Life Fitness reorganizes to give specialty more attention

After merging the formerly separate consumer and commercial divisions into one company three years ago, Life Fitness has separated the two again to help give specialty and retail customers and product development more focus.

After merging the formerly separate consumer and commercial divisions into one company three years ago, Life Fitness has separated the two again to help give specialty and retail customers and product development more focus.

"It's the best of both worlds," said Dan Wille, now vice president of the consumer strategic business unit for the United States and Canada. "Now, we're not only the small speed boat that can react and maneuver quickly, but we're also part of a larger company, and we have the resources" to respond as needed.

Formed quietly in early July but only now being publicly announced, the strategic business unit, or SBU, is led by Wille, who has been with Life Fitness since 1994. The SBU's director of sales and marketing is Adam Horwitz, who started with the company in 1999 as the treadmill product manager. Others in the consumer SBU include Neil Taylor, marketing manager; Blaine Barnett, senior business manager; Monika Czarnota, dealer program manager; Matt Brennand, product manager, cardiovascular products; Greg Highsmith, senior director, strength products; and Jay Maloney, associate product manager, strength products.

Segment specialization

The reorganization to allow SBUs for consumer and for commercial/club products was sparked partly by the arrival of a new president for Life Fitness in February, Peter Hamilton. Hamilton watched and analyzed the company until about June, then discussed and implemented the management changes, which includes an international division led by Matt Johnson. The commercial division is led by Jay Megna.

"The U.S. specialty retail market is an important marketplace for us," Hamilton told SNEWS®. "As the largest player in it, our presence is not consistent with where we have to be as Life Fitness."

When asked if the specialty and retail areas had been a bit neglected of late, Hamilton chose to turn around the answer slightly: "We have so much more opportunity to do better in that marketplace."

Part of doing more and better also means a whole range of new product that will be new at retail in the fourth quarter -- 16 pieces in total that are brand new or tweaked and redesigned in some way (13 cardiovascular and three strength). A huge showing indeed for the specialty retailer and his or her customer who hasn't had such a range of new equipment in a few years.

Hamilton, 59, from East Philadelphia and a "recovered lawyer" who was CFO of Brunswick when it bought Life Fitness, said he planned to retire from Life Fitness after taking over the reins from Kevin Grodzki in early 2005.

"Kevin took the business from one level to the next, and my job is to take it further," Hamilton said. "What I do well is create a clear and simple strategy and the organizational structure that will enable the company to carry out that strategy."

Product realignment
Gone basically are the Sport and Essential brands introduced by Life Fitness about three years ago. The company learned it needed to keep its name, even on product that sunk into more of an entry-level price arena.

"The Life Fitness name had a lot more value than Life Fitness realized," Horwitz said.

Now the product strategy for specialty retail is three-tiered:

1. Value – where, as an example, bikes might run from $800 to $1,600, depending on whether they were upright or recumbent.
2. Premier Design – the sweet spot of pricing, with an emphasis on looks combined with function.
3. Elite Luxury – which are basically commercial pieces and derivatives of those pieces that are the high-end equipment pieces for consumers who simply want the best.

Bikes and ellipticals in the new lineup are at retail now, having arrived in late summer. The new treadmills -- the really sweetest looking pieces of the group, which SNEWS® got a first glimpse at last week at the company's Chicago-area headquarters -- will arrive in the next few weeks after the company started on its redesign in late 2004. Many of the pieces were introduced at a private party for select retailers at the Health & Fitness Business show in Denver in August.

"This is the fastest Life Fitness has ever done a project," Wille said.

The new treadmills (T5-0, T5-5 and T7-0) have incorporated not only a laundry list of new and user-friendly features, but also aesthetics a consumer may not immediately notice but may still have an impact. For example, on the T7 (list, $4,500), there are no screws showing, leaving only swooping, curving, smooth pieces of silver so "it literally looks like a finished piece of furniture," Horwitz said. The pieces that drop down in price (T5, $3,500; T5-5, $4,000) may have some showing, but retain the smooth and sweeping look.

"We want someone to be proud of their treadmill," Horwitz said.

>> The "activity zone" control area is a small keypad on the front bar where a user can not only control incline and speed, but also see the numbers selected. Speed zones (walk, jog, run) can be set to the customer's own definition of those speeds, as can the "low-medium-high" incline settings.

>> Perhaps a small item but one that SNEWS® thinks women will find attractive are clear, colored Plexiglas cup holders and an accessory holder that are dishwasher safe for cleaning.

>> Another feature on the T5-0 and the T7-0 is a 10,000-steps program, catering to the trend of counting steps instead of calories or miles. A user can have their steps counted while on the treadmill, and then know how many more he or she will want to put in later that day. Or a user can program the treadmill to go for a certain number of steps instead of time or miles.

>> Manuals that accompany each treadmill have been formatted to fit easily in hands on thick paper stock with pictures and clear explanations as well as a trouble-shooting guide.

>> For those users who have a piece of equipment in the bedroom, there is also an option to shut off all lights or, in the case of thin walls in a home or sleeping babies, the option to shut off all beep tones.

With the range of the three tiers, Life Fitness will have covered treadmill prices from $2,200 to $7,000.

Marketing and branding
But the new stuff doesn't stop at new Plexiglas cups, manuals and steel. The specialty retail segment also realizes it needs to raise its image and name awareness among consumers.

For example, the company now has 10-foot-by-50-foot wall coverings for select specialty fitness stores with its new campaign steeped in human needs rather than equipment features: "Where does your workout take you?"

For example, one piece shows a fit male working out with the tagline, "Obstacles are put in my way not to stop me, but to prove my dedication." Another shows a young woman with the line, "At first I was following through on a promise. Now I'm chasing a dream." A third shows an older man with the caption, "Several miles a day used to seem impossible. Now, it's part of my routine."

"Everything," Horwitz said, "becomes part of the brand."

SNEWS® View: Although Hamilton declined to use the word "neglect" when talking about the company's recent past with specialty retailers, we at SNEWS® would say the use of the word is not so far from the truth. In our annual survey of retailers, Life Fitness comes in as a "best" brand, but it still raises plenty of comments and votes as one that's the most difficult to deal with, with respondents noting things like, "It's too big," "You're only a number," and "too arrogant." We think the company reorganization with a division to focus on specialty retailers and product for them, is an important way for the company to reconnect and refocus on specialty-specific products. We can't say we've gotten excited about new Life Fitness product of any category for a few years -- it's been nice, sure, but it hasn't gotten us really stoked. These new treadmills, however, are pretty exciting and will be pieces that will stand out on a store floor. It seems almost as if retail had become secondary to the company's commercial segment -- odd since the potential growth at retail is larger than the commercial division could ever dream. We will look forward to watching the development of the new segmentation at Life Fitness, as well as look forward to the company's promised participation at the 2006 Health & Fitness Business show.



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