2013/14 SNEWS FitBiz Retailer Report: Steady as she goes

In our 11th annual FitBiz Retailer Report, SNEWS tallied 311 specialty fitness storefronts in 2013, the same as 2012. Still, the landscape shifted.
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The specialty fitness retail industry held steady in 2013 — literally.

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In our 11th annual FitBiz Retailer Report, SNEWS tallied 311 specialty fitness storefronts with their doors open in the United States by the close of 2013, the same exact number we counted last year.

Of course, there were changes among the ranks. Those 311 locations are now owned by 35 separate businesses versus last year’s 36. In effect, those remaining businesses picked up the slack with a net gain of four new locations (11 openings and 7 closings). So, there is a silver lining.

Falling off our list is Home Workout in California (formerly Workout World), which shuttered its U.S. business in 2013, but remains open in its home country of Australia. First Place Fitness in Florida, also dropped off our list, after slipping back to two stores, while Ultimate Fitness Superstore in New Jersey joined our rankings with three locations.

2nd Wind Exercise remained atop of the specialty fitness pack and added an impressive (at least impressive for these days) six locations with a notable expansion into Arizona for a total of 51 stores. Beyond that move, it was just single-store openings for Leisure Fitness, Push Pedal Pull, Fitness Showrooms, California Home Fitness and Colorado Home Fitness in 2013.

While an even-steven result in U.S. specialty fitness store counts is by no means unhealthy in this economy, it’s perhaps a disappointment versus 2012’s gain, albeit small, from 301 locations to 311. SNEWS had hoped and predicted that the industry would build off those gains.

To an extent they did, just not with physical new stores. Most retailers told us 2013 was a decent year.

“2013 was a good year compared to 2012 and 2014 is trending a little better than 2013,” said Scott Egbert, who heads up Home Fitness Group and its 21 locations. That was the sentiment among many retailers we spoke to. There are no gangbuster gains, they told us, and the reality is that the specialty brick-and-mortar business, no matter what industry you are in, has changed.

Reaching out
At Leisure Fitness, with 27 locations in five Mid-Atlantic States, same-store sales were up between 8 and 9 percent in 2013, said Andrew Leshik, director of sales and marketing. It plans to add two more stores in 2014.

The increase is largely attributed to the commercial end of the business, he said, while the home retail side remains a bit sporadic.

“A lot of people have a wall up between commercial sales and retail, but we take more of a comprehensive approach.” Small local gyms, physical therapists, schools, and businesses are driving the gains.

On the home retail side, Leisure Fitness has seen the best results by heading out of its stores. “We’re going where the customer is,” Leshik said, including providing free corporate wellness programs and setting up Costco Road Shows. “It’s not just for the sake of sales," he said, "but for the pure marketing … getting in front of buyers with physical stuff and our experts.” The business still needs a physical store in the market to help grow its presence, Leshik said, and the idea is that the outreach helps drive traffic back to the store, both commercial and residential.

“It takes boots on the ground,” agreed Gary Glanger, co-owner of FitCorp USA with 15 locations across Texas. “We’re joining associations and websites that clue you in on new construction and employees in the area that we can reach out to, whether it’s a new fire department or an apartment complex.”

Specialty fitness retailers are also increasingly reaching out online with e-commerce sales — we saw a fair share of newly upgraded and slick-looking websites — but some admitted treading murky waters, with unclear MAP policies, especially with respect to territories. It’s an area where manufacturers have to clean up the rules, they said.

CrossFit, rowers and cardio
Cardio remains king at specialty fitness with treadmills, ellipticals and bikes. And the big winner in 2013 was rowers, many told us. The rower resurgence owe a big thanks to CrossFit, but it’s also attractive as a pretty straightforward piece of equipment, said Ricky Chow, regional sales manager at Precision Fitness Equipment with stores in Massachusetts and New Hampshire.

“It’s not complicated, it holds up over time — there aren’t a lot of parts to fix — it has a smaller footprint and it’s at an attractive price point of around $1,000,” Chow said.

As far as CrossFit goes, most retailers said they’ve gotten into selling some accessories such as battle ropes and Plyo boxes, but it’s an uphill battle to wrestle control of the business from the Internet retailers. Similar to above, it will take some reaching out. As SNEWS reported last month, some retailers have had better success than others.

Meanwhile, the strength category continues to putter along, with some smaller, single-station functional strength trainers as the highlight with consumers, said Robert Swartley, director of marketing at Eclat Inc., which has a dozen stores in Texas, including Busy Body of Houston and Fitness Unlimited.

“It’s still 3 to 4 years before you see strength turn around,” he said. “I think it will be an educational thing, especially with the female customer — women are starting to learn that they can lift weights and not look like Arnold Schwarzenegger.”

Everyday athletes are also starting to pay more attention to strength and not in the sports you might think. Golfers, climbers and skiers, for example, are talking more about strength training these days.

Technology push
There’s no ignoring a fast evolving technology push with fitness equipment and consumers are increasingly asking how this piece or that with work with their phones or fitness trackers.

“They want that connectivity,” Chow said. “It provides motivation and accountability.”

“They’re familiar with their phones and tablets,” and want to see the same in their fitness equipment, Swartley said, who uses tablets on the sales floor to show how they can interact with the machines.

As SNEWS pointed out at last year’s Health and Fitness Expo, it won’t be long before manufacturers stop making their own consoles and instead start relying on phones and tablets as the hardware that can run their software.

Still, there’s a segment of consumers “that don’t want all the technology bells and whistles,” Chow said. The best would be for manufacturers “to offer more than one console option.” And there should always be an obvious, single button for a quick, no frills, start.

Sporting goods shift
National sporting goods chains that sell fitness equipment had a good 2013, adding plenty of new stores to our list.

But many noted how hardgoods sales, including fitness equipment, have lagged behind softgoods. In the case of Dick’s Sporting Goods, CEO Edward Stack told investors his stores would follow that trend.

“We're shifting square footage to growing areas as we address challenges and categories like fitness and golf,” Stack said. “The apparel business that we are looking to expand in the women side and the youth side is more profitable than the golf area or the fitness area that it’s replacing from a square foot standpoint.”

If more follow, it could be good news for specialty fitness retailers with less competition. Then again, it’s also a sign a slowing retail market for fitness equipment. As Stack noted, more people are going to the gyms these days.

In sum
We were perhaps a bit bullish a year ago to expect two straight years of store-count gains at specialty fitness retail, but we remain optimistic.

While physical locations may only inch up in the next few yeas, we’re confident the overall specialty fitness business is growing. Those ahead of the game are the ones evolving — reaching out to new customers and keeping abreast of the latest technology and trends.

In 2014, we hope to see more retailers increase their outreach to some of the more popular complementary disciplines such as yoga, running and CrossFit, where plenty of opportunity lies to attract new customers.

Click here to download the PDF charts that accompany our 2013/14 report. Access the 2012/13 report here, plus the 2011/12 report here, the 2010/11 report here, and the 2009/10 report here

--David Clucas

The small print: Remember, our list of top retailers is only based on store numbers. We recognize that the number of doors a store has may not fully represent how good or how strong a retail brand is or even how high its revenues are. But since it is the only black-and-white-number we have, that’s what we use. If you have any corrections, questions or comments, please contact us at snewsedit@aimmedia.com.

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