. The no-middle-man, direct-to-consumer, product-centric approach model works. It can (and likely) will work for golf as well.

What’s Left for the Little Guy?

None of this bodes well for the average golf shop.

For whatever it’s worth, green grass (on-the-course shops) has the distinct advantage of transforming commodity into necessity.

If I show up to the course, as many golfers do, without tees, balls, a glove, or in the case of one of my buddies, golf shoes, green grass is the only game in town.

I need those things (often high-margin things), and no online shop can compete with the immediacy of the demand. Green grass can survive on apparel, the occasional bag of clubs, and plenty of high-margin accessories.

For the traditional off-the-course retailer, things are a bit more complicated. There will always be a measurable percentage of golfers who want to try before they buy. For those guys, a golf shop that’s geographically disparate from any big box competition (as is still the case for many local shops) can claim one of the few remaining advantages left for a small retailer.

Those guys still have to compete with online, and eBay, and direct to consumer business that make it very enticing for try before you buy to become try before you buy somewhere else.

As our discretionary capital shrinks, buying local will often take a backseat to getting the most bang out of what few bucks we have to spend on our hobbies.

Never mind the little guy, we’re going to support ourselves first.

Differentiate or Die

For guys who do little more than sell clubs (and other miscellaneous golf wares) the future is bleak. It’s not going to get easier.

Diversification is one solution. What none of you could know is that the author of last week’s piece is doing just that. He’s already expanded his business within the golf industry, and he’s currently looking into some options outside of golf to help support his business.

I would imagine many others are doing the same.

If you step away from the passion we all feel for this game and look at the economics of golf the same way a business like Dick’s Sporting Good does, you’d find that not much delivers less ROI per square foot than golf.

One shop manager I spoke to recently told me that he’s ecstatic if he can pull in a 35% average margin on golf…and he’s not ecstatic very often.

Retail markup at Dick’s across all departments runs in the ballpark of 50%. When you can sell yoga pants all day long (and make 70% doing it), does it even make sense to bother with golf?

For most, I believe the only chance for long-term success in the golf retail business requires shifting the focus from product to services.

Sure, nearly every golf shop preaches customer service, but is that really much of a competitive advantage? In today’s world, Amazon’s customer service is good enough. Hands-on isn’t valued the way it once was. To the average consumer, you’re selling commodities. Accept it and adapt. I’ll buy my milk from anyone if the price is right, and so will most anyone else.

The shops with the best chance for survival are already providing services like regripping, repair, and lessons. Those with the acreage can do well with driving ranges (demo days can also offer a substantial revenue boost).

Those who have already invested in Trackman, Foresight, or some other simulator would be wise to sell blocks of time to customers who want figure things out for themselves. Those who haven’t invested in technology, probably should.

It’s pretty simple, differentiate or die.

And if it is the unfortunate latter, with some many other options, will today’s golfer even notice?

Help Support MyGolfSpy’s Continued Independence

We’re not lying when we say that we refuse to take advertising from the biggest names in golf. We truly believe it’s the only way to remain above the influence while maintaining our freedom to provide honest opinion and commentary about what’s happening inside the golf equipment industry.

If you found this story important, meaningful, or just interesting, please consider making a donation to help support MyGolfSpy’s independence.

We accept credit cards through PayPal. A PayPal account is not required in order to donate.

[donation-can goal_id=’fund-the-revolution’ style_id=’mgs’ show_progress=false show_description=false show_donations=false show_title=false title=”]