Facing Down the Mini-Monster Health Clubs; Part 1 of 2 by Will Phillips February 2010 When Curves fitness centers opened, many roundtable members insisted that Curves wouldn't last; it wasn't real exercise after all. They also figured that small clubs like this would be a feeder system to larger more sophisticated clubs, which unfortunately also turned out to be wrong. Small clubs like Curves, Anytime Fitness, Snap Fitness and Planet Fitness not only operate as complete systems, but retain their members just as traditional health clubs do. The lesson to be learned from Curves is that they found an area that was untapped: the women's-only segment of the market. For many women, Curves is not only a social outlet, but offers as a safer atmosphere for working out. Curves, Anytime, Snap, and Planet all made Entrepreneur magazine's top ten fitness franchises on their overall Franchise 500 list for 2009. Even if one of these institutions failed - which is unlikely—they would be replaced by another low-priced fitness franchise. Because of their focus on a niche market and the fact that they offer an unusual level of convenience, these Mini Monsters are chipping away at the sales and membership of traditional clubs. Let's Do the Numbers (from highest grossing to lowest) Anytime Fitness: 1,000 locations, 600,000 members $26 million in sales Snap: 1,700 locations, 5 million members, $31 million in sales Planet: 270 locations, 1.4 million members, $100,000,000 in sales Curves: 10,000 locations, 4 million members, 129 million in sales Sound scary? You bet! We may not like it, but smaller and low-priced fitness only clubs are here to stay, and continue to increase their market share. The dynamics behind these businesses are extremely powerful as well as simple. Most of them are generally smaller than traditional clubs, so it's easier to find good locations, and they can be built much faster. Since staffing is minimal, the majority of the managerial and human resource problems that often arise in larger clubs are minimized. What is their Strategy? In her first Popcorn Report some fifteen years ago, Faith Popcorn identified a major trend: no one has enough time. Twenty years ago, a good health club offering tennis, racquetball, swimming, aerobics, weights and more, served almost everyone. Unfortunately this multipurpose approach also failed to create social communities for their members, who then found it easy to leave if a nearby niche club was more focused or easier to get to. The Mini Monsters position themselves based primarily on locality. This is sometimes called the 7-11 corner store strategy, which is to locate closer to consumers, and offer unparalleled convenience. This approach illustrates the niching or fragmentation of health club industry, where small clubs can sell the same product at a significantly higher price. Consider that a roll of paper towels costs twice as much at a convenience store than it does at Wal-Mart. In the same way, your members want fitness, but if you don't manage the ancillary issues such as time and social connection, you may lose them even with a superior fitness facility. Another advantage of the Mini Monsters is that they focus on very specific areas of exercise such as personal training studios, yoga studios, and Pilates studios, which can make their offerings appear to be superior than a jack of all trades club. Because of this focus, the public may also see them as are more talented and skilled. What Can You Do? Clearly, it's unlikely that you'll be able to move to a new, more convenient site, do major renovations, or purchase all new equipment. What you can offer is tribal connectivity. Tribal connectivity has to do with building social bonds and emotional connections between members, as well as between the club itself and its members. In Part 2 of this series, we'll look at how building social bonds and emotional connections in the article titled: Social Bonding, Tribes and Affinity Groups—A Solution to the Retention Challenge.