Investing in a Golf Shop

[Kleriq]

I’m pondering opening a golf shop in San Francisco. There is a dearth of golf shops within city limits—Dogleg closed, and Eagle Club stopped doing retail at the beginning of the pandemic. It can take equally as long to get to the city line as it does to get from there to Dick’s or Golf Mart.

I’m not in a position to leave my career, but I do have the ability to invest. Anyone have advice on seeding a business like this while having a full-time career?

[iacas]

Yeah… don't do it?

The old joke (it's been said about a lot of things) goes like this? "Do you know how to make a small fortune in golf retail?" "Start with a large fortune."

I'd suggest that those other two stores closed… because that joke is more true than joke.

[mcanadiens]

It strikes me as a very difficult business to get into and have any success. Even the big box type golf stores have been closing around my area. About all we got left besides Dick's is a Golf Galaxy on the far side of town and the pro shops at our local courses.  Like a lot of other retail, more of it is online rather than bricks-and-mortor. It's something you could do in theory, but you got some much more established competitors. 

What would make your golf shop succeed where these other businesses have failed? 

[The Flush]

I live in a rural area. The county population is less than 30K and the nearest big city is 70 miles away.  There is a small custom club fitter (plus driving range) that has been around a long time now. His wife once told me they would enough money from the shop to live on if it weren't for health insurance.  Therefore he keeps his day job as a health physicist (former Navy nuke) at a nearby DOE facility for the insurance, although I'm sure he makes a decent salary as well.  His wife is full time in the shop and handles all of the office work (scheduling, billing, ordering, etc) as well as minor shop stuff such as grip replacements. They have some normal retail (bags and balls) but I would guess most of the income is from the service of fitting and club building, not retail.

I think he makes money because he and his wife do all the work and that is the type of model than can work.  I can't see making money as an investor. Maybe in a big city it could be different. 

[ChetlovesMer]

Good points have already been made, but here's something else to think about. You mentioned you wanted your golf shop to be "within city limits". San Francisco I'm guessing gets a pretty high premium for retail space. They probably also have pretty fat city taxes. Which is all well and good. But many products, certainly golf products, can very easily get purchased on-line, or at least price-checked. So, when that new Ping driver comes out and everyone selling it for $499.00. Your shop will have to carry inventory and sell it for $499.00. However, you may be paying infinitely more per square foot for your retail space and infinitely more for your city taxes. That's going to eat into your profit as compared to a store in the middle of nowhere, or even more so when compared to a place that perhaps is on-line only. 

It's very tough to compete when you are on unequal footing. 

[Darkfrog]

Since I have been back into golf, I haven't set foot in a retail golf shop. I purchase my balls from direct to consumer brands, clothing/gear online, and clubs through the facility where I take lessons (after fitting with 10% discount, and they carry all major manufacturers and some smaller ones like Edel). I can't really see a golf retail shop in SF being successful, considering how expensive commercial space is in the city and the convenience of online purchasing for customers.

[Bucki1968]

Not sure if it helps or not but I have seen a couple smaller golf shops make it here. The one thing they have in common is that they do a lot of club repair, re-grip etc. as well as selling used clubs. They do sell some new inventory (gloves, balls, bags, apparel) but I have been told that they try to buy the closeout stuff cheap and pass on the saving as much as they can and still make a buck. I would think that they will eventually be effected (if they already haven't) by the "second swings" and "global golfs" of the internet. 

[Shorty]

1 hour ago, Kleriq said:

Anyone have advice on seeding a business like this while having a full-time career?

You can almost guarantee that you'll go broke. Why do you think the other shops closed?

You are going to invest in a shop and have someone else run it?

People shop online.

How much do you think you'd pay to fit out a new shop?

People will expect state of the art simulators, use them and then go and buy the clubs they tested cheaper online.

DON'T.

[Double Mocha Man]

2 hours ago, Kleriq said:

I’m pondering opening a golf shop in San Francisco. There is a dearth of golf shops within city limits—Dogleg closed, and Eagle Club stopped doing retail at the beginning of the pandemic. It can take equally as long to get to the city line as it does to get from there to Dick’s or Golf Mart.

I’m not in a position to leave my career, but I do have the ability to invest. Anyone have advice on seeding a business like this while having a full-time career?

The only thing you have going for you is there are more golfers now than pre-pandemic.  Although a few are falling off.   You would also need a strong on-line presence.  Selling products at the same or a slightly lower price point than the discount online retailers.  No drop-shipping, you must have the gear in stock and get it out the door immediately.  Which swells your inventory costs.  You would need a great website... have a pro build it.   

I see where you're coming from... having your own golf shop seems like fun.

Otherwise, invest in the stocks on the Dow Jones index... but not today.  

Edited December 13, 2021 by Double Mocha Man

[Sandy Divot]

With all the shipping and supply issues, good luck getting inventory.

[ChetlovesMer]

1 hour ago, Double Mocha Man said:

Selling products at the same or a slightly lower price point than the discount online retailers.  No drop-shipping, you must have the gear in stock and get it out the door immediately.  Which swells your inventory costs.  You would need a great website... have a pro build it.   

Hey DMM, The manufacturer's set the price in the golf club industry. You are only allowed to offer lower prices on previous generations of clubs. 

So, he wouldn't be able to gain a competitive advantage by cutting margin. 

35 minutes ago, Sandy Divot said:

With all the shipping and supply issues, good luck getting inventory.

That's true at this moment in time. But that problem will eventually go away. Not sure what the OP's time line is. 

I also don't think the OP wants to open his OWN shop. He wants to help fund one. I think he wants to be an investor. 

1 hour ago, Double Mocha Man said:

Otherwise, invest in the stocks on the Dow Jones index... but not today.  

March of 2020 would have been the perfect time to invest. See, investing is easy. Just go back in time and pick your spots. 🤪

[Double Mocha Man]

1 hour ago, ChetlovesMer said:

Hey DMM, The manufacturer's set the price in the golf club industry. You are only allowed to offer lower prices on previous generations of clubs. 

So, he wouldn't be able to gain a competitive advantage by cutting margin. 

Dang manufacturers!  Always ruining the free enterprise system.  I buy all my new Titleist products at 50% off.  J/K

You are correct.  I should have said, sell at the lowest price you can, allowable by the manufacturer, to match your competitors.  But there go your margins since you're not dealing in massive bulk inventories...

Edited December 14, 2021 by Double Mocha Man

[Kleriq]

I appreciate the replies, everyone. I understand that brick-and-mortar retail is extremely challenging, especially in a high-COL area, and that golf is a bit of a fad right now with no guarantee of sticking around.

I’m hoping to form a *comprehensive* understanding of how to critically evaluate a business plan, including those aspects that apply generally to B&M retail as well as those that apply specifically to working in the golf industry. Of course it’s not possible to know *everything* beforehand, but I tend to try to learn before doing when some more entrepreneurial folks might try to learn *by* doing.

That said, here’s my pitch:

San Francisco has a number of excellent golf courses both within and around the city limits, but no dedicated golf retailers. While San Franciscans who golf are likely to own cars, three of SF’s five publicly accessible 18-hole golf courses (Presidio, Lincoln Park, and Golden Gate Park) are located at the north end of the city, while the nearest golf shops are miles past the southern border or across the Golden Gate Bridge. My plan is to open a golf retail store near the Presidio, serving urban golfers and visitors playing San Francisco’s northern courses.

The store will cater to these core customers:

• The beginner looking for a starter set or their first upgrade. Buying equipment is a major challenge for new golfers. Only Dick’s, Golf Galaxy, and arguably Costco really cater to the new golfer; the other golf stores in the region all cater to experienced golfers. Even golfers who only stick to the driving range need clubs, but the vast selection and marketing terminology can intimidate them. By dedicating space to the beginner golfer, and locating the store conveniently near both their home and a local driving range, those with an interest in taking up the sport can give in to their impulse and be swinging clubs the same day.
• The golfer who needs consumables quickly, or who has a strong brand allegiance. Golfers can form an attachment to certain brands of tees, balls, and gloves. A wide selection of these essentials attracts those golfers who realize on Saturday afternoon that they’re low on their favorite golf ball, and who would otherwise settle for paying for a different brand at the course pro shop.
• Golfers seeking non-traditional attire. Several golf attire brands have come about recently, and other brands can cross over into on-course fashion. Particularly for style-conscious beginner golfers, clothing from non-traditional brands can be a major differentiator from the established retailers.
• Seriously dedicated golfers who always want their equipment in the best shape. The shop would offer loft/lie adjustments, re-shafting, and re-gripping. Fittings would be offered in a simulator bay.
• The general golfer looking to order new equipment. Rather than stock a large inventory of clubs, the shop would carry a tailored selection of iron sets and woods for the high- to mid-handicapper, and offer fittings with a discount for placing the order through the store.

Edited December 14, 2021 by Kleriq
Remove paragraph that was rewritten into bullets

[iacas]

So… you're just looking for people to be cheerleaders and wish you the best?

I think you're doomed to fail, if you can even get halfway to getting off the ground.

[Kleriq]

1 minute ago, iacas said:

So… you're just looking for people to be cheerleaders and wish you the best?

Not at all. I was hoping the criticism would be a more sophisticated than “retail is hard, people shop online”. Basically, if a diligent commercial banker were to sit down and look at an application for a loan to open a golf shop, what would they ask themselves as they read it?

Some folks have mentioned the stock market, which gives me an idea… maybe I should look into how managers of consumer non-durable mutual funds choose what to buy.

[iacas]

6 minutes ago, Kleriq said:

I was hoping the criticism would be a more sophisticated than “retail is hard, people shop online”.

Maybe it's that simple. Maybe there's a reason that no golf shops are in the area - because they'd all fail.

Why isn't Blockbuster still around? "Because can rent movies without leaving their house." Sometimes the answer is that simple.

6 minutes ago, Kleriq said:

Basically, if a diligent commercial banker were to sit down and look at an application for a loan to open a golf shop, what would they ask themselves as they read it?

Where the hidden cameras are?

[Denny Bang Bang]

@Kleriq I think to have a fighting chance in pulling it off, you’d need to start off as (if not remain) an owner operator.  It sounds like you’re not planning to quit your day job and do that.  There are too many negatives against you (several listed above, several not), I wouldn’t recommend investing in it.

That said, if you’re feeling inspired and passionate about it… start doing the work.  Develop your plan, figure out the margins, figure out the overhead, what are the carrying costs, what will free cash flow look like, etc.

[Shorty]

5 hours ago, Kleriq said:

Not at all. I was hoping the criticism would be a more sophisticated than “retail is hard, people shop online”. Basically, if a diligent commercial banker were to sit down and look at an application for a loan to open a golf shop, what would they ask themselves as they read it?

 

The moment you say you want to be all things to all customers is the moment the bank manager will lose interest.

You want to supply rare/boutique items.

You want to do stuff that the big chains don't have time or resources for.

You want to supply a huge range of  common items like tees, balls and gloves.

The hardest thing you are going to have to understand is that consumers are primarily motivated by price. You may well offer great service. But how much cheaper are you going to be? You will lose your profit margin in trying to beat other, more resourced chains.

You say you want to cater to serious golfers who want their clubs in tip top shape. Do you know who those players are? Guys who keep their clubs in the trunk of their car and replace them when they feel like they want new clubs. They aren't getting loft and lie adjustments or replacing shafts. Not all golfers spend their lives on golf forums agonising about equipment.

The business plan is a projection of your ability to earn money and repay a loan, not a list of feel-good cliches.

Offering a wish list of services that are not profitable impresses no-one, especially those who you want to lend you money. Sorry.

What is your estimate of shop fit out, security, inventory, insurance, cleaning, salaries? What are your projected weekly profits and how did you arrive at that number?

In my opinion, an independent golf shop would be in the "highest-risk/almost guaranteed to fail category."

I mean - I know I'm being harsh, but you seem to be one step away from saying something like "It'll be  a shop run by golfers for golfers". As if any one will give a sh*t. 

We are almost in 2022. Customers will spend a morning trying out clubs and the afternoon on the internet and phone trying to get the best price anywhere else and buy their consumables on ebay or Amazon.

It's sad, but it's true. 

Edited December 14, 2021 by Shorty