Industry View: Challenges facing fitness, possible solutions, call for collaboration

The SNEWS® View column is an occasional editorial by the editors at SNEWS®, but we also welcome guest editorials on topics pressing to our industries. This one is offered by Steve Lindenau, president of Diamondback Fitness, about the current state of the fitness industry, the competition and challenges we face, and some solutions that could help the industry move forward, including the suggestion for industry-wide collaboration on some kind of industry advisory board.

SNEWS® has long been keen on this topic and covered it in-depth since the inception of GearTrends® magazine in 2003. Click here to see an article we published in July 2003. If you are interested in an industry-wide board or collaboration, please email us at snewsbox@snewsnet.com. The more we share, the more we all can gain and grow. Now is the time to further this discussion.



The challenges that face fitness

By Steve Lindenau

Whatever business you are in, it gets better or worse on a daily basis. Our fitness business is facing more challenges than ever before and, in fact, it has been that way for the past 18 months. What are we doing about it? Up until about 18 months ago, the fitness business was growing at a very steady rate. Now, it is declining. I would like to give my opinion on what I believe are the challenges we face, as well as present some possible solutions.

>> Challenge No. 1: We must collaborate to promote the entire industry.

How many people in the United States and Canada would like to be more fit than they are today? How could our industry combat childhood obesity? How could our industry play a part in reducing our nation’s health costs? These three questions are some of the reasons why I believe our industry continues to have enormous potential. The problem is that we are not working together to try to promote ourselves as an industry to try and help answer these and other health-related questions. Both retailers and suppliers are guilty of focusing on the negative, being trite, and wishing our competitors the worst. For example, I have had many calls recently from both retailers and suppliers asking if my company was going out of business. I was also asked me if I have heard any rumors about other people going out of business. How productive is that?

Solution: This industry has to drop its pettiness, and collaborate to promote our industry. To be honest, instead of fielding two dozen calls about whether my company is going out of business or not, I would have much rather talked to both suppliers and retailers about ways to promote our industry and make it stronger. I truly want my competitors to do well. I propose a forum consisting of both manufacturers and retailers convening three to four times a year to discuss the promotion of our industry. If we successfully promote our industry, everybody wins!

>> Challenge No. 2: We don’t know our competition.

Many believe that we are competing against the fitness retailer down the street or the supplier that sells similar products to ours. Although I feel that this is part of the problem, it is not the main problem. We are truly competing for a consumer’s free time. People are deciding to buy other things with their disposable income other than fitness equipment. Why are we losing out to flat-screen TVs, computers, cheap airline tickets and video games? These industries do a masterful job of conveying the “fun factor” of their products. Our industry does not. Working out is fun, and should be a part of your everyday life, yet our industry does not convey this. We should be selling fitness as a fun activity, yet many consumers view buying a piece of fitness equipment begrudgingly. Working out is a chore, and watching a flat-screen is an escape. And since our current economic conditions have made people even more discerning with their dollars, the flat-screen ends up winning.

Solution: We need to sell fitness as “fun.” A treadmill, home gym or elliptical is actually a lot more fun than a flat-screen TV, although we need to teach people more about that. We need to look at new and fresh ideas about how to promote this concept. I believe retailers should focus their marketing money more on educating consumers on fitness benefits and the “fun” factor of fitness, and less on offering crazy discounts on products that the average consumer does not fully understand. To most consumers, fitness products are somewhat intimidating and confusing, and they really need to be explained to people by a store’s trained and experienced staff members. Discounts and pictures in a newspaper ad don’t do it justice. It is up to us as fitness professionals to create the positive marketing hype to make this a fun purchase for people. That is how we can compete with the purveyors or other high-end consumer goods. Think of all those retirement investment seminars advertised. Yes, they are in the end selling a product — and they do make sales — but they are also educating attendees about what to do and what not to do.

>> Challenge No. 3: We are not treating our customers as well as we used to.

What are we doing with our customers? There is a major trend in this industry to “job out” service and delivery. We spend a lot of money on advertising in different mediums trying to drum up new business. A lot of the feedback I get is that advertising is not working like it used to. So, then, how are you treating your current customers? There is a goldmine in your files for repeat business and referrals yet this important potential revenue source is far too often ignored.

Solution: We are selling expensive consumer goods. Other industries are enhancing the customer experience when they are selling expensive consumer goods. In general, I believe that our industry is diminishing the experience. We need to buck this current trend and come up with ways to enhance this experience. Are we spending enough time with people when they purchase the equipment? Are we taking care of them after the purchase? Do we make follow-up calls after the installation? In the current state of our industry, a happy customer is worth his or her weight in gold. We need to take better care of them.

>> Challenge No. 4: The game has changed, but we have not.

I think that it is safe to assume that the majority of people reading this would say that their business is down from last year. I would also contend that although your business is down, the way that you are doing business is pretty similar to how you have done business in the past. Does that make sense? If the climate has changed, wouldn’t you normally dress differently?

Solution: When it comes to your business, it is time to “dress differently.” If you have done business the same way for years, you really need to change your thought pattern. The market has changed very fast. The way that people shop for product has changed, and product demands have changed. We need to change and become smarter retailers and suppliers. Think about new ways to market, maintain your customer base, and go after new business. Read all you can about what business pundits and retail experts are saying consumers want when they shop. We aren’t exceptions to those demands for service, service, service and attention, attention, attention.

>> Challenge No. 5: Supply is greatly outweighing demand in the market.

This is a big problem because those suppliers who do a good job of forecasting and timely product delivery get penalized by those who do a poor job. Severe overstock of product causes deep discounting by suppliers to customers, which jams fitness retailers warehouses full of old product and takes away much of the retailer’s buying power. It is a short-term gain for the retailer, but very detrimental to the supply side of the industry.

Solution: Suppliers have to get better at forecasting, so there is not an abundance of product on the market. Retailers must give realistic projections to suppliers so that the supply comes more in line with the demand. Too much supply or even too much demand will create a very unstable market. Right now, there is too much supply. We need to be realistic in what we can buy, produce and sell in the challenging current market conditions.

>> Challenge No. 6: It is getting increasingly more difficult for fitness suppliers to make a profit.

Retailers aren’t the only ones facing economic hurdles. Fitness suppliers in our industry are also faced with an extremely difficult task: How do you turn a profit in our current business and economic conditions? Retailers expect higher margins, faster and higher-quality service, great product availability, longer warranties, lower freight rates, “special buy” discount options, and longer payment terms. But one just has to look at our current economy to understand that prices on everything are increasing sharply. The cost of doing business in Asia is also increasing at an alarming rate. Raw material costs have dramatically increased. Fuel costs have soared, and the U.S. dollar is considerably weaker. It is extremely difficult given our current market conditions to run a profitable business as a fitness supplier.

Solution: Retailers need to understand that suppliers have to make a profit in order to stay in business. It is not a matter of greed; it is a matter of business ethics and survival. There needs to be realistic expectations from retailers of business conditions and what constitutes fair margins so that both sides of the business equation can make money.

Helping the industry prosper is something that SNEWS® would like to take part in. Lindenau has kicked off an important discussion. You can continue it by participating in our forum, below. And if you are truly interested in some kind of industry collaboration, please email us at snewsbox@snewsnet.com. We would like to see something started. Now is really the time.