The aggressive nature of the coronavirus and subsequent governmental responses to the pandemic have required most fitness business operators to make consequential decisions on short notice. This includes the top executives of four prominent vendor companies.
Club Industry’s March 25 virtual town hall event featured a panel discussion featuring Chris Clawson, CEO of Life Fitness; Rob Barker, president of Precor and executive board member of Amer Sports, Bill Davis, CEO of ABC Financial Services; and Blair McHaney, CEO of MXM. The four executives discussed how the pandemic has affected their businesses, as well as how they are attempting to aid their facility partners during this time.
The town hall is now available for on-demand viewing.
The executives concurred that the pandemic is rapidly evolving, and assessments must be made on a day-to-day basis.
Shelter-in-place ordinances are affecting Life Fitness’ manufacturing plants in Illinois, Wisconsin and Oklahoma, Clawson said. Meanwhile, some recent equipment orders were delivered while others were delayed or canceled. Every partnership and transaction is unique and requires careful communication with all parties involved, he said.
“We do believe you have to stay engaged with your employees,” Clawson said. “We try to have consistent conversations with them. I’ve been producing videos once a week to go out to our employees. We also have communications with our customers—general communications to say, 'Hang in there. Here's some of the things we're doing and others are doing, so you're not alone in this.'"
In recent weeks, Life Fitness has provided its facility partners with a custom-branded digital coaching app with workouts that can be completed at home and without equipment. Additionally, the company has resupplied its global dealers with consumer equipment to meet the new demand for at-home fitness experiences, Clawson said.
Precor is anticipating the pandemic will play out in two phases, Barker said. He calls the phases “standby” and “bounce-back.” The former phase describes Precor’s current state of reduced operations. The company is actively reconfirming purchase orders and, in many cases, continuing to store already-purchased equipment at no additional charge. In some cases, delivery trucks have been rerouted on the spot after a facility operator notified Precor of a closure or inability to receive an order.
Barker said he wants Precor’s facility partners to feel like the company is an asset to them during this time, not an additional hindrance.
He also encouraged facility operators to communicate directly with their banks and leasing partners, not Precor, regarding the postponement of any leasing payments.
“The cash management of the industry is very important,” Barker said. “I would say it's the No. 1 thing after the health of our staff and customers. The industry can help [financially], but at some point the industry is not big enough, and we have to look to the government and some of the banks.”
Precor is anticipating a 70 percent decrease in its second quarter 2020 revenue due to the pandemic. Barker noted that facility operators may not be in a position to immediately purchase new equipment when the pandemic recedes—a period that he calls the bounce-back.
"If you underestimate the degree to which you need to manage [your business] in the short term, you don't really get to buy a ticket to the bounce-back,” he said. “And the problem with the bounce-back is no one knows when it's coming."
McHaney is a club operator in Washington state in addition to being CEO of MXM, a provider of member experience management solutions. He recently made significant but necessary expense cuts with all of his businesses in anticipation of generating little to no revenue in the near future, he said.
However, he has directed the MXM product team to leverage their data archives to create MXM Idea Lab, a free system that allows operators to gain access to strategies for weathering the pandemic. (Read more about MXM Idea Lab here.)
ABC Financial, a club management solution provider, is experiencing a period of heightened but temporary demand due to the recent slew of mandated facility closures across the country, Davis said. As of March 25, approximately 70 percent of ABC Financial’s club partners had closed their facilities.
“Our business model hinges upon the success of club operators and the growth of club memberships,” Davis said. “We're a transaction-based business model, so if our clients—the clubs—aren't collecting fees, we are not getting paid. So, we are expecting pretty material dislocation in the month of April, and we're planning for that to persist for a couple months thereafter.”
ABC Financial’s partners have made a wide range of decisions regarding billing, Davis said. Many facilities have entirely ceased billing, which has been favorably received. Conversely, other facilities have continued billing while implementing new virtual offerings that have successfully engaged members at home.
Davis said he and his team are attempting to forecast the industry’s bounce-back so that they can help their partners get back up and running as soon as the time is right.
View the on-demand version of the town hall for more insights from Clawson, Barker, McHaney and Davis.
Click here for more details on Club Industry’s virtual town halls.
Click here for more coronavirus-related resources for fitness professionals.