If you opened this page expecting to read a convincing case for why you should open a retail space at your gym, we might disappoint.
It turns out retail business – especially gym retail business – is hard. Burpees at the end of a long training session hard.
We’re going to be real with you: if you’re going to do gym retail, avoid these pitfalls or you might be better off not doing retail at all.
However, with careful consideration & planning, it can have a positive impact on your bottom line. Here are three things to keep in mind when it comes to operating a successful retail space.
Know your why
“Growth for the sake of growth is the ideology of the cancer cell.” — Edward Abbey
Ok, opening up a retail space in your gym is not that serious. But having a gym retail space for the sake of having a retail space can absolutely be detrimental to your business in more ways than one.
In our opinion, gym retail should be an add-on service. It’s not a primary concern or focus for running a successful fitness business. It can certainly add revenue to the top line and profit down to the bottom line, but it shouldn’t be the be-all-end-all focus of your fitness business.
If it’s at all taking away from your membership experience, or from your ability to work with your members, we recommend redirecting your focus to spend time on those members.
Additionally, if you’re building out your fitness studio, make sure that the training space for your members is adequate before you allocate space for retail.
Additional gym equipment or a post-workout stretching area will go a lot further with members, if you’re short on square footage.
Keep in mind that creating an enjoyable experience for your members is the number one focus, and anything extra should be just that.
Pssst… would you rather watch than read?
Check out our new YouTube channel here:
Track your macros
Retail isn’t the part of your business to shrug your shoulders and say, ”this looks like 3 tablespoons.” If you’re currently estimating costs & assuming margins, there’s a likely chance you’re overshooting your earnings.
The profit margin on gym retail is usually much less than what owners have in mind, and it rarely brings the return on investment that was anticipated.
Take a gym bag as an example. Let’s say you purchased the gym bag for $50, and you’re reselling it for $95 in your fitness retail space. It’s easy to assume that the difference, $45, is going towards your bottom line.
However, as a business owner you have to take into consideration employee discounts, monthly member discounts, mom/dad/Aunt Margaret discounts, and routine sale discounts in general.
Equally important, you have to take costs into consideration that don’t show up on paper such as the time and effort of you and your staff. In retail, it often takes a disproportionate amount of energy and effort to source the merchandise, put it on the shelves, and actually have someone to sell it and be there at the front desk.
Many times, these uncounted costs often add up into the thousands of dollars, and really erode at the actual profits that businesses have.
So, if you’re dubious about the amount of time and effort your team are spending on the retail side of things, as well as how many discounts you’re giving away, we encourage you to start tracking every tangible & intangible cost throughout the buying, tracking and selling process.
You may find they add up to a lot more than you initially thought.
Be Bob Barker
This leads us to our final piece of advice: get the price right the first time.
Industry standard suggests that retail should be priced at double what you’re paying for it.
This kind of built-in pricing structure allows for those monthly member discounts, and maybe some of those discount sale racks to move merchandise off of the shelves.
If you’re not pricing your gym retail for at least twice what you’re paying for it, you’re setting yourself up for selling retail below cost when it actually gets to that discount shelf.
And as accountants, it’s our duty to point out that this does not make for a profitable business operation.
In this situation, there’s a lot more at stake than a brand new car on a game show!
We hope you’ve found this helpful and we’ve given you something to think about. If you’re currently struggling with your retail space operations, or want guidance in opening a brand new space, you should also check out our Top 10 Tips For Your Fitness Retail Space.
At any point, if you have questions, please reach out to us and we would be glad to help you on your journey.
- How Much Cash Can You Get Back From The Employee Retention Credit? - October 12, 2022
- Is The Employee Retention Credit Worth The Hassle? - August 24, 2022
- Gyms & Vaccinations: Your Top Questions Answered - August 22, 2022