Three years after SNEWS® called the Arizona market "an all-comers event" and Exercise Equipment of Arizona owner Bob Cunningham told us the area was a "zoo," the growth of others and a slowdown in the industry have prompted Cunningham to call it quits at brick-and-mortar.
Cunningham will close the door on his last store of two on Oct. 31, walking out of a liquidated Phoenix location where he's had the lease since 1980. He shut down a Scottsdale store at the end of last year.
"People are worried about their jobs, and they're holding spending close to the vest," he told SNEWS®. "It's just that the brick-and-mortar stores are not doable at this time."
He placed two ads on Craig's List -- one Oct. 24 for his office equipment and store fixtures and supplies (click here to see that) and one a week earlier for his store's equipment advertising up to 70 percent off on all stock (click here to see that). His website, www.exerciseequipmentaz.com, is already shut down.
With the closure, however, Cunningham said he is not saying adios to the fitness industry. He said he will continue to do commercial sales, repairs, service and equipment moving.
"Maybe the economy will be better and we'll get back into," he added. "It'll be interesting to see how this all shakes out."
One manufacturer he carried, PowerBlock, told SNEWS® he may be the only retailer shutting down which doesn't actually owe money to any suppliers. Other brands Cunningham carried when he closed were Schwinn, Bowflex, Body-Solid and Bladez.
"I have no debt. I don't owe anybody anything," he said. "Looking over the next 12 months, it doesn't seem as if it were going to get any better."
So he said he thought, "I may as well pull my cards from the retail side" while he had no debt and could walk away still in good standing with suppliers and customers.
The Phoenix area market turned into that "zoo" starting in 2004, after Donnie Salum's Fitness Gallery declared Ch. 7 bankruptcy liquidation and Busy Body Home Fitness bought Denver-based All About Fitness, which was beginning to expand into the market. That, and a growing population in the area, fueled others to jump into the fray.
Currently, the specialty retailers battling over the market are:
>> AtHome Fitness -- three stores since it was opened by former All About Fitness managers Greg Feeder and Bryan Dorksen in late 2004.
>> Busy Body Home Fitness -- five stores after it bought All About Fitness in mid-2004.
>> Fitness Depot -- two stores and a small warehouse showroom, run by Jay Garfall and Eli Trujillo, also first opened in late 2004.
>> Fitness4Home Superstore -- three stores run by former sales rep Bob Lachniet and also opened in late 2004.
>> Others include commercial sales by Gym Source and Advanced Exercise Equipment. Precision's presence ceased earlier this year.
Cunningham admitted he was conservative, "and that has affected things in one way. I don't have a strength as a sales pusher, I don't have pretty advertising, and I don't have big stores and high overhead."
In a November 2004 SNEWS® story (click here to see the story, "Arizona specialty fitness market turns into all-comers event"), Cunningham said the market was becoming "over-saturated" because people "see the (population) growth numbers and everybody wants to come to town."
According to the Phoenix area business journal on Oct. 24, foreclosure filings in Pima and Maricopa counties increased 311 percent in September to 2,414, up from 777 during the same period last year. Maricopa County, where Phoenix sits, led the state with 2,127 foreclosures. Area experts are telling a similar story, as are others around the country: During the real estate boom a few years ago, families bought land and homes but now the mortgages have reset and prices have turned down. Phoenix is one of the hot spots for foreclosures, experts have said.
Still, the market shows some light at end of the corridor: A study released earlier this month by the Urban Land Institute and PricewaterhouseCoopers, "Emerging Trends in Real Estate 2008," which gauges investment and development prospects in the United States, said Phoenix is No. 9 on the top 15 list of U.S. commercial real estate markets for 2008.
The latest U.S. Census figures available (1990-1999) showed Arizona had a population growth of 40 percent, only second behind Nevada's 46 percent. In absolute numbers, Arizona was the fifth-fastest growing state, coming in behind only California, Texas, Florida and Georgia.
SNEWS® View: We don't have a lot of fun writing stories about retailers that are shutting down -- and this makes two in two weeks who were in the industry for 25-35 years. Cunningham made a smart decision to close his doors, however, before the debt piled up and he had to dip into his personal savings since he recognized he could not compete with the fleet of stores that have all opened in the last three years -- at least not at their level of flash, push and advertising. We wish him luck and, frankly, wouldn't be surprised to see him come back to the retail market in a couple of years. Unless, of course, he discovers that not having a storefront while still selling and servicing is a lot more fun.