Gold Creek found the key to creating a profitable pro shop was to outsource its operation to an off-course giant
First, off-course golf specialty stores elbowed in on green-grass shops. Then, big-box golf retailers and mass merchants put the squeeze on their smaller specialty rivals. Now, the big boxes are locked in fierce battles with each other on high-traffic street corners across America and, in at least one market, it’s benefiting (gasp) green-grass shops.
The golf retail gods, it seems, are not without a sense of irony. At least that appears to be the case at Gold Creek, an 18-hole, semi-private golf facility located an hour north of Atlanta in Dawsonville, Georgia.
For years, Gold Creek, like many rural, single-store operations, was struggling to compete with the buying power of off-course retailers and Internet stores, so much so that its retail business eventually became hamstrung by limited selection and high prices. In fact, despite an active membership and brisk daily fee play, Gold Creek’s 2006 pro shop profits barely amounted to $5,000.
At the same time, retail behemoth Edwin Watts Golf Shops (EWGS) was operating five successful stores in the metro Atlanta region, yet growing competition from Golfsmith and several new PGA Tour Superstores was putting a squeeze on the golf retail environment. It was then that Dan Burle, Atlanta regional manager for EWGS, devised the innovative idea to quickly open more doors by partnering with on-course shops like Gold Creek, providing them with complete inventory and merchandising support—and a percentage of sales—in return for their retail space and direct exposure to active golfers. (Speaking of irony, the Edwin Watts empire began as a single, on-course pro shop.)
Gold Creek Head Professional Chris Dare, who had already been stocking his shop via a consignment agreement with a local golf shop merchant, needed little convincing, so he quickly signed up. The result is one of the most unique and possibly unprecedented arrangements the retail industry—not just the golf industry—has ever seen.
To be clear, the Gold Creek-EWGS arrangement is not a vendor concept shop or even a store-within-a-store retail partnership where one might see, for example, a Dunkin’ Donuts counter inside an Exxon Tiger Mart. This is two retailers in the exact same business—from factions that historically have been bitter enemies—who have created a relationship in which one is supplying the merchandise for the store and the other is operating it.
In March 2007, Burle and Dare implemented their plan, which called for the “Edwin Watts Golf Shop at Gold Creek” to be assigned an EWGS sister store in Atlanta. That facility would supply the bulk of the on-course shop’s merchandise, fixtures, point-of-purchase displays, initial training, monthly inventory assessment and ongoing support. Meanwhile, Dare and his staff would be responsible for day-to-day operations and sales, 10 percent of which would go to Gold Creek.
Of course, nothing is ever quite as easy as it sounds, and this uncharted path was not without its hurdles. For starters, there was the issue of Dare’s existing inventory, which had to be liquidated while the new merchandise from EWGS was arriving. Although it wasn’t problematic per se, Dare admits it did require “a little more attention and finesse in terms of bookkeeping” to keep things separate. And, as luck would have it, Dare’s point-of-sale system didn’t support the automatic uploading of EWGS’ inventory data, so it had to be keyed in manually, stretching the task from a day to a few weeks. Several days of training at the EWGS sister store were also required to learn, as Burle puts it, “How Edwin Watts sells, how Edwin Watts keeps a store looking…and other things such as traffic flow and strategic positioning.”
Still, says Dare, “I’m allowed a lot of latitude as to how I want the shop to look and operate. At the same time, they’re protecting the Edwin Watts brand, and they want to be sure that we’re representing them the right way. So, it’s really a partnership.”
Thus far, the relationship seems to be going swimmingly. Between Gold Creek and Lake Spivey Golf Club, the other on-course subject in this retail experiment, Burle estimates he’s gaining access to 70,000 metro Atlanta golfers, directly at the point of play. “When you run a newspaper ad, you don’t know who you’re hitting,” he says, “But with these [satellite golf stores], you know you’re getting core golfers.”
What’s more, Burle’s green-grass partners provide venues to conduct revenue-producing events, such as demo days and teaching clinics. And, perhaps most helpful, is that they provide outlets for moving merchandise from the sister stores, which helps keep the inventory fresh. Burle admits that it’s sometimes older product that’s sent to Gold Creek and Lake Spivey, but it’s still a huge improvement over what the pro shops were previously able to offer. The real beauty is, even marked down, the merchandise fetches a worthwhile margin, especially considering that, for the latter part of its shelf life, he’s not paying rent or employee overhead.
Gold Creek has made out pretty well, too, and the club’s much-improved merchandise selection, competitive prices, fully fixtured store (compliments of EWGS), and happier members and guests are just the beginning. In addition to being included in all of Edwin Watts’ print, radio, outdoor and e-mail advertising, Gold Creek benefits from robust demo days and clubfitting programs, as well as the mass retailer’s ability to quickly satisfy special orders and inventory fill-ins. The positive aspects even trickle down to the tournament level, where Gold Creek is able to offer a more attractive package. Now, when a person wins a “pro shop credit,” he or she receives an Edwin Watts gift card that can be used at Gold Creek, at any one of Edwin Watts’ 66 stores or at edwinwatts.com.
“That has increased my ability to sell golf tournaments, for sure,” Dare notes.
Accordingly, Dare’s pro shop profits have increased, too. In fact, they’ve quadrupled in the year since partnering with EWGS. Even more impressive is that Gold Creek’s overall profit margin has increased by 30 percent.
“I would say that’s directly related to the quality of this pro shop—it’s driving business to all areas,” says Dare, citing a 10- to 15-percent lift in rounds played due to the added marketing and tournament exposure. What’s more, the newfound, non-golf, “shopping” traffic has, in turn, boosted food-and-beverage sales by 20 percent.
With numbers like that, there’s no question about the initial success of the partnership, though Dare is quick to point out that this type of arrangement might not be for everyone. “I’m looking at doing larger volume, with higher-quality product and better service to the customer, and that suits me, but I am giving up some control and high-margin areas,” he says. Then again, for some products, he sees a higher margin than he normally would, which tends to balance things out.
The real question about control is, when problems arise and difficult decisions have to be made, who has the final say? According to Dare, “That still lies with us here at the course.”
Craig Better is a New Jersey-based freelance writer and managing editor of Golf Vacation Insider.
