Competing Against Discount Clubs

by Franco Russo on Aug 20, 2018

You’ve worked long and hard to get your fitness facility off the ground, and while you’re doing okay in your community, you’ve noticed some of your membership base trickling away. Upon further investigation, you realize that while you’ve had your nose to the grindstone, managing your facility and planning for growth, a discount club has opened up not far from you. Not only that, but a handful of specialty boutique studios have carved out some market share. Where do you fit in, and what can you do to keep your place?

As a mid-sized club (priced between $45 and $65 per month and serving 1,000—2,000 members) or a smaller full-service studio, you have a niche. So do the other options. High-end facilities target fitness enthusiasts who are searching for a lifestyle change in an upscale, unique and remarkable environment with a lot of personalized amenities. In contrast, low-cost fitness clubs target people who simply want access to a place where they can work out on their own time, with no fuss, minimal amenities and a limited overall experience.

Although budget clubs have not had a significant impact on high-end facilities, they have been taking market share away from competitors in the middle. Before budget gyms became popular, mid-sized clubs experienced substantial success because they offered fitness services in a clean and motivating environment (similar to their competitors) at a much lower price than the high-end facilities. Although the amenities did not match up with those offered by high-end competitors, members were willing to forgo such services in order to pay a lower rate.

In reality, however, mid-sized facilities struggled to provide an experience that justified the average monthly rate of $50–$60. Although members were offered an initial fitness evaluation and orientation, it was generic and didn’t address their specific needs, and it came with little or no follow-up. This applied not only to the personal experience but also to group classes. The service was overvalued. Coupled with the lack of investment in new equipment, and possibly a lack of clean facilities and operational excellence, this amounted to basic service at a premium rate. This created an opportunity for discount clubs, which saw that mid-sized fitness facilities were failing to offer their members a fitness experience that matched the membership fee. Discount clubs offered a comparable experience at a much lower price. Finding no difference in value, people fled to the cheaper options.

If you run or own a mid-sized fitness facility, or an even smaller one, you need to stay viable and regain market share from budget clubs and boutiques. The following strategies may help.

Create an Effective Brand Identity

Many general managers, owners and operators respond to competition with a knee-jerk reaction: They lower their prices. This is destined to fail. It only communicates that the product offerings and services were overpriced all along. Members will resent this, and it will equate their fitness experience to the one available at a discount club (a club that—adding insult to injury—features newer equipment and facilities). Do not lower your prices! Instead, create an effective brand strategy that will differentiate your business.

Determine your target market. Who makes up your core clientele? Include people who are interested in a fitness center that provides a highly personalized experience in a clean, welcoming, motivating and friendly environment. Although it seems simple, many facilities skip this step.

Establish a mission statement. You need to reinforce your facility’s values. The mission statement is your identity, and it defines your product, setting you apart. An effective mission statement focuses on your strengths over the competition’s weaknesses. For example, “ABC Fitness provides a highly personalized and remarkable experience in a fun, welcoming and motivational environment. In your quest to achieve goals, ABC offers an alternative to large, impersonal clubs!” Everything—your logo, your interaction with members, your day-to-day operations and your offerings—stems from your mission statement.

Differentiate your facility. Most budget clubs provide their members hardly any service. I once visited a health club where the tour was self-guided. Once I finished the tour, I was instructed to sit down in front of a computer, review the various membership options and join if I felt so inclined. At some budget facilities, members pay to access the showers! At others, the classes are virtual because the business model cannot sustain a full fitness staff. This means there’s no one there on-site to guide members through a safe and effective class.

Instead of the above, capitalize on this bare-bones mentality by offering more personalization. For example, always greet members by their names. Train staff to interact with clients on the floor to ensure they’re making progress, and to bond with them. Extend this to the class setting by encouraging instructors to inspire participants and be invested in each individual’s success.

For more information, please see “How to Compete Against Discount Clubs” in the online IDEA Library (April 2018 IDEA Fit Business Success). If you cannot access the full article and would like to, please contact the IDEA Inspired Service Team at 800-999-4332, ext. 7.

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About the Author

Franco Russo

Franco Russo IDEA Author/Presenter

Franco Russo entered the fitness industry in 1997 as a Membership Consultant in the prestigious Midtown Sanctuaire in Montreal. After leaving the industry for a couple of years, he returned as sales and marketing director in 2006. In 2009, Russo became the General Manager of NouvelleVie Fitness Club. He is currently the regional sales director at Atlantis Strength in Montreal.