DALLAS - As long as a market is expanding, retailers talk about the other guy in a sportsmanlike manner, saying, ‘‘Competition is good’’ and "There’s room for everybody to grow."
That is, until a category flattens like a putting green.
Then it’s time to go after the other guy’s market share, which is the case in golf retailing today.
A consolidation has commenced in the fragmented industry, and Austin, Texas-based Golfsmith International says it wants to lead the way in a sport with an estimated 26 million participants.
‘‘We want to be the national brand in golf, the way that people think of Best Buy or Circuit City for consumer electronics or Barnes & Noble or Borders for books,’’ said Jim Thompson, president and chief executive of G olfsmith. ‘‘No one retailer has a greater than 5 percent market share, and we believe that if we build and ingratiate the multichannel experience of stores, online and catalog, we can become the dominant national brand.’’
Golf participation has been stagnant in recent years. Rounds played have dropped 2 percent to 3 percent in each of the last few years, according to the National Golf Foundation. Retail sales of golf equipment in 2002 just climbed back to 1997 levels of $2.5 billion, according to market research firm Golf DataTech in Kissimmee, Fla.
Golfsmith is expanding well beyond Texas, from New York to California, in its drive to become the No. 1 seller of golf goods — which the NGF says is a $6 billion industry when accessories and apparel are included.
Golf retail chains are privately held and national rankings aren’t available, but industry sources say Golfsmith is in the top three along with Florida’s Edwin Watts Golf and Minneapolis-based Golf Galaxy. Golfsmith, which plans eventually to do an initial public offering, wants to be viewed as the consolidator.
‘‘Right now, we like the fact that the business is flat. That’s when an effective retailer can gain market share,’’ said Thompson, a former executive at Circuit City, CompUSA and Highland Superstores.
Golfsmith has had the deep pockets to open stores at a fast pace since 2002, when the company sold a major stake for $120 million to private equity firm First Atlantic in New York.
It now has 42 stores, with plans to open more this year. It recently unveiled two 12,500-square-foot stores in Oxnard, Calif., and Scottsdale, and will open others in Baybrook, Texas, near Houston; in Long Island and Scarsdale, N.Y.; and Norwalk, Conn.
In mid-March, the chain said sales rose 18 percent to $257.7 million in 2003 as it added 12 stores. Same-store sales, or sales at stores open at least a year, increased 7.4 percent. The company, which is required to disclose results because it has public debt, posted net income of $1.1 million vs. a net loss of $2.2 million in 2002.
The specialty retailers face stiff competition from major sporting goods chains, which are grabbing for a larger share of the golf equipment market.
The Sports Authority, the Englewood, Colo., parent company of Oshman’s and Gart Sports, created its own store-within-a store called Golf Day that it’s adding to both new and existing stores.
Oshman’s newest area location, which opened in March across the street from a newly remodeled Golfsmith, has a Golf Day shop positioned in the front.
Golf Day was introduced two years ago, and the chain plans to open 70 locations this year and 70 more in 2005, said Terry Maloy, senior vice president of marketing at Sports Authority.
The 2,400-square-foot shops have a broader selection of brands than a typical Oshman’s and are staffed by a local PGA pro, he said. ‘‘If we’re going to have selection, we need someone with the expertise to explain it,’’ he said.
Oshman’s Golf Day shops are a natural evolution for a sports superstore chain, said Tom Stein, co-founder of Golf DataTech.
‘‘They do a good job in 2,400 square feet for their customers — people with money to spend on leisure sports. It’s convenient for a mom in the store buying her daughter new soccer shoes. She can pick up a new putter for herself.’’