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MANUFACTURING: Company Reports Sales Increases Averaging 30 Percent

Fitness Equipment Maker Rolls On. The San Diego Business Journal features LifeCORE Fitness.

Fitness Equipment Maker Rolls On
MANUFACTURING: Company Reports Sales Increases Averaging 30 Percent Annually

Roger and Traci Bates say the key to their business’ success is making quality exercise machinery that fits easily in a home.

By Mike Allen
Monday, May 24, 2010
As many are realizing these days, smaller is sometimes much better. At least that’s the case for LifeCore Fitness Inc., designers and purveyors of compact personal fitness equipment, which is enjoying higher sales in the midst of an ongoing recession. In the past four years, sales at the Vista business are averaging 30 percent annual increases. This year, owners Roger and Traci Bates say revenue should hit about $9 million, up from last year’s $6 million.
The key to the business’ success, says Roger, is making quality exercise machinery that fits more easily in a home. A 15-year veteran in the fitness equipment industry, he was constantly hearing from customers the same refrain. “A lot of customers would ask me the same thing. ‘Why are these things so big?’ ”
“I knew if we could come out with quality compact fitness equipment that people would buy it,” Roger said.
While a standard elliptical bike may be 72 to 78 inches long, the elliptical bikes LifeCore makes run about 45 inches.
Roger and his wife, Traci, ran a fitness retail store in Dallas for seven years until they sold it to a competitor and relocated to San Diego in 2001. The following year, the couple opened Fitness and Spa Outlet in San Marcos, a retail store selling fitness equipment and hot tubs for the post-workout session. Fitness equipment made up about 80 percent of the total. The spa sales also helped a bit when sales of the fitness equipment dropped in the summer months, they say.
Giving ‘Em What They Want
In 2004, the Bateses started operating LifeCore within their San Marcos retail store. The concept was to design and manufacture smaller exercise machines their customers said they preferred. Roger took his ideas to some domestic contract manufacturers but soon realized by going that route, the retail prices would be more than most buyers could afford.
So they began importing some fitness equipment from Taiwan, among the largest manufacturers for all types of sporting goods, especially bicycles. But before putting the new bikes or treadmills on the floor, Roger tweaked them by changing such parts as the seat and the console, or the computer controls. “I’d take off their seat, and install one made of mesh that was more comfortable,” he said. “On the consoles, we upgraded them and made it easier to use.” As the products moved, the couple were encouraged about starting their own business, selling to other retailers. They say they used about $30,000 of their own funds to launch the business.
Leap of Faith Paying Off
When they first began importing, neither of the Bateses had any experience dealing with international partners, and mainly used their gut instincts to select the contract manufacturers. “It was sort of a leap of faith, but so far, every company that we’ve done business with has been a tremendous partner,” Traci said.
She says the business does not use letter of credit financing. The process used in many international transactions involves transferring funds to parties via banks, which ensure both the funding and the delivery of the goods. She says the process would tie up their funds for too long.
As to their experience in Taiwan, they say it wasn’t intimidating. “The owners (of the plants), the salespeople, even the engineers (who take design directions) are all English speaking. In Taiwan, students are all required to take English,” Roger said.
Customers today tend to buy smaller and less expensive pieces of fitness equipment such as the kind made by LifeCore, says Dan McLean, who owns First Coast Fitness Equipment, with three stores in northern Florida and a customer for four years.
Gaining Praise
“People aren’t buying 5,000-square-foot homes anymore, and they’re more apprehensive about allocating a lot of space for their workout equipment. At the same time, consumers still want quality,” McLean said. “LifeCore is probably our No. 1 company as far as our sales because of its good midpoint price, and its quality.”
LifeCore has about 250 customers, primarily family owned businesses. The largest customers are located in the East Coast and Midwest. “We have one dealer who has 33 stores,” Traci said.
Although the equipment may be smaller, it works just fine, says McLean. “They’ve done a great job of fine-tuning the size without taking anything away from the product’s value,” he said.
Recently, several LifeCore products received best buy awards from Consumers Digest. The firm’s products, which include bikes and rowers and range in price from about $900 to $3,000, also received high ratings from Consumer Reports, Traci says. Given the $3 billion market for fitness and stationary workout equipment, LifeCore could be on a rapid growth path. Yet Roger says his dream when he started LifeCore wasn’t to create a big company. Rather, he wanted to build a business that makes high-quality products that people respect.
And once again, the Bateses and LifeCore Fitness are proving that smaller can definitely be better.