The one thing I like about listening to two of our columnists, Michael Scott Scudder and Sandy Coffman, at the Club Industry East show is that they don't pull any punches. They're old-school analysts who want to make the club industry a better industry for today's leaders. Scudder and Coffman tell their messages in different ways. Scudder admittedly has a more negative or contrarian point of view (which doesn't mean he's in the wrong at all). Coffman is more positive, yet freely tells of the pitfalls of the business.
I'll first touch on Scudder's presentation, titled "How the Heck Do You Compete with $19 a Month?" Scudder wanted to use the word "hell" but was told he couldn't. I sat in on only the first of this two-part presentation, but thanks to the miracle of power-point printouts, I got the gist of the second part, too.
The assembled group of about 15-20 people from places such as Boston, upstate New York, Florida, Atlanta and North Carolina heard Scudder urge them to find a niche in their operations. Instead of using convergence--trying to please everybody with childcare, pro shops and juice bars, for example--they should be divergent. Choose who you are, be that and serve that, Scudder says. With that in mind, Scudder adds that the club industry is not really run by health club owners anymore. It's run by consumers.
Scudder brought up the word commoditization, which puzzled many in the group, to describe the current surge of low-price players in the club industry. This is actually the basis of the column by another one of our contributors, Ed Tock, in the upcoming June issue. Commoditization, as Tock writes, refers to the development that industries experience when, in the eyes of the consumer, everyone starts doing the same thing the same way. Therefore, the company with the lowest price wins.
Tock referred to the Wal-Mart model in his initial draft he sent to us, and so, too, did Scudder during his presentation. Big players like Wal-Mart who offer the same if not better products at lower prices than "mom and pop" stores have run the mom and pop stores out of business. That's happening in the club industry, too, Scudder says.
In addition to finding a niche, Scudder urges club owners to consolidate their operations and consider lowering their prices. By consolidating, Scudder really refers to cutting the budget. That might mean the elimination of childcare, but it also could put group exercise (which Scudder believes is coming back in a big way) on the chopping block. Sales personnel and operating hours also have to be taken under consideration. More employees might have to be trained to do more jobs.