GolfSmith Files For Bankruptcy — Not A Reflection On Golf

bankrupt-retail-store_ryl6wc6vsGolfSmith, perhaps the best known big box golf retailer, has filed for Chapter 11 Bankruptcy. That’s the version of bankruptcy that gives the company relief from creditors while a restructuring takes place. Chapter 7 results in liquidation.

GolfSmith reportedly will sell its Canadian Golf Town division, close some stores and perhaps sell other parts of itself to suitors such as Dick’s Sporting Goods. The hope is, of course, to emerge from Chapter 11 as a leaner, more profitable operation. Failing that, GolfSmith could liquidate entirely and close its doors. I think they will survive in some form.

The usually-hyperbolic media now has headlines screaming that this is just the latest example of the death of golf as a sport.

I don’t believe it. General Motors filed for Chapter 11 bankruptcy, and yet the auto industry (and General Motors) are doing just fine. Delta filed for bankruptcy. They’re still here, and so are airplanes. Borders filed for bankruptcy and disappeared entirely,  but books still are being sold.

The bigger story is not the decline of golf, but of the decline of the Big Box Store in general. GolfSmith was a Big Box Store. Best Buy, Staples and Barnes & Noble are all having their own problems. No one, however, suggests the death of office supplies.

Big Box bookstores are instructive. While Borders is long dead and Barnes & Noble is gasping for air, the number of small bookstores in the United States is actually up by as much as 25%. A Christian Science Monitor article has some explanations:

Why have independent bookstores persisted even as larger book giants around them falter or fall?

For starters, the resurgence of indies dovetails with the “buy local” movement.

As Monitor staff writer Yvonne Zipp explains in “The novel resurgence of independent bookstores,” “Independent bookstores are what urbanists call ‘third places,’ like farmers’ markets, that add to a community’s sense of identity. And like farmers’ markets, some customers come for the atmosphere….”

“These days, community-building is the most important key to an indie bookstore’s success,” Christine Onaroti, owner of indie bookstore WORD in Brooklyn, told the Monitor.

Some also credit their resurgence to a successful transition to younger owners who are creative and tech-savvy. These owners leverage social media to advertise and use mediums like Kickstarter to crowdsource fundraising for – and build interest in – their stores.

“A decade ago, when people were ready to retire, they couldn’t find anyone to take over and ended up closing the business,” ABA CEO Oren Teicher told the AP. “Now, some of the most prominent stores in the country have changed owners. And the new owners bring a whole new sense of energy – they’re more tech savvy and sophisticated. Their energy is contagious. They give everyone else a sense of possibility for their business.”

Ann Arbor was the home of the original Border brothers’ store. It shuttered years ago when the chain collapsed, and the building is now occupied by restaurants and office space. Still, a new small bookstore, Literati, opened three years ago in Ann Arbor when the media experts were predicting the end of all of the rest of the brick-and-mortar bookstores. From all outward appearances, Literati is doing just fine. It is small, but packed with books. The store holds regular author and community events, and has in recent months partnered with an upstairs coffee lounge. The shelves have small notes on them with hand-written employee recommendations. Literati offers community, is sensitive to the local market and has lots of energy.

Mrs. GolfBlogger and I attended a cider-and-cheese tasting there and walked out with several books. We stop in every time we are downtown. It is cozy and friendly.

Contrast that with what I found in the several Golfsmith stores I have visited. Three times as large as they needed to be, the Golfsmith big box stores were in strip malls many miles from a golf course — or even an outdoor driving range. While they contained a lot of stock, the floor space made them feel less than full. Staff seemed uninterested or uninformed.  The one I regularly visited in Michigan was indistinguishable from the ones I visited in Ohio, Maryland and Virginia. Even before the bankruptcy news, I wondered how they stayed in business. Lots of staff standing around, massive rent, few customers.

No sense of place. No local connections. No community. No partnerships. No market sensitivity.

Close to GolfBlogger World Headquarters, local brick-and-mortar proshop Miles of Golf is the opposite that. So too is the slightly-further-away-from-home Carl’s Golfland. I have no idea how those two fare financially, but they seem to have all the right ingredients. Both have attached outdoor ranges; Carls is also adjacent to a course. The stores are relatively compact and stocked to the ceilings (literally — the bags are stored up high). Staff is eager, friendly and knowledgeable about both the larger golf scene and local golf in particular. Both sponsor community events and have on-site activities. Their bulletin boards have notices about local leagues, outings and other golf-related events. Miles recently opened an outdoor beer garden between the shop and driving range. I have no idea how that’s working out for them, but every time I drive by, there are golfers enjoying a cold one after hitting a bucket. Even if Miles is not making a lot of money, they ARE building community and a sense of place.

As with the exit of Nike from the golf business, I wonder if Golfsmith’s troubles are not a problem, but an opportunity. Nike’s exit signals an opening for other companies in the equipment space. Perhaps Wilson will take advantage and return to its former prominent position. Golfsmith’s potential exit (and certain downsizing) offers an opportunity for smaller on- and off-course pro shops to step into the void.

In the wake of the Golfsmith announcement, I got a press release from GolfTec laying out plans to move its instructional locations from GolfSmith stores that are closing to standalone stores. The release reads, in part:

New GolfTEC standalone locations going forward will feature updated in-store designs and a variety of exciting new technology.

This includes:

  • New In-Center Design – Tailored to create a dynamic and holistic experience, new centers (and retrofits of existing) will feature an inviting and vibrant atmosphere tailored to total golf immersion. Further, new amenities and additional high-end game improvement products and services are available for students to engage with.
  • New Technology – Known as one of the most technologically progressive brands in golf, the company’s new locations will feature:
    Advanced, state-of-the-art cameras and lighting to provide enhanced high-resolution video for both in-bay playback during lessons and online viewing post-session.
    Custom content on in-bay screens to guide players through solo practice sessions and skill assessments, helping them more rapidly achieve their playing goals.
  • Updated TECfit club-fitting software that integrates deep swing characteristics and ball flight data to further help players and coaches identify the best possible equipment, including recommended club head and shaft combinations

The first bullet point goes to my thoughts on Big Box versus Community Stores. Rather than a cookie-cutter, antiseptic environment, it looks as though GolfTec wants to create a sense of place and community.

A final couple of thoughts:

First, I do not believe that Nike’s exit from the equipment business, nor Adidas’ desire to sell TaylorMade are signs of the death of golf.

From the beginning, Nike had hitched its wagon to the success of a single player: Tiger Woods. With Tiger on his way out, and no similarly marketable player in the wings, Nike had no reason to stay in the equipment business.

As for Adidas-TaylorMade: They sowed the seeds of their own destruction (and of others) with the six-times-a-year major equipment releases. The vast bins of last years clubs at remainders sales speaks to this. Adidas just wants to sell off the problem it created.

Finally, for all that golf is down from Peak Tiger, it is still up from Pre Tiger. As with a Tulip Bulb, Real Estate or Stock Market bubble, corrections from artificial peaks were bound to happen.

Tulip bulbs, for the record, are still being sold.

 

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