2001: Callaway-branded store to open in Boston

A Callaway Golf store, showcasing the company’s products, is opening in downtown Boston next spring. Whether more will follow in other markets, however, remains unknown.

The initiative not only resurrected Callaway’s past ambitions to establish retail storefronts but it also angered retailers who say the manufacturer is trespassing on their turf.

Merchants also complained that the typically proactive company didn’t confirm plans for the store until Dec. 4, days after the news had leaked, causing a buzz throughout the golf retail community and raising suspicion within it.

Wall Street analysts and industry observers sympathized with retailers but said fears of Callaway rolling out a distribution system of its own were unfounded. Instead, if the Boston pilot succeeds, they envision Callaway opening in major metropolitan cities a limited number of “showcase” outlets – akin to NikeTown stores – designed mostly to elevate brand awareness.

“Unless Callaway is totally stupid, which I don’t think they are, it would be suicide for them to open Callaway stores in every market,” said Tim Conder, an analyst with A.G. Edwards & Sons. “If they took it that far, they would put themselves at risk of having their retailers gravitate toward other competitors.”

Conder approved of the retail experiment but criticized Callaway for causing an uproar among retailers. To avoid a backlash, he said Callaway needs to be “as forthcoming as they can be, as soon as they can . . . .”

Larry Dorman, Callaway’s chief spokesman, insisted the company “is not in the retail business.” Rather, he said, Callaway has granted one of its retail partners, Golf & Ski Warehouse Inc., a “royalty-free license” to open a Callaway-only store and use the company’s name on the marquis.

The new store will be owned and operated exclusively by Golf & Ski, according to Scott Peters, president and founder of the three-store chain in New Hampshire. Both partners said the new store would be treated like any other Callaway account and would not receive preferential treatment, such as lower wholesale prices or advance shipments of new products.

However, they said Callaway will provide “store-in-store fixtures” for the new retail location. When asked whether such amenities would be supplied for free, both parties declined to discuss details of the partnership.

Dorman also would not confirm or deny whether the company has plans to form similar joint ventures in other markets. But he indicated more retail locations were possible.

“We’ve had inquiries from other people . . .” he said. “We are interested in building our brand and getting the best exposure for our brand at the retail level. That’s why we created the store-in-store fixtures. This (project) is just another opportunity. It’s an evolution.”

Callaway officials said the 5,000-square-foot store – at 100 Summer Street in the heart of Boston’s financial district – will showcase all of the company’s products and include a fitting center. It also is likely that the store will prominently display Callaway apparel, which is being developed under a recently formed alliance with Ashworth.

In 1998, Callaway had announced plans to open a 30,000-square-foot store in New York City, but scrapped them when its finances soured that year.

Callaway’s new model makes more sense, industry observers said, because the company’s “franchising method” reduces financial risk. If the stores are placed strategically to avoid conflict with existing accounts, the move could prove beneficial, Conder said. He said he wouldn’t be surprised if Callaway formed similar partnerships with some of its key accounts such as Edwin Watts or Golfsmith.

“These stores could help draw people through, especially tourists, who might see some new products and buy them at their local stores when they get home,” he said.

Some retailers, however, complained bitterly.

“I don’t buy the notion that this is some ‘showcase’ store . . . ,” said a merchant who, like several contacted by Golfweek, requested anonymity. “It’s just another competitor.”

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