Feature 1: Thomas Plummer
Buy Thom's Books!: Thomas Plummer
Hire Thom!: Thomas Plummer
Feature 4: Thomas Plummer
The Era of Vast Confusion
Originally Posted 03/29/10

There have probably never been stranger market conditions than exist now in the fitness industry. If the old adage is true, that confused markets represent great opportunity, then this must be the decade of vast fortune for those strong enough to take risk.

Never has this market confusion been more evident than in the franchise business, once the future hope for the industry and now a highly polarizing segment of the market with wars and issues all their own.
There was once a time that the mere name of the club could incite membership and market strength.

Remember the early days of the Nautilus Fitness Centers, Gold’s Gyms, World Gyms and Powerhouses. All of these were names that once drove market share and made the independents shake from fear.
My how things have changed in this segment of the industry. Gold’s Gyms now, for example, have clubs charging $9 in some markets, $19 in others and as high as $50 plus in the Northeast. Visit a Gold’s and you might find beautiful physical plants designed by Fabiano and just a few miles away find other Gold’s that look like relics from the 1990’s with a central workout floor crammed with equipment and a huge free weight area pushed up against the wall.

In the early days of franchising, the name was the delivery system. Put a recognized name on your building and almost everyone knew what to expect when you walked through the front door. Gold’s and World’s, for example, represented the 1990’s style body building gyms and were known for seas of equipment.
The name-only franchise faded, however, to be replaced by the franchise based upon a delivery system. Out went the name-only guys and in came Curves (circuit training), Anytime (first generation 24-hour concept) and Fitness Together (small, multi-room training facilities). Of course the purest form of franchise-based delivery system is Planet Fitness and the low-priced, value model.

This new generation of franchises left the previous generation in scramble mode. This is no more evident than the fear that Planet Fitness inspires in most Gold’s owners illustrated by the endless meetings they have up and down the east coast focusing on competing against the low priced model.

Planet Fitness is a logical concept that plays on the idea that most people just want simple access to equipment and don’t want to pay a lot. These same members are also tired of the posturing and insanity that existed in many clubs in the late 1990’s. PF is a good model and serves a purpose, but what makes them solid is not so much the concept but the focus on a precise business model and marketing base; something the Gold’s guys don’t currently have in their organization.

Many of the clubs in most of the old-style franchises are nothing more than replicas of the box clubs that existed in 1995. Average locker rooms, average group rooms and as much equipment as can be squeezed into a 5000 square foot training space. In fact, most of the ones opening today seem to be using the exact same equipment lists they used to order in 1995, represented by the huge order of Hammer Strength that most of them install but probably now appeals to about five percent of your membership.

This box club, which exists in thousands of more clubs than just in Gold’s, has a low penetration rate in its offerings that make if extremely vulnerable. For example, these clubs might break down like this:
• 10 percent that just want to be left alone to do their own thing
• 10 percent that take part in the club’s group exercise programs
• Five percent that are one-on-one training clients
This totals 25 percent of the club’s memberships. This also means that 75 percent are just there walking slowly on a treadmill or going in circles holding a big workout card and doing a circuit.

These owners always cite how beautiful their clubs are. Good physical plants attract, but don ‘t retain, and your highly finished gym really does nothing to keep the members you worked so hard to attract. Even the Lifetime people, who build their new clubs at about $30 million each, have found that they can attract with this magnificent facilities but that they also have retention issues like every other club. See previous blogs for ideas on this as well.

This 75 percent represents the members this club could lose if it faces a low-priced value club. If all I am doing is walking on a treadmill, then why pay $49 per month when I can go down the street and pay $10 to walk on the same brand of tread?

What these owners fail to realize is that they aren’t getting beaten on the price; they are getting beat by the concept and focus. PF and all its new imitators that it is spawning work because they have a defined plan and focused concept and their competitors don’t.

Without a narrowly defined plan of who you are and what your represent to the consumer, you tend to madly scramble when attacked. This is why you see incredible Gold’s Gyms dropping their prices to stupid lows. If I don’t have a plan of my own to compete, I will just copy yours.

This is not new by the way. This surge and reaction phenomenon has been going on since the 1950’s. In those days, someone put in a tiny, kidney-shaped swimming pool and every club then had to have one. Drive by a club and see a full parking lot and the owner thinks: "It must be his pool that is making people crazy?”

This owner would of course never think that the reason he is failing is that he is doing something stupid and that it isn’t the pool that is killing him but his own dog-poop business plan.

Once started, this trend continued during every generation: These are just a few of the stupid things that one guy did, then claimed he made a million with this edge, and then faded. Of course some of these did work well and did give the owner a temporary edge, but the point is that every great idea was copied, diluted and then faded:

• The circuit era in the late 60’s
• The Nautilus era in 70’s
• The first generation of Gold’s guys
• Aerobics and all its sub-groups in the 80’s
• The super-box franchise workout clubs in the 1990’s and the fear they spread
• The advent of the 24-Hour Fitness chain and the fear it spread
• Then came LA Fitness and the fear it spread
• Then came Anytime and its revolutionary 24-hour idea and the fear it spread
• Then the $19 dollar guys in the late 1990’s
• Then the $10 guys now

All of these confused the market, forced strong reaction, were eventually copied and then diluted, and it will be the same again today.

Your defense is know what your about and focus on your own plan. You are hard to hurt if you have a solid plan that is working. You may need to adjust, such as offering a $39 price against a $10 guy, but you have to learn to compete as an alternative rather than just a cheap imitator.

Login to post comments.

Subscribe to RSS Subscribe to RSS

Footer: Thomas Plummer
Copyright 2011. Thomas Plummer Company | 800-726-3506 | email: jillian@teamnfba.com
Site design by Susan K. Bailey Advertising, supported by Site Apex
Web Mail Login | Admin Login | Terms of Use | Privacy Policy