There’s no time like the present to prepare for storms on the horizon. I’m reminded about this because one of the big boys has just arrived in town in a big way. The launch of Life Time Athletic into the local Las Vegas market has been a wake-up call, announced with all of the glitz and fanfare people expect of this town. I would like to use it as an example of how established local gyms can respond effectively to big-box corporate competition.
The Las Vegas Athletic Club Value Proposition
When the big national or multi-national brands move in, you are either going to fight based on price point or value proposition. You have to differentiate yourself from the competition by focusing on and promoting the things that you have that are unique or proprietary.
Ultimately it will likely be a combination of price and service that wins the day. The top end of the market will skim off the most hardcore workout fanatics, and families that can afford the best. That leaves a healthy chunk in the middle of the market, where consumers watch their budget but value fitness and make it a priority over other activities.
Las Vegas Athletic Club (LVAC) exploits the home-court advantage and loyalty of their members, of which they currently have a little over 20,000. LVAC was formed in 1977 and has been under the current ownership since 1991, they now haves six locations around town.
LVAC can compete with the national chains on price as well as their large clean and modern facilities that are well equipped. LVAC has a long list of positive reviews on Yelp.com, which indicates that its local reputation is an asset. It is a 24-hour operation, in the low $20 range with a 26-month contract, as of this writing. Life Time Athletic is more expensive at around five times the price of LVAC for monthly memberships.
LVAC also takes a page out of the playbooks of some of the higher priced gyms by offering a choice of classes that they can upsell to members for additional fees. CrossFit gyms charge more than $200 per month and attract dedicated gym users who want to train hard and have intense peer pressure for support. LVAC offers a full range of high intensity classes that appeal to the dedicated member on a budget.
The Corporate Achilles Heel
Apparently Life Time Athletic does a great job of providing clean well-equipped gyms. They have a high monthly membership fee but additional classes and optional extras are priced in addition to it. There are always going to be some members who will pay the premium price for premium service. The best way to compete as a small gym is to provide premium service at a moderate price, in the same way as LVAC.
Life Time Athletic is a public company so you can get some insight into the finances and it looks like they have peaked. The numbers show that in spite of the growth in the number of locations the membership is not growing as fast.
The secret weakness of the big-box corporate gyms is that they rely on their brands but they have huge overhead costs to pay. As long as you provide professional service and clean modern facilities you should be able to compete effectively. LVAC are easily able to compete with a giant moving in to the neighborhood. That should be encouraging to all of the independent gym owners out there.
Fighting The Good Fight
The big-box national and multi-national brands are a fact of life that you have to deal with. If you don’t have to compete directly with them, yet you may find that you may have to do so unexpectedly some time soon. Local companies can compete effectively like Las Vegas Athletic Club does here.
Lower price points, combined with great value and innovative thinking, will mean that you are more of a threat to them than they are to you. Just make sure that, in the nicest possible way, you are prepared to fight for your members, have contingencies and be smarter than the big corporations can ever be.
Las Vegas Athletic Clubs. Las Vegas Athletic Clubs. https://www.linkedin.com/company/las-vegas-athletic-clubs. 2014. (accessed July 21, 2014).
Lax, Rick. Workouts Getting Stale? Find Your Perfect Gym. April 11, 2012. http://www.lasvegassun.com/news/2012/apr/11/five-gyms/ (accessed July 21, 2014).
O’Rourke, Bryan K. Differentiation Strategies For Health Club Competitors. January 4, 2011. http://www.bryankorourke.com/journal/2011/1/4/differentiation-strategies-for-health-club-competitors.html (accessed July 21, 2014).
Robison, Jennifer. Vegas Fitness Industry Is Bulking Up. July 18, 2014. http://www.reviewjournal.com/life/health/vegas-fitness-industry-bulking (accessed July 21, 2014).