Retail In The Gym Revisited

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  • Retail In The Gym Revisited

There are some principles that are true for all businesses, not just for small gyms or fitness centers. You need to find the right balance of service and retail merchandise sales. If you can fit retail into your gym business model it’s going to be a good insurance policy. It can complement your memberships, training and class sales. I’ve written before about retail sales and the pros and cons. I think it’s worth revisiting with a few updated thoughts on the subject.

Turnover Counts When You Stock in Large Or Small AmountsGirl deciding to eat a slice of pizza instead of a salad bowl

The key is to move stock and get back the capital tied up in it as rapidly as possible. You literally want to get your investment moving as fast as you can. As a general rule, when you only earn a small margin on sales, you want to move merchandise fast. If it turns over slowly you need to get a much higher margin to justify having it on the shelf for extended periods. The best of all worlds is where you can get a fast turnover at a high margin.

Principles To Apply To Retail Sales

– Turnover cash as fast as possible
– Go for the highest possible margin
– Small daily gains add up to big end of year profits
– Balance that against being true to your brand and your values

Helping The Customers Spend More And Spend Better

So why not turn this old trick to your benefit as a small gym owner? It can bump up your revenue significantly. Selling convenience items will have a high return on investment. Paying commissions can help to motivate the staff.

For example, a $100 membership sale that costs you $80 plus a $20 sale that costs you $4 goes from 20/100 to 36/120 or from 20% markup to a 30% markup. That is an increase of 50%, half again as much! That is why it is worth promoting the sale of small convenience items at the front desk or in a separate retail space in a corner of the gym.

It’s not likely that there will be such a clear-cut improvement in the real world. You may get an added item sale on one in five or one in ten purchases, so it has to be spread over a broader base. Then of course there’s the issue of encouraging your trainers and front desk staff to go for sales. Consider whether the aptitude is there and what resources you can apply to training.

At the end of the year you’ll be glad of an extra few percent because the numbers always add up, the longer the time scale the bigger the payout. It could be enough to pay your salary and the commission for your employee will boost their paychecks. Customers get the convenience of buying gym related items like supplements, sports drinks gym wear, et cetera.

Bringing Temptation with Integrity

There’s always a risk of going too far. Your membership may be offended by offerings that are too blatant or that clearly run against your stated principles and goals. It is a real hazard to offer merchandise for sale that’s not congruent with your stated values. Short of dirty floors and a musty odor in the gym there aren’t too many things that will cause you to lose members faster than having them feel insulted by an inappropriate offering.

Do not sell anything that conflicts with fitness and health, ever! The only sort of merchandise that you can really sell in a gym is that which is aligned to the values of fitness and health. As long as it’s all congruent, it will be understood as being part of what you do, even if members don’t choose to make purchases immediately.

As long as the mix of products and services are congruent you can make it a clear win-win. Members get convenience and you get a little better return on investment. At the end of the day, you are running a business. If you don’t work to create as much value as possible you are doing yourself a disservice. A well rounded business model that includes retail merchandise sales will help you stand up to the competition and hang in for the long haul.

Over to you…

Does your fitness studio or health club offer retail? What kind? If not, why?

One Comment

Cory Savage
May 22, 2014

It’s certainly worth testing. Ask your members what types of items they might be interested in. Most gyms at the very least sell water and sports beverages.

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