Golfsmith International Inc.

Golfsmith1For Golfsmith International Inc., selling merely golf products is just not enough. Instead, “We’ve had a very strong focus on being authentic,” CEO Martin E. Hanaka says. “We really target the avid golfer; those who play 25 rounds or more.”

The Austin, Texas-based specialty golf retailer operates stores that sell clubs, bags, apparel, balls, and GPS and rangefinder systems. Founders Carl and Barbara Paul started Golfsmith in 1967.

Before co-founding the company, Carl Paul received a tailor-made set of golf clubs as a gift, which made him realize there was an unfilled niche in the industry for custom-made golf clubs and components. The couple then started operations from the basement of their Edison, N.J., home, and sent out a typewritten, hand-illustrated catalog.

Golfsmith later saw the addition of Carl Paul’s brother Frank, and it moved to Austin in the 1970s. There, it opened its first showroom in 6,000 square feet of unused army barracks. By 1976, Golfsmith had grown to gross more than $1 million a year.

In 1992, the company moved to its current headquarters in Austin, on a 40-acre campus that includes corporate offices, a practice range, a 30,000-square-foot Golfsmith store, and 240,000 square feet of shipping and distribution facilities. Three years later, the company began opening retail stores locally in Houston, Denver and Dallas.

Today, Hanaka says, Golfsmith has 85 stores and will have 89 stores across the United States by year’s end. Golfsmith has a staff of approximately 1,800. Additionally, the company has engaged customers by doing what it can to improve their golf games.

“We have what we call the ‘Play Better’ guarantee,” Hanaka says. “If you buy from us and you don’t play better, we’ll give you your full credit [back]. I think that’s really been the foundation of the company.”

Another advantage Golfsmith has over its competitors is its qualified staff. “We put [forth] a tremendous amount of training on site,” he says, noting that Golfsmith usually hires people “for their passion or expertise” for golf.

Staying Competitive

This year, Golfsmith is focusing on several ways to become more competitive. This includes a new Golfsmith Mobile Site (in BETA test format now) with more robust product search functionality, mobile landing pages, cross sell/up sell functionality, mobile payment (Paypal), upgraded store locator options and a mobile deal of the day module.

Customers can view the site and shop from their smart phone at the following address (preferably from wifi access): With this site launch, Golfsmith will not only be best of breed in golf but on par with some of the top retail mobile sites on the Web. That will be applicable to not only Apple products, but others as well. “That whole process [involves] getting more information to our customers,” he says.

In addition, the company is enhancing its website so it can stay competitive with other online retailers, such as Amazon. “[It will improve] the hierarchy of how we classify goods and cross-reference [them] when you do a search on our site,” he says. “You can get [what you] need faster.”

This year has marked a period of major expansion for the firm, as it has opened 10 new stores and relocated four to larger models. “[We] did a comprehensive analysis of every market in the country,” Hanaka says. “We’ve identified 107 new locations for Golfsmith down the road.”

The company often chooses areas that have many golf magazine subscribers. Golfsmith also looks at the rate of golf product sales in the region, along with the number of competitors. “We size up markets that we think [have potential] growth,” he says, noting that the company plans to open 12 stores next year. “The site dynamics to a specific expansion site are every bit as important as the market dynamics. We want to know who the co-tenants will be what the visibility will be and particulars of the site.”

Returning to Stability

A longtime veteran of retailing, Hanaka joined Golfsmith in 2007 as its chairman, and became its CEO the following year. Before coming to the company, he held the same roles at Sports Authority. Hanaka says he promotes an “entrepreneurial” culture at Golfsmith. “We’re a small company, and we like to have that small-company feel,” he says.

Associates might wear golf attire in the office, but it is not all fun and games. The company regularly measures itself against business metrics and trends so that it can react quickly to market changes. “In our office group, we all share [equal] responsibility because we are interdependent of one another to fulfill our individual responsibilities. None of us is as good individually as all of us are collectively,” he states.

He sees a strong future for the company. “In 2009 and 2010, the golf industry shrunk from $5 billion to $4 billion,” he recalls, noting that the number of golf retailers or store door declines in the United States has dropped from 1,600 to under 1,000. “It has stabilized,” Hanaka says. “We can be one of the best [companies] in the trade.”

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