What's Up With Lifetime Fitness ? Things Are Looking Up That's What.

I've always wondered about Lifetime Fitness. The rising costs of building these huge facilities, little pricing power, huge overhead. The "big box" competitor in the fitness industry made me wonder "is it really a viable category killer?" I had my doubts.

I follow the company closely and during the past year the stock has steadily improved; trading from a 52 week low of $22 per share to a $41 per share price today. Compared to the S&P, as the graphic below shows, Lifetime has really out performed the market. Given all of the struggles in the health club business these past few years, you'd wonder why. However, even TSI's stock price has improved by nearly 60% in the past 52 weeks. Upon closer inspection there are some answers that hint at a recovery for the industry and possible greener pastures, at least for a while, for Lifetime and perhaps for TSI as well.

Recent analysis published by Oppenheimer's Brian Nagel and Rupesh Parikh, reflect an upbeat outlook for the company. The pair of analysts predicted Lifetime would outperform the market back in May of last year. They were right. In January of 2011, they again upped their target value for the company from $46 per share to $49 per share. There revised forecast of share price related to an improving economy, the likelihood that Lifetime will reaccelerate growth and that Lifetime's balance sheet is deleveraging.

So what do you think about Lifetime Fitness and its stock price performance this past year ? Do you think that the TSI and Lifetime stock price moves reflect that things are looking up ? Contact me, Bryan O'Rourke, and share your views on the company and the industry in general. What's up with Lifetime Fitness ?

Karl Droppers & The MVP Sports Clubs Team

I really enjoy sharing my views on the fitness industry and how organizations can adopt new thinking and disciplines to achieve success. Its rewarding and fun to work with leaders of fitness and wellness organizations; its what we at fitmarc and integerus do everyday. So I was thrilled this week when I got to see Karl Droppers, President at MVP Sports Clubs, in person, along with his entire team during their strategic meeting in Orlando. I shared views on where the fitness industry has come, where its going and how organizations can adapt to deal with the changes ahead. Karl reached out to me after attending my IHRSA webinar in 2010 on how the bricks and mortar fitness business is changing.

Karl is a great leader and it is refreshing to work with an experienced professional who is open minded and recognizes the degree of change that is happening in the industry. Because of his forward thinking, I think good things are in store for his organization.

MVP Sports Clubs is an interesting and successful operation with facilities in Orlando and Michigan. The Orlando facility where the strategic meeting occured, which is called RDV Sports, is a huge complex of 365,000 sq. ft. that includes multiple ice rinks. The facility is incredible.

I also got to catch up with long time friend and associate Benny Hardouin, who I knew from my association with Franco's Athletic Club. The team was enjoyable with many senior people and a nice group of fresh faces. My thanks go out to the team at MVP Sports. I enjoyed meeting all of you.

I'm curious; when was the last time your organization had a quality strategic meeting ? Have you benefited from some fresh thinking about the future and where you are or could be taking your fitness or wellness business ? Let me, Bryan O'Rourke, know what you think. Please share your views. Is it helpful to have an outside fresh perspective when you are planning for the future ? If so who would you look to for that guidance ?

Can Health Clubs Achieve Renewed Growth ? Yes - By Applying New Disciplines

I get to hear from a lot of leaders in the fitness industry and as a result I learn a lot. As we know, the health club industry saw tremendous growth for a number of years that slowed significantly as the result of the rapid surge in competition and a slowing economy. Now, with the economy rebounding what should we learn from the past as we proceed to the future ? This is a timely question and I have a view - the health club industry needs to approach new opportunities with new disciplines.

Its time to rethink how we approach new business development in general as opposed to just picking up where we left off during the last boom.  Here's how. Professor Rita McGrath, in the clip below, outlines key disciplines essential to what she terms discovery driven growth. Central to her message is that leaders and managers should recognize the higher level of uncertainty that exists in business today and adapt their growth process accordingly. Rita is right, and the health club industry should heed her warning. As Rita explains, companies must apply new approaches. Could this be relevant for club operators ? I think so and her views are timely.

Watch the video below, share your thoughts and tell me Bryan O'Rourke: how can the health club industry best achieve new growth? Do you think Rita McGrath is correct ? Is the barrier to growth in the heallth club business more a function of how we approach growth as anything else ? Must health clubs change their assumptions about club operations, the marketplace and growth strategies to achieve better results and how ? I am looking forward to hearing your thoughts.

Differentiation Strategies For Health Club Competitors

I get to speak with a lot of health club operators, along with other fitness participants, and a big question they ask is "how do I compete with budget competitors?" Concepts like Planet Fitness and others are offering memberships as low as $9.95 a month - this is concerning for many (see video below). I share the view that 80% of the U.S. market will be in the $19.95 monthly membership tier within a few years.

The Budget Gym trend is her to stay (check out How the Bricks and Mortar Fitness Business Is Changing), and therefore the issue of how to compete is an important one.

A key way to combat this price oriented competition is through a marketing differentiation strategy. A facility owner can create the perception of uniqueness in the minds of customers. Marketing differentiation strategies can be based on price, service, a unique focus or a different product mix. For more on being different check this out.

Differentiation marketing helps you stand out in a crowded marketplace. It can be an important strategy to implement, especially if there is a lot of similarities among competitors. An effective differentiation strategy gives customers a reason to choose your facility by pointing out subtle or less obvious differences or benefits that customers may not be aware of.

There are several types of marketing differentiation strategies. With a pricing strategy, you attempt to position your business as the low-price alternative - which is what the budget facilities are doing. A high-price strategy can also be used to create a perception of prestige. A product/service strategy emphasizes your program offering, outstanding group fitness via Les Mills is a good example of this. A customer service strategy points out your superior service. With a focused strategy, your marketing emphasizes a unique feature like a convenient location, or attempts to appeal to a specific market segment. But there is something even more important when it comes to differentiation for health clubs.

As Jonathan Fields recently commented with respect to health club differentiation:

It’s a clone club. And, that creates a big challenge for both the folks in marketing and sales. With a few exceptions, beyond the window-dressing, you could swap one brand for another fairly easily, leaving price and convenience as the primary selling points. In a market where there’s little competition, that’s survivable. But, as soon as more clubs with similar features arrive, you’re left with price as the primary differentiator and that’s a bad place to be. In an attempt to try to overcome clone club syndrome, club owners task marketers, advertising agencies and PR people with “positioning” their solution as bigger, better, cooler, cuter, edgier, hipper, funnier and different, when in reality it’s not.

Jonathan is right. Many clubs are very much the same so differentiation is difficult So what to do ? Why not focus your differentiation and marketing strategies on what prospects want - results. And by the way, why not utilize social media instead of high pressure sales tactics and old school direct mail ?

Watch the IHRSA Live Video below from IHRSA's Ask An Industry Leader Program. What do you think ? How should fitness facilities and health club operators use differentiation strategies to compete with low price budget gyms ? Contact me, Bryan O'Rourke, and share your views and experiences.

How Can We Positively Impact The Obesity Crisis In 2011 ?

I am proud to work in the fitness, wellness and the health club industry. There is a real push to make health clubs part of the solution behind the obesity and sick care crisis in the U.S. and I applaud IHRSA's leadership, particulary my friend and colleague Art Curtis, as well as Phillip and Dr. Jackie Mills for their work and book Fighting Globesity. I think increased activity certainly will make a positive impact, but as these professionals know its as much to do with how people eat ? Perhaps you read my recent post on the McRib sandiwch (if you did you get the picture). Jeston Leonard once said "six pack abs are made in the kitchen, not the gym." While we can't expect the solution to involve a six pack, there is some relevance in what Jeston said as it pertains to the obesity problem.

My colleague, partner and friend, Clint S. Lee, asked me this morning if I had seen Food Matters, the documentary. I had not. We've touched on the food system before in relation to the movie Food Inc. and our mutual enjoyment of Michael Pollan's book The Omnivore's Dilemma, its a topic we'd spoken about before and I'd written about as well. The movie isn't just about the unbalanced food system and how we eat but also about the sick care system, which I've also shared views on.

I am watching the movie and its pretty interesting.  A clip is below. Check it out and let me, Bryan O'Rourke, know what you think. How can we positively impact the obesity crisis in 2011 ? Tell me how health clubs and fitness facilities can become a part of the solution and more importantly how we can impact how we eat which causes so much of the problem.