The New Competition

The club across the street isn't the only business after your business.

There was a time when you knew who the competition was. You could open the Yellow Pages, flip to the listing for "health clubs" (or, in the old days, "gyms") and find out who else in your town offered people a place to work out. But increasingly, the competition comes disguised as apartment complexes, senior or assisted living complexes, weight-loss centers and even churches.

While some of these are new to the world of fitness facilities, others have been offering services for years. But now they are dipping into your pool of potential members, as they open their doors to a wider customer base than residents, members, etc., inviting the general public inside to sweat.

"The fitness industry is not monolithic; it is made up of spas, health clubs, apartment complexes and more," says John McCarthy, executive director of IHRSA. "It is a very heterogeneous industry in which all of these segments have coexisted for a long period of time."

While they may have coexisted for a long time, in today's ultra-competitive environment, every member lost to a health club alternative hurts the bottom line. But while these alternatives can compete with clubs for members, they can also aid clubs in finding new members and increasing revenues.

"It all comes down to attitude," says Oregon-based consultant and author Ronda Gates, of Lifestyle by Ronda Gates. "If a health club owner or manager views the competition - for example, the apartment or assisted living complex - down the street as a threat, that puts you in a frame of mind that may close the door to opportunities."

Glenn Colorassi has taken Gates' philosophy to heart. He is the director of the Stamford Athletic Club and founder of Stamford, Conn.-based AgeFit, a management and consulting company that develops fitness programs for seniors. Although senior residences with fitness centers could be considered competitors to the Stamford Athletic Club, Colorassi turned an adversarial relationship into a profit center. Specifically, AgeFit has assumed the management of 12 local senior complex facilities over the past two-and-a-half years. This has given Colorassi both a constant revenue stream and membership recruitment tool.

"The situation can be what you want it to be," says Colorassi. "You can work with the `competition,' work against them or take your chances and just ignore them. We have had great success working with them."

Colorassi adds that the network of 12 facilities which his company manages has acted as a "feeder system" into the commercial club. "The 50-plus demographic is the fastest segment joining health clubs," he says. "This gives us a way to get our name in front of that crowd, even if it is just through a `managed by' sign hanging on a wall. This way when they feel comfortable and are ready to join a full health club, they think of us."

And not every facility looking to grow its member base considers itself competing with commercial health clubs.

"We don't look at the other fitness facilities in our area as competition," says John Kratzer, general manager of the Marquette University Rec Plex, which is in crowded downtown Mil-waukee. "We opened to the public to help integrate the Marquette community with the Milwaukee community."

Despite the fact that a large portion of Marquette University's Rec Plex is made up of alumni and others associated with university, it doesn't mean that the Rec Plex won't take a member when he comes through the door. Since it opened in 1993, when the university purchased a YMCA adjacent to the campus to help meet the needs of its students, the 45,000-square-foot center has taken on what Kratzer calls a real health club feel. In fact, the Rec Plex features two weight rooms, selectorized and cardiovascular machines, an entertainment system and even towel service.

"Our location - and understanding it - has really been a key to our success," Kratzer says. "As a downtown location, we cater to a very select, adult population that is aware of what other facilities offer. To succeed, we have to offer similar amenities."

While living communities and schools have had exercise facilities for some time, other venues are new to the exercise business. "One of the biggest increases in weight management is coming from churches," says Gates. "The churches offer support and a community feeling that their users may not get from traditional outlets like commercial clubs."

Even though the church groups are adding to the competitive environment of fitness, Gates says that if approached with the right attitude and plan, these groups offer a fertile membership base for the commercial fitness facility.

"Many of these groups, much like the various park and recreation programs, aren't full-time programs," she explains. "And many are just classes and offer no real free weights or machines for the users. This allows the commercial facility to help transition these members into their facility."

This can be done in a number of ways regardless of the setting, be it an apartment complex, assisted living setting, or church, according to Gates.

"Many times the teachers in these settings are affiliated with a commercial club," she says. "This is a great opportunity to distribute guest passes, take a class to the gym for a training session or just talk about the benefits of cross-training with equipment that is not available where they are. The key is to network, network, network."

While some of these nontraditional venues are adopting exercise plans for the masses, a more traditional competitor is slow to catch on: weight-loss centers.

According to Marketdata Enterprises' 344-page study "The U.S. Weight Loss and Diet Control Market," weight-loss centers such as Weight Watchers, Jenny Craig and Nutrisystem racked up $1.1 billion in sales in 1999, and the market is expected to grow by another 7 percent this year. Still, generally speaking, weight-loss centers have not embraced fitness.

"Very few of these commercial programs offer a real exercise component," says John LaRosa, president of Marketdata Enterprises. In fact, according to LaRosa, only Weight Watchers, Jenny Craig and Nutrisystem combine traditional counseling with exercise - either in the form of walking classes or by recommending that participants work out in clubs or on their own.

"It's very tough for weight-loss centers to get involved in the exercise component of weight loss due to liability and space considerations," LaRosa says. That's why he speculates that this can open up the possibility of alliances and relationships between the weight-loss centers and fitness facilities.

"While it is true that there is some competition between the two, it is possible to work together to assist dieters in reaching goals," he says. "The key is to realize that the two programs can work together and aren't exclusive and competitive."

While weight-loss centers, churches and to some extent apartment complexes and other venues represent a new challenge to the competitive landscape, other nemeses still lurk, such as infomercials.

Although infomercial exercise products take billions of consumer fitness dollars off the shelf, these competitors might also help to boost your membership rates, according to Richard Cot-ton, an American Council on Exercise (ACE) spokesperson and exercise physiologist for Salt Lake City-based First Fitness.

"On the one hand, there are promises, hype and a presentation that you can easily get in shape, sometimes by doing only one exercise," Cotton says. "On the good side, infomercials keep fitness in the minds of the public. It is a half-hour-long message that you need to exercise. It is a message that no club could pay for itself."

Cotton also believes that infomercials open the door to marketing opportunities for commercial clubs as well. "Health clubs can market themselves by showing the benefits of their equipment vs. the infomercial product," he ex-plains. "This can be extremely effective, especially with consumers who have had bad experiences with infomercial products and may be turned off to exercise. Additionally, health clubs can play off of the fine print of the infomercials which states that good nutrition, aerobics, etc., are necessary beyond the five minutes a day with the infomercial product."

Despite the threat - real or perceived - that infomercials and other non-club competitors may present, the key to success lies in the mind-set of the club operator. "The most important single fact is that all of these different outlets get the people in the game," says IHRSA's Mc-Carthy. "Then over the course of time, as they become comfortable with exercise and their needs change, they may join a health club. There is significant synergy between all of these fitness outlets and in the short-term they are broadening the reach of fitness. It is up to the health clubs to capitalize on these potential members."

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