The days of owning your own pro shop and café or juice bar may be over for many club owners, but even when these operations are outsourced, club owners shouldn't leave behind cross selling opportunities.
For some clubs, pro shops and juice bars can be a great fit as part of the business. At the clubs managed by American Leisure, vending typically accounts for about 20 percent of the ancillary revenue, according to Wayne Brown, director of sales at American Leisure. This usually breaks down to about 5 percent of total club income, says Brown.
For other clubs, pro shops and juice bars can be nothing but headaches. With a 40,000-square-foot expansion to be completed in the fall, Fayetteville Athletic Club in Fayetteville, AR will offer a pro shop and restaurant for members. Prior to the expansion, the club operated a snack bar, but the profits weren't very “healthy,” says Bob Shoulders, owner of the club.
“I don't know many health clubs that are good at the restaurant business. Most lose their shirts. I can't think of any that make money,” says Shoulders. That's why with the expansion he is outsourcing the snack bar operations.
Shoulders has decided to change his retailing efforts at his new pro shop, too. The shop will carry minimal inventory, focusing on demonstration items, such as racquets or shoes. If members try the item and like it, the club will order it for them. Doing it this way cuts down on inventory warehouse space and staff to keep up that warehouse.
“We'll have balls and stringing stuff and logo stuff that people need for every day. But carrying $20,000 worth of warm ups and tennis skirts…people don't even wear collared shirts to play tennis anymore,” says Shoulders. “You don't need all the square footage and don't have to have a merchandiser or buyer to spend all that time ordering stuff that will sit there.”
The problem with pro shops, as Shoulders sees it, is that members often can buy the same items at Target or Wal-Mart for cheaper. Clothing inventory from now on at Fayetteville Athletic Club will be limited to clothing with the club's logo on it — something members can't get at Target or Wal-Mart.
Many pro shops — outsourced or not — also keep on hand the smaller items that members might forget but need during or after their workout — locks, gym bags, water bottles, swim caps, tennis balls. The most typical items sold at American Leisure pro shop facilities are clothing, cardio entertainment accessories, cold beverages and spa products, says Brown.
Cross selling has helped Shoulders' club increase nondues revenue from 20 percent of gross eight years ago to 36 percent of gross last year (although part of that increase comes because the club is offering more programs now).
Cross selling ideas include:
Even though Chelsea Piers Sports Center doesn't own the juice bar/restaurant in the club's complex, the club's nutritionist still works with the restaurant's owner to list a drink of the month. She includes a mention of the drink of the month in the club's newsletter and the juice bar has a point of sale sign stating what the drink of the month is, says Bill Abramson, general manager at the club.
If you know that your personal trainers are using a certain item in their personal training or that your nutritionist is recommending a certain supplement, then it makes sense to ensure that when your members go to purchase those items, they do so at your club. Inform staff that those items can be purchased at the club so they can let their clients know.
Sports Club/LA distributes to members its book about how to eat healthier. To go with that, the club developed a line of supplements (protein bars, shakes and powders) to help members eat five to six small meals a day. Those supplements are sold in bulk at the pro shop and individually at the Sidewalk Café. Personal trainers encourage their clients to go to the pro shop to purchase these items along with their heart rate monitors, says Nanette Patee Francini.
Sports Club/LA sends members a passport booklet that includes discounts and free items in several areas of the club, such as the café and boutique.
Shoulders has offered coupons and giveaways at his pro shop and juice bar in the past and will continue that with the new facilities. For instance, when people joined the club or used a membership kiosk in the facility, they received a coupon for a free smoothie from the snack bar.
For new members, a club may want to include in the member packet a certificate for free smoothies at the juice bar or 25 percent off an item at the pro shop. Those incentives may pull the new members into those areas of the club for the first time.
At some country clubs members can purchase a discount card that allows them to receive the value of the card off their next purchase and a certain percentage off all purchases after that. With that method, a club receives a dollar amount right away and the club has captured the attention and loyalty of the member, says Frank Margarella, owner, Premier Club Consultants.
Clubs can also create certain membership levels that allow members deep discounts at the pro shop and juice bar as a way to galvanize their loyalty, says Margarella.
Whatever cross marketing efforts are in place, these ancillary revenue areas still need help from an invaluable part of a club — the staff. That's why staff training in how to cross sell is imperative for cross marketing to work.
“In order for vending to be successful, selling retail should be a collaborative effort between departments,” says Brown. “We rely on training every department to cross sell because our mission is to offer more than just great facilities. We want our staff to be educated in all areas of club operations so we can give prospects, members and guests an experience that goes beyond just having good equipment.”
Some of American Leisure's hotel clients prefer not to allow any signage on walls and counters in keeping up with their brand identity. As a result, the company learned that cross selling and communication can be just as effective as print marketing because the sale becomes more personal.
American Leisure offers a Sales Training for Commercial Clubs program that goes beyond how to sell memberships. It includes lectures, discussions, role playing and review.
“We have front desk associates who sell five-figures of spa products from a five-shelf display cabinet, and we reward them for doing so with commissions and spiffs as incentives,” says Brown.
While Margarella says that incentives need to be in place for staff to spend any time cross marketing, Abramson says that well-trained staff would still cross sell because unofficial incentives would probably come their way.
“If a masseuse is getting a lot of referrals from a personal trainer, then they are going to reward that personal trainer themselves,” says Abramson.
Still, Chelsea Piers does offer incentives to staff, mostly surrounding the spa. Trainers that sell 10 massages get a free massage at the spa. However, a club owner that offers incentives must ensure that everything is measurable, Abramson says. In addition, everyone has to be on the same page, and good directors have to be in place to communicate with staff about the cross selling opportunities.
Regardless of who is pushing the pro shop and juice bar, it all comes down to ensuring that once members are there, the facility can deliver the quality expected at a price that that demographic can afford. As long as that is in place, members will keep returning — cross marketing or not.
Call it sticking to the core or call it leasing out your headache. Either way, it means the same thing: outsourcing the ownership and/or operation of your pro shop and/or juice bar.
Frank Margarella, owner of Premier Club Consultants, sees a lot of outsourcing in the pro shop and juice bar businesses within clubs.
“But if it's a true opportunity in outsourcing, then it should be an opportunity for you to manage yourself,” Margarella says. “If it's worth it for them (vendors), then it should be worth it for you.” That is, he says, unless the club is an ultra large club that may just need to focus on fitness as its core.
Sports Club/LA is one of those large clubs. It subleases some of its pro shops (which the club calls active wear boutiques) and some of its cafés.
“For a short time we operated them, but we aren't in the retail business; we are in the athletic club business,” says Nanette Patee Francini, cofounder of Sports Club/LA. The inventories alone are extensive, requiring warehousing and staff in those warehouses.
“People think the shops consist of what's in it,” says Francini. “They forget there's an entire warehouse back there with 20 employees and loading docks.”
Despite the leasing, Sports Club/LA keeps a close tabs on its vendors, requiring all the vendors' staff members to go through the club's training as a staff member of Sport Club/LA, says Francini. Besides, members don't know what is leased out and what isn't. To them, anything within the club is the club so the professionalism of the vendors' staffs should match the professionalism of the club's staff.
It's a lot to think about for club owners trying to decide whether to outsource their existing or new pro shops and juice bars.
“All I can say is think long and hard about what your concept is, what you want to include in it,” says Margarella. “Does it really support what you are trying to be for your members? Do you have the appetite to operate these things yourself, or do you have the appetite to work with outside people, which has its own set of challenges?”
In addition, the club owner must decide whether the square footage devoted to these businesses is the best use of the space.
“Even if you have someone else operating them, you are going to be at some level in the restaurant and retail business,” says Margarella. “And are you going to be excellent at all of those businesses?”