Gary Heavin knows what finding a niche market can do for a business. When he opened the first Curves for Women in 1992, he did so with an eye toward providing service to women who didn't feel comfortable in traditional clubs. As many small clubs flounder, Heavin's business recently was named by Entrepreneur Magazine as the third best franchise and the third fastest growing franchise in the country. Curves for Women, which initially opened for women in small towns, now has 2 million members in small towns and metropolitan areas. The franchise will have 5,000 clubs open in 50 states and five countries by January 2003. And it all started with a niche market that wasn't being served.

Heavin says that having a niche in today's club world is critical.

“There are so many fitness companies that it is dog-eat-dog in the general fitness industry,” Heavin says. “The only hope for the average small fitness provider is that they focus on something and do that better than anything else.”

Heavin isn't alone in this belief. Michael Scott Scudder, president of Fitness Focus Co., says that most small club owners know they can't compete with the multimillion-dollar marketing budgets, images and business savvy of the big chains.

“I think the small players have realized that you can't make money selling health club memberships,” Scudder says.

Instead, small clubs must find a niche and serve that niche well, focusing on revenue per member rather than number of memberships, he says.

Besides, the marketplace has changed during the past 15 years. New clubs are popping up all over the place and large companies are buying out smaller clubs.

“If you want to compete with the big boys or girls, you better be able to differentiate yourself,” says Casey Conrad, a consultant in the industry for more than 14 years. “Here's why: with no discernable difference in product, the consumer will always buy based on price.”

Conrad founded what could be termed a franchise of “boutique” clubs, Healthy Inspirations. The clubs offer a weight loss and lifestyle program that combines nutrition, exercise, relaxation and aesthetic treatments under one roof.

Conrad says that 87 percent of people who join a health club cite weight loss as a goal, but clubs sell memberships, not weight loss.

“We cater to individuals looking to lose weight,” Conrad says. “Although that is a large market, when you are talking about the health and fitness industry, [clubs] never had a focus on weight loss.”

The members at most Healthy Inspirations facilities are women between the ages of 30 and 65 who have never worked out and who want to lose 30 pounds or more. The facility pulls them in with weight loss ads and offers them spa-like amenities. Each member must meet with a lifestyle consultant for 10 minutes three times a week. They can also take advantage of private relaxation rooms with massage chairs, an aromatherapy sauna and vacuum massages.

“It is that boutique environment that makes the average deconditioned customer comfortable,” Conrad says.

The clubs have exercise equipment, but Conrad calls the environment at the clubs, which are usually 2,000 square feet or less, “simple and unintimidating.”

“It's beginner friendly,” she says. The members can take advantage of the circuit exercise program, which has 20 stations of equipment, mostly hydraulic equipment that is adjustable. The facility offers classes and programming with the machines, offering classes within the circuit through the week.

“In this day and age where it's rush, rush, rush, and you don't know anybody at the bank, people like small, hometown service,” Conrad says. “That's what a boutique concept can offer. It can offer a narrow product or service at a higher level than can be done at a multiservice facility.”

Conrad's clubs and the Curves clubs serve a market that wasn't represented at health clubs 15 years ago when the membership was made up of people predominantly under 40 with a focus on sports and fitness. Now, the marketplace is filled with inactive people of all ages and subgroups. Those subgroups include people who want to look good, families interested in the social aspect of club life, those ages 40 to 65 concerned with wellness and health, active seniors and inactive seniors. These groups open up the possibilities for niche clubs.

Scudder also sees children's fitness growing into a huge market, especially since one-third of children under 16 are clinically obese and many schools are cutting their physical education classes.

“I think the opportunity for the fitness industry and club industry will be huge with children's fitness,” Scudder says. “We haven't scratched the surface.”

My Gym Children's Fitness Center has started scratching at the surface. Not a typical health club, its focus is children's fitness. The company offers a specialized program designed to help children develop and grow through play, says Gene Barr, senior executive vice president and director of franchise development at the company, which is based in Los Angeles. The mission of the company is to build children's self esteem and to establish a niche to serve the ever-growing couch potato population among American children.

“We are about impacting communities and serving a need that is seriously overlooked,” says Barr. “We have more obese children now than ever.”

The games and programming are designed to help with the fundamentals of physical fitness.

“We want to orient them at a young age to the fun relationship to fitness as well as assist parents to interact with their kids,” Barr says.

The plan seems to be paying off. The company, which started in 1983, now has 100 franchises in the United States and soon will open corporate clubs. The company also has gone international with clubs in Korea, Malta, Singapore, China, Australia, Japan and Hong Kong.

OTHER FORMS OF NICHE

Sometimes having a niche entails having a specialty core product. For Fitness Group in Vancouver, British Columbia, Canada, that core product is group fitness. The 8,500-square-foot club offers personal training, Pilates, spinning, cardiovascular and weight-training programs. The weight training room is less than 1,000 square feet while the aerobic floor is 3,800 square feet, an indication of the club's emphasis on group fitness, which pulls in about 4,000 people a week.

“They come for our group fitness classes,” says Julie McNeney, vice president of marketing at Fitness Group. “People talk about our classes as the best in town.”

Women make up the majority of the club's members (83 percent). Most of the women are ages 38 to 45, married with children, and earning more than $110,000 (Canadian) a year.

FINDING A NICHE

The aforementioned clubs have all found a niche, but how did they do it? For beginners, they started with a little research.

“You have to find out who your market really is, not who you think it is or who you want it to be,” says Scudder. He recommends doing a thorough demographic analysis.

“First, you have to look at each market that you serve and see who is there,” Scudder says. “You can't put a small, upscale club in an area dominated by people under 40 and lower income.”

Club owners at existing clubs have to determine how the area's demographics match with their club, including their current members and the facility's programming, equipment and staff. To attract a new market the club owner will have to change the way the club is run, Scudder says. That includes ensuring he or she hires the type of staff that appeals to the demographics. For example, an upscale, older clientele may not feel comfortable with a staff in its early 20s, and a young sports-training crowd may not be comfortable with older staffers.

Changing an existing club to fit the member demographics of the area is a risk. The club may lose some long-standing members. However, clubs have to weigh the risks and the potential rewards of changing their demographics. Scudder, who leads seminars on topics such as how to change a club's culture, also owns clubs in Texas. He recently reoriented the demographics of his clubs, which meant saying goodbye to some long-standing clients.

“One of the things I would caution you is if you change your existing culture in a present facility, it will take time,” Scudder says. “You aren't going to do it in one to two years.”

It took Scudder six years to change his club, including replacing the young people at the front desk with women in their 40s who appealed more to the club's new, older members.

“You do a risk analysis on any business,” Scudder says. “Most people wouldn't go into business if they just looked at that. You have to look at the potential, which means sticking your butt on the line.”

A club owner also must do an honest, no-holds-barred competitive analysis of other clubs in the area, Conrad says. The owner should find out what the other clubs offer and put quality ratings on those offerings and on their facilities. Then, the club owner should rate his or her own programs and facility.

“Then ask, what do we do best?” Conrad says. “What is it that we do that can differentiate ourselves from the other people?”

By finding out what a club does best and focusing on that, the club owner can prevent himself or herself from being reactionary, a major downfall for many clubs. “You make really bad business decisions when you are reactionary to other people's business,” Conrad says.

CHALLENGES

Resisting the urge to be reactionary isn't the only challenge facing niche club owners. Often a challenge is finding the capital. Because it takes less to get up and running, smaller club owners often borrow from a friend or take out a home equity loan to get the business started, Conrad says.

“So, you're running on a shoe string,” Conrad says. “It is the nature of that small beast.”

For Heavin at Curves, the challenge was convincing people that exercising for 30 minutes allowed adequate time to get fit. Curves uses a 30-minute circuit training routine for its members, programming that became more accepted as members showed improvement in their fitness levels and in their weight.

Another challenge involves space constraints. Large clubs can do almost any programming because they have the space, but small clubs have to make hard choices to accommodate particular populations. Scudder had to make hard choices at his club. He got rid of an aerobics program and converted that space into six different types of group training programs that make the club more money.

“So the challenge for the small independent operator is, how do I create space to do this as well as change my corporate culture and everything else?” Scudder says.

FUTURE

While popular niche clubs include women-only, yoga, personal training and day spa clubs, Scudder believes that in the future specialty clubs could include medical or quasi-medical clubs. At these clubs, members can get supervised programming that includes heart rate training, analyzes metabolic rate and offers individual health information.

“You will see those facilities materialize where they are doing specific things, probably getting referrals from HMOs, PPOs, insurance companies,” Scudder says. “They will have to be quality facilities. It doesn't necessarily mean big facilities.”

Group training studios that are about 5,000 square feet instead of 100,000 square feet may also re-emerge, he says.

As the baby-boomer generation ages, the senior market will become an even greater niche, too, Scudder says. However, larger clubs may actually be able to handle this market better because of the social aspect. Small clubs won't have the space for social areas where seniors can sit down and enjoy a cup of coffee before or after a workout.

IN THE END

The issue is do enough smaller clubs realize the need to specialize if they are going to survive? Scudder thinks if they don't, they won't be around much longer.

“I'm one person who does not think the number of clubs will continue to grow and grow,” Scudder says. With the law of economics, there will be a curving out pattern, he says, but despite that, an opportunity will exist for niche players.

“We are talking about a contextual shift in our marketplace,” Scudder says. “It is a tremendous opportunity. This is the best opportunity for bringing to the plate what we set out to do — have an influence on people's lives, but it's going to take different thinking.”