Thursday, March 09, 2006

Clubbuilding War Breaks Out

The clubbuilding industry is in for some significant changes with the recent purchase of GolfWorks by Golf Galaxy.

Let’s look at the signs that are starting to emerge. Golfsmith, founded in 1967 is the granddaddy of clubbuilding. They began with a catalog that supplied components to the do-it-yourself clubbuilder. Then, they expanded into brand name merchandise, started opening retail stores (currently 50+ stores) with a clubbuilding department, and now have a powerful Internet presence. In 2002 they were bought by Atlantic Equity Partners III.

Golf Galaxy was founded in 1995 and started out opening retail stores (currently 51 stores). They went public in 2005. In 2005 they launched their Internet site, recently purchased GolfWorks (considered the 2nd largest component seller) and intend to open clubbuilding departments in each store. With this recent acquisition, they are clearly setting their sights on Golfsmith.

It will be a little like the ongoing cola war between Coke and Pepsi. They both sell the same product, they both have major brand visibility and they both sell to the same customer. With both companies being well financed, both will need to keep propping up their value with increased sales. The only way to do that quickly is by adding new stores or by acquisition.

Look for a marketing battle in the next few years as these two well financed gladiators try to steal business from each other. This should open up market opportunities for smaller players that can fill niches not adequately covered by the BIG TWO, especially in the clubbuilding realm.


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