Increasing Profitability of Health Clubs Through Retail

A widespread misconception in the fitness industry is that the sole purpose of a profit center is to keep members happy. Without a doubt, we all want to keep our members happy at a reasonable cost. Having multiple profitable profit centers enables your facility to differentiate itself from the competition on both the service and financial fronts, while still keeping the members’ best interests in mind. When the majority of people in our industry think of profit centers, they immediately think of the’smoothie bar’ or ‘pro shop. These centers can be as simple as a beverage cooler and a clothes rack or as large as a 3000 square foot retail store. Either extreme may be appropriate for you.

To understand what to expect from your retail profit center, it is necessary to first define your business. You are a retailer whose survival is contingent upon creating an impulse to purchase. Not that you are never a ‘destination,’ because the occasional customer will take a break from the office to purchase a smoothie at your establishment, but the majority of your sales will come from impulse purchases. Keeping this in mind, you must be able to generate those impulses at all times. To begin, your retail center must be located near the front door. If not directly across from the front counter, then close to it. This is the facility’s prime real estate. If you are located near the front door, within 30-50 feet, you can guarantee that every person who walks through the front door will come into contact with your products. This is true for each of your profit centers; they must all have a presence upon facility entry. To return to my earlier statement, retail relies on impulse, and in order to generate that impulse, you must be directly in front of the consumer. Your drinks and bars should be located directly in front of the front door, closest to the line of traffic entering and exiting. This is done for the same reason that gum and candy are available at every gas station’s check-out counter. Directly in front of you, eliciting an impulse. Additionally, these products are quite enticing. Drinks with vibrant colors indicate flavor, which attracts the potential consumer. An open cooler brimming with beverages and ice is an enticing presentation, especially following a strenuous workout. Clothing, apparel, and tanning supplies are all vibrant and attractive when organized neatly along walls and shelves. Organization and stocked racks and shelves create the impression of a healthy store, which consumers find appealing. Empty, disorganized shelves make it difficult to locate items, nothing stands out, and creates the impression that whatever remains has been picked over and is probably ‘junk’.

While setting up your retail space, you must consider your promotions and the perceptions of potential customers. There are an infinite number of promotional methods, but only two fundamental types: passive and active. The most common is passive, which is the least effective and requires the least effort and creativity. Passive is as simple as hanging a SALE sign on your clothing rack or beverage cooler. Passive promotion necessitates no interaction with the prospective customer. Active promotion necessitates that the potential customer responds to the promotion in some way. Active promotion is extremely effective when employees distribute samples throughout the facility and offer them to members. If you are organizing a food drive for Thanksgiving, consider offering a coupon for a free smoothie in exchange for each can of food donated. Open a pair of lifting straps and place a dumbbell in front of them; allow them to try on a pair of straps. Naturally, there must be some limitations, but you can tailor your promotion to your specific needs. The majority, if not all, promotions will benefit from the use of some type of signage. Avoid overusing signs; they will lose their effectiveness. Due to the fact that the member base may already be desensitized to the effects of signs, you must be creative in your design and placement.

Product promotion is an art form that is critical for retail sales optimization. Understanding your target market and effectively appealing to them may seem like a simple science in and of itself. Are you familiar with the demographics of your customer base?? Are the products you sell appealing to them?? Or do you provide what you believe a fitness facility should sell?? Wrestling magazines are unlikely to be found in a Christian bookstore. The same holds true for your retail center. Is the majority of the traffic generated by bodybuilders? Then you should supplement with weight gainers, creatine, and tank tops, among other things. If there is a younger crowd in the traffic, they prefer energy drinks and tanning supplies. Not to say you cannot expand along those lines, but you must first identify your target market; otherwise, you will be selling products to people who do not want them. You can get a sense of it by simply watching members arrive and depart. Certain characteristics are self-evident: male or female, gray hair, and obesity, to name a few. You can probably glean additional information from a member’s profile. While this may require some additional effort and time, any information you obtain about your target market will be valuable.

After identifying your target market, you have the opportunity to educate them. Retail establishments cannot rely on monthly health magazines to educate their customers properly. You should stock your center with credible literature. A poster on the drink cooler indicating which beverage is best for which occasion. A list of the ingredients and a description of protein shakes. Most importantly, you must educate the staff, as they will be the center’s public face. They will interact with customers on a daily basis, and you want them to be as knowledgeable about the products as you are. They will develop relationships with customers over time, and those relationships will directly result in purchases. When a customer observes an employee demonstrating product knowledge over time, he or she will approach that employee first when a need or question arises. Employee product education is just as critical as knowing how to operate the cash register.

You do not want your profit centers to become a source of financial distress for you or the club. Poor management, uneducated employees, ineffective marketing and promotions, and a lack of customer knowledge are all surefire ways to make your center financially vulnerable. Each of these issues is resolvable, but only after they are properly identified.