IHRSA - Nov09CBI-Nutrition

Nutrition an Essential Factor in Fitness Equation
Role of supplements expands as healthcare market changes

Canadian Charisma
David "Patch" Patchell-Evans, who founded GoodLife Fitness in 1979, enjoys the singular distinction of owning not only Canada’s largest chain, but also the largest chain owned by a single individual in the world. He was recently elected chairperson of IHRSA’s board of directors, a leadership platform from which he’d like to "unite the world through fitness."

Konami Sports & Life
Japan’s largest club chain has risen to the challenges presented by global economic woes.

Design International
Fasten your seatbelts: CBI takes you on a tour of three stunning clubs, in Brazil, Dubai, and China!

Cooper Complete: Do It Yourself Supplements!
Dr. Kenneth H. Cooper has been breaking ground since 1969, when he introduced the world to the word “aerobics” with the publication of his best-seller by the same name. He followed up, in 1970, by founding the Cooper Clinic, in Dallas, and, subsequently, the Cooper Aerobics Center and Cooper Institute. Concerned, also, about nutrition, he published The Antioxidant Revolution in 1997, and, finding most commercially available supplements wanting, introduced his own line the same year. The initial goal of Cooper Concepts, Inc., one of eight corporate subsidiaries, was to create a multivitamin that was pure, potent, and effective based on dosage, absorption, oxidation of LDL cholesterol and homocysteine. Today, the Cooper Complete Nutritional Supplements line includes seven different multivitamin combinations: calcium, vitamin D, joint health, eye health, prostrate health, CoQ10 (ubiquinol), and high-potency omega-3 fatty acid. The products are sold in retail environments, including Sprouts, Whole Foods, Tom Thumb, Central Market, HEB Grocery, and Albertson’s Pharmacy, as well as in many health clubs throughout the country. Cooper Concepts doesn’t release its financial results, but has enjoyed steady sales growth since its founding.

It’s a bitter pill to swallow—the constantly increasing cost of conventional medical care. Ironically, however, as expensive pharmaceuticals are being scratched off the shopping lists of many consumers hard-hit by the economy, the sales of a wide range of alternative health elixirs have swelled.

Health clubs, the established provider of what may be the ultimate wellness therapy—exercise—are responding to, and profiting from, the growing demand for a variety of nutritional supplements and related offerings.

So called “consumer-directed healthcare,” focusing largely on disease prevention, has redirected the market. As a result, interest in nutraceuticals—a broad category of nutrients or modified food items believed to have health benefits—has risen significantly. Vitamins, vitamin-laced waters, fruit and protein shakes, a mind-boggling assortment of nutritional supplements—all have surged in popularity.

Information Resources, Inc., a Chicago-based consumer intelligence firm, points out that, in the final quarter of 2008, the sale of vitamins alone was 8% higher than during the same quarter in 2007. Global Industry Analysts, Inc., a company that specializes in business intelligence and strategic support, predicts that, worldwide, supplement transactions as a whole will surpass $187 billion in 2010.

For clubs, the opportunity to drive revenues, establish a solid new nondues-revenue source, and, at the same time, offer members a valuable product and helpful service is significant. However, merely bellying up to the juice bar or restocking the vitamin counter regularly won’t ensure success. In fact, clubs that are flourishing with these lines concur that, in order to guarantee steady sales and serious profits, operators have to skillfully manage a number of factors.

Planning for Results

In Santa Clarita, California, results—specifically, exceptional financial ones—are the name of the game for a club called, appropriately enough, Results Fitness. The 4,000-square-foot hybrid facility, which, this year, was named one of the best gyms in America by Men’s Fitness magazine, boasts a 95% penetration rate when it comes to nutraceuticals—it sells something to nearly everyone, nearly every day.

Co-owner Rachel Cosgrove notes that the club’s approximately 200 members spend an average of $8 per visit on the products. They purchase both prebottled supplements, such as fish oil, as well as the most popular offering, staff-prepared protein shakes. “Clients love our shakes,” boasts Cosgrove. “I’ve even had some say, ‘I didn’t want to work out today, but I really wanted a shake, so I came in anyway.” The club sells some 1,500 of the drinks per month, ranging in price from $4.50 to $5.75, earning $3 on each. That’s $4,500 in profits—from shakes alone—dropping to the bottom line every month.

It doesn’t happen by accident.

Cosgrove maximizes the returns by stressing the value of the merchandise, incentivizing sales, and doing what she can to counter the competition.

“First of all, it’s about quality—it’s about what produces results,” she says. “It means asking ourselves, ‘Will this help our members achieve their goals?’ If we feel that a product will, then we’ll bring it into the club.”

Cosgrove, herself, is particularly well equipped to make such decisions. She’s a member of the American Dietetic Association; is qualified as a nutrition and lifestyle coach; and is certified as an Apex Nutrition Professional and as a sports nutritionist with the International Society of Sports Nutrition. Credentials notwithstanding, she and her staff conduct in-depth studies to determine which items will produce the desired outcomes and offer superior value.

Their efforts not only determine what hits the shelves, but also confer credibility. “We read the research and educate ourselves,” she explains. “Consequently, our clients trust us. They know that whatever we’re selling is the best. And when we suggest that they try something, they buy it.” Cosgrove and her staff also attest to their faith in the benefits of the products by using them themselves.

Inspiring employees is another important part of the process. Cosgrove pays trainers a healthy 10% commission on sales, an incentive that prompts more consistent and zealous merchandising. “It’s part of their job,” she explains, “and we conduct trainings, role-playing sessions, etc., to help them do it better.”

The club’s efforts, however, don’t take place in a vacuum, and Cosgrove has taken the competition into consideration. “We can’t hope to compete with the large chains, ones like Wal-Mart or Trader Joe’s,” she laments. Recognizing that she couldn’t prevail on price, she relied on quality and exclusivity. She sources her products from three, top-of-the-line providers: Private Label Fitness (PLF), a supplier of supplements designed for athletes; Metagenics, a manufacturer and distributor of science-based medical foods and nutraceuticals that are marketed to healthcare professionals; and Performance Food Centers (PFC), a leader in the design, operation, and supply of juice bars/cafés.

“They’re all great and make use of excellent ingredients that I can stand behind,” she says. “Plus, their merchandise isn’t directly available to consumers.”

Mastering retail basics

Urban Active Fitness (UAF), a 32-facility chain with sites in the tri-state area of Kentucky, Ohio, and Tennessee, is also sensitive to the threat of competition and adept in the art of retailing. “We’re not going to try to go head-to-head with online players,” says Jeff Quammen, the company’s director of corporate programs. “And we’re not going to offer the same stuff as your neighborhood GNC.” Like Results Fitness, UAF relies on suppliers familiar with the fitness industry for all its provisions, from protein bars to smoothies. It makes use of PFC; Healthy Images, a wholesale company; and City Blends, an IHRSA associate-member company that provides a turnkey juice bar system.

UAF doesn’t share its financial figures, but, Quammen attests, is quite good at setting and hitting its financial targets—including in the nutrition category. It does so, he explains, by offering products with wide appeal, making sure that they’re always available, and utilizing high-visibility advertising. “Markets vary, but our strategy is to cater to common needs and wants,” he explains. “It’s impossible to be everything to everyone, but we cover the basics. We also pay attention to trends so that our lineup remains fresh and up to date.

“We believe it’s important to restock products regularly; if members want something, we want them to be able to buy it while they’re at the club,” Quammen continues. “Furthermore, we strive to give them a reason to make a purchase by telling them why they might need a particular item. We post signs, hand out flyers, do e-mail blasts, and do scrolls across the TVs—just enough to pique their interest.”

Smooth selling ahead

American Family Fitness (AFF), a 7,500-square-foot facility in Fredericksburg, Virginia—one of seven clubs in the Richmond, Virginia-based chain—has proven how much potential there is even in a nutritional offering as simple as a smoothie. Each week, it sells more than 1,000 of them, generating $28,000 in monthly revenues, with a hefty 30% margin delivering $8,400 in profits.

Like Quammen, Dave Hornberger, the café manager for the club, which has over 20,000 members, stresses a quality product, well-informed staff, member education, superior customer service, and effective marketing. Café employees are not only very knowledgeable about the product they’re serving, but are also well versed in retail skills, such as up-selling.

AFF conducts monthly in-house trainings, during which, Hornberger says, “We offer continuous updates, new product information, and facts about nutrition.” To supplement this coaching, AFF avails itself of vendor-provided instruction. The café’s primary supplier assisted it with the initial set-up and provides schooling for staff. Hornberger also encourages a personal connection between servers and customers: “We try to learn the members’ and remember what they typically order,” he says. “That way, when they come in, we can ask them if they’d like the usual.”

Hornberger also markets the café’s wares aggressively. “It’s a must,” he insists. “You have to advertise to attract customers.” Like Quammen, he makes use of posters and in-house TV ads, but, beyond that, he also has employees distribute free samples to members during peak hours. A taste or two is quite compelling, but, sometimes, just seeing the offerings is enough. “Location and line of sight are crucial,” he explains. “Displays, and even the café itself, ought to be convenient to members as they enter or leave the club.”

Regardless of what’s sold, or how it’s sold, it’s worth noting that, while supplements will never substitute for a sensible and comprehensive diet, or eliminate the occasional need for medication, they’ve become a staple—virtually a necessity, Cosgrove suggests—in the club setting. “Today,” she observes, “most people aren’t obtaining all of the nutrients that they require on a daily basis, and so a fitness program really isn’t complete without them.”

- Patricia Glynn, p.glynn@fit-etc.com