The Best Way to Deal with New Competition

You get a depressing call from your partner. You and your staff think, “Not another one.” In the last 12 months two major new competitors have opened in your area — clubs bigger and more expensive to build than ever before. Yet on the other end of the spectrum, two new personal training studios have opened. What once was a very good market has now become crowded with more clubs threatening to take away your members. Less commission for the sales people, less training revenue, less everything. Yet, does it have to be this way?

One thing is for certain. The fitness industry seems to be ever expanding, drawing in more players and many with deep pockets. Some come in with bigger, more beautiful clubs; some open clubs with lower prices than you ever dreamed.

Yet, how you view new competition (or improved existing competition) is critical. Will it be something that hurts you, maybe knocks you to your knees, or will you stand up straighter and accept it as a challenge to become better than ever? The second approach is tougher because it takes more discipline. However, most businesses face competition — some do just fine and some don't. What makes the difference?

Often, it comes down to whether you are reactive or proactive. History shows us that clubs that are reactive (they know a major new competitor is coming, yet they do nothing) usually take the biggest hit. On the other hand, proactive clubs — no matter how strong they are — take a smaller hit and are quicker to recover and continue their healthy profits.

What are some of the proven secrets of dealing successfully with bigger and better new competition? First and foremost is the attitude the owners take and then instill in management and every staff member. Proactive owners know they must keep themselves and their employees proud and positive. Recently, a club in the Northeast had to deal with two new competitors — a “super” club chain and a low-price model — both within a couple of miles. Management at the existing club created a plan starting with making sure that the employees knew what their club's strengths were and worked to maintain a level of confidence. Remember that people will go where they feel appreciated, loved, respected and cared for. No competitor can take that away from another club.

Second, the club underwent extensive interior redecorating — and an exterior facelift. The club went from being generic “nice” to “talk-of-the town” beautiful just with a new interior and exterior décor.

One of the most significant things a club can do (or with many, a must do) is to make their clubs more attractive, exciting and rewarding to belong to. One of the key advantages so many smaller businesses, such as boutique operations, have (in any industry) is a visually appealing environment. People love to be in beautiful, clean environments, not necessarily bigger environments.

An established, highly profitable club in Florida enjoyed the rapid growth and minimal competition of its marketplace. Then, a bigger and more beautiful club planned to open a half mile away. The existing club owners had made their members wait for cardio even though they could have easily afforded to buy more. Management's approach was, “Why? They have no place else to go.”

The club's staff also provided rude service, something they surprisingly seemed to be unaware of. Once the club owners learned of the new competitor, they started threatening the new club owners. When they found that some of their members had joined the competitor during presale, the existing club management actually told these members to leave, cancelling their memberships. After a couple of months, the club owners added new cardio in hopes of stopping the exodus, but many members felt insulted that the continually requested cardio equipment was added only after members started to leave. The result? The new club opened and did well. The existing club was sold and is for sale again with profits down significantly.

If you aim to be competitive only when you need to be, it is too late. Planning for new competition before it exists by regularly reinvesting in your club and putting away cash reserves for when it does happen is a must in today's changing markets. Strong, disciplined planning leads to a stronger competitive position.

How will you see a new competitor? The choice is yours, and here is the key — you make this choice each and every day in how you treat your members, employees and club. If you don't have strong competition now, act today as if you expect it someday. Your club will be stronger today and in the future.

Bruce Carter is the president of Optimal Fitness Design Systems International, a club design firm that has created about $420 million worth of clubs in 45 states and 26 countries.

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