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Golf Town makes drive on U.S. market Add to ...

Stephen Bebis knows all about the cutthroat U.S. retail market: He worked at superstore chains there and briefly headed a sporting goods merchant before it collapsed into bankruptcy.

But that experience isn't stopping the chief executive officer of Golf Town, Canada's largest golf retailer, from taking another swing at the U.S. market. Later this month, he'll launch five stores in the Boston area, with a sixth planned. Eventually, after acquiring a rival, he envisions as many as 600 U.S. outlets.

"I know what it takes to win in that market," Mr. Bebis said in an interview.

Mr. Bebis will need a winning formula. Golf sales have been on a downward spiral south of the border, with recession-battered consumers unable to make discretionary purchases such as golf clubs and bags. Already, major chains such as Golf Galaxy, which Mr. Bebis used as a model 12 years ago in developing Golf Town, are closing money-losing stores.

Mr. Bebis also has to grapple with the poor track record of Canadian retailers generally in the U.S. market. Top chains, including Canadian Tire, Future Shop and Loblaw, have been forced to retreat. Mr. Bebis is wagering that golf retailing will be a better play.

It won't be easy. U.S. sales of golf hard goods, such as clubs and balls, fell 2 per cent to $2.4-billion (U.S.) in 2010 from a year earlier in U.S. specialty golf stores, according to market researcher Golf Datatech in Kissimmee, Fla. Still, that's an improvement from the previous year, when those sales tumbled 11.6 per cent. (The numbers don't include golf clothing and accessories, nor golf sales at general sporting goods and other retailers.)

"Golf retail in America is a crowded market because the world of golfers hasn't been growing," said Tom Stine, co-founder of Golf Datatech. "The golf industry has suffered economically along with everything else over the last two years."

Mr. Bebis is betting that his U.S. retail experience, along with the economic recovery and more golfers in the New England states, will work to his advantage.

As well, he has a deep-pocketed owner in the Ontario Municipal Employees Retirement System, one of Canada's largest pension funds, which will also help him reach his eventual goal of opening stores in Europe and Asia.

"Our big audacious goal would be to be the world leader in golf retailing," Mr. Bebis said. "Certainly the rest of the world is available to us at the appropriate time. We've got to walk before we run."

He's not alone in taking on the U.S. market. Later this year, Loblaw Cos. Ltd. will test its cheap-chic Joe Fresh Style fashion in four stores in New York, with ambitious growth plans. Lululemon Athletica Inc. and Aldo Group are among Canadian chains that have made gains south of the border.

But Mr. Bebis is stepping off the fairway and on to the rough. Total rounds of golf played in the U.S. dropped 2.3 per cent in 2010 from a year earlier, according to Golf Datatech. Still, in Mr. Bebis's favour, rounds played in New England jumped 3.6 per cent in the same period, and in Boston, 1.5 per cent.

Those numbers give Mr. Bebis a fighting chance to take on the market, said Randy Zanatta, co-founder and former CEO of U.S.-based Golf Galaxy, which once had a 10-per-cent stake in the Canadian chain. (Mr. Zanatta was also a director of Golf Town.) "If anybody can do it, I'm confident in those guys," said Mr. Zanatta, a partner in the Retail Minds consultancy in Minneapolis. Along with its seasoned management group, Golf Town recently hired a former executive of Golf Galaxy to help with its expansion, Mr. Zanatta said.

"But they have to temper their enthusiasm," he added. "In Canada they don't have nearly as much competition," both in stores and e-commerce.

Mr. Bebis said his stores are different from rivals because they offer a bigger offering of golf clothes - three to four times as much- and a larger interactive presence (simulators, chipping and putting facilities) in which shoppers can try out the equipment. The hands-on golfing experience keeps customers longer in the stores - an average of two hours, he said. On rainy weekends, they linger still more, he added.

He's adding more casual fashions, including stylish jeans, to draw more women, especially those who come into the stores with their golf-fanatic husbands. "Our customer is very busy," he said. "They like being able to buy some of their casual clothes from us while they're in the store buying golf stuff."

In Canada, Mr. Bebis has enjoyed a strong run, with Golf Town annual sales almost doubling to roughly $400-million today from $220-million in 2006; it was snapped up by OMERS the following year. It has 55 stores and plans to add another five in Canada by 2012.

But same-store sales growth has slowed in the past couple of years to single digits from double digits, Mr. Bebis said. He attributes the decelerating growth rate partly to a more saturated market and deflation. With less domestic opportunity, he has international growth in his sights.

 

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