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FitBizFitBizT H E B U S I N E S S J O U R N A L O F T H E F I T N E S S I N D U S T R Y

C R E A T I N G C O M M U N I T Y T H R O U G H C O M M U N I C A T I O N W I N T E R / S P R I N G 2 0 0 4

C R E A T I N G

C O M M U N I T Y

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CUSTOMERHow well do you know your customer? We commis-sioned a study that would tell us who is shopping—and buying—where. B Y T H E R E S E I K N O I A N

I N S I D E8PULSE OF THE NATIONFrom sea to shining sea, we asked

retailers—large and small, chains

and independents—what is and

isn’t selling in their stores and

how business shaped up last year.

BIG, BIGGER...BEST?Who really are the “leading” fitness

retailers out there? We list a top

group by numbers of stores, then

add a bit of commentary to get the

juices flowing and help you decide.

TRENDS & DEMOGRAPHICSOur FitBiz cover story continues

inside with analysis of GearTrends®

stats: Finally, hard data on the

demographics of those buying at

specialty, sporting goods, depart-

ment stores and the Internet.

2 | EDITORS’ LETTER

4 | CATCHING THE BUGLearn the benefits of viral

marketing and how your business

can use it.

6 | UNTANGLING THE WEBCreate a website that’s a

valuable resource for

employees and customers.

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ou’ve heard the debate. You’ve likely taken part in it: Who is buy-ing at specialty? Is specialty losing customers to sporting goods?

Is sporting goods losing to discounters? And is the Internet the deathknell to all other channels?

That debate is nothing but a lot of hot air—albeit entertain-ing over a few beers or when business slows on the trade showfloor—if you don’t know who your customer is and if that per-son would even consider another channel.

The editors at SNEWS® and FitBiz decided enough is enough.We wanted to KNOW who is buying fitness products at spe-cialty, sporting goods, department stores, discount stores andon the Internet, each broken down by region where needed, andrevealing not only income, but also age, gender, education andother data. So we decided to commission some research thatwould TELL us who is shopping—and buying—where. Wewant you to know who your customers are and whether all ofour guesses about who is going where to buy are true.

What we found wasn’t totally out-of-line with all our guess-timates. But now you’ve got the FitBiz/SNEWS® statisticallysignificant data to confirm everything you thought—and per-haps a few things you didn’t think. Either way, the statisticsshed light on your paying customers. And, with this, we hopeyou can build a stronger, smarter and more profitable business.

(continued on page 14)

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Before you roll your eyes at this question, realize we’renot asking you to check the body fat or VO2 of your staff.We assume everyone is fit since you are in the business offitness. So let’s add some emphasis to the question to clar-ify: How fit is your business?

A business is a business, no matter what it sells, so learn-ing more about how to do what you do better will make yourcustomers happier and your bottom line stronger. That’s whywe at GearTrends® and SNEWS® LLC have introduced FitBiz by GearTrends® as a part of our family that includes ourGearTrends® magazines, our online 24/7 news sourceSNEWS®, and our GearTrends® website. In FitBiz, we want to take a broader look at busi-ness strategies, the day-to-day business of fitness, and how others around you are con-ducting the business of fitness—all of which can help you do better business.

As you see, FitBiz is a compact business resource designed so your staff will findtake-away nuggets to put to use right away. You’ll also find thought-provoking columnsand features that can help you assess the just-completed busy season and past year aswell as prepare for the coming year with the approach of spring—we hope these can befodder for company discussions and meetings. Naturally, we’ll continue our trends reportingand category analysis in our second-annual GearTrends® fitness magazine this summer,where you’ll again find the SNEWS® fitness retailer survey, our second annual.

Thumb through this, our first FitBiz, and you’ll see a different format than our thickGearTrends magazines filled with in-depth page-turners. Our cover feature takes ahard look at a topic that you and others have tossed around a long time: Who shopsat what channel? Who buys where? We’re sure you’ll find this as fascinating a readas we found combing through pages of statistics. Among other features, you’ll find arather unusual twist on the “leading retailer” charts done by others—we listed retail-ers by numbers of storefronts, changes in the past year, and then presented a touchof commentary for a better perspective than just revenues provide; we all know rev-enues can be fudged every which way but loose by non-public companies. In our thirdfeature, you’ll get inside the stores and heads of top retailers all around the countryto find out how their last year went, which will help you put your own year in context.Our intent, as you read this one, is for you to get as much or more from it as you wouldsitting down in your local pub with hundreds of fellow retailers to share business topsand flops—something that likely wouldn’t happen anyway.

Of course, you’ll find lots more too. From one page to the next, we’ve worked dili-gently to provide you with a highly readable, highly researched, highly professionalbusiness publication written and produced by trained journalists. We think fitness de-serves it. We trust you’ll agree. And we look forward to your continued feedback.

Thanks for being a part,

» W W W . G E A R T R E N D S . C O M2 » F I T B I Z » W I N T E R / S P R I N G 2 0 0 4

F I T B I ZWINTER/SPRING 2004

Editor/Publisher: Therese Iknoiantherese@snewsnet.com, 530-268-8294

Editor/Publisher: Michael Hodgsonmichael@snewsnet.com, 530-268-7736

Managing Editor: Wendy Geisterwendy@geartrends.com, 714-508-5757

Contributors: Julie King, David Ferris, Craig Delger

Art Director: John T. Davidsonjrocket77@aol.com

Editorial materials & correspondence to:101 W. McKnight Way, Ste. B-305

Grass Valley, CA 95949530-268-8295

MEMBERSHIP/SUBSCRIPTION SALES

Sales Director: Gene Treacygene@geartrends,com, 865-675-2052

Eastern Account Manager: Daisy LeDucdaisy@geartrends.com, 865-977-7897

Western Account Manager: Elizabeth Fearyelizabeth@geartrends.com, 303-753-8726

Network membership/subscription rate inquires to:329 Treyburn Dr., Knoxville, TN 37922

865-675-2052Fax 865-675-2053

FitBiz by GearTrends® is published by SNEWS® LLCin the interest of the growth and development of thefitness industry. FitBiz is a component of theGearTrends® Network, designed to “create commu-nity through communication” by encouraging par-ticipation from trade professionals and consumers.The GearTrends® information network strives to bethe industry standard for late-breaking news, featuresand trend reporting, business education and com-pany/product information. The GearTrends® Net-work also produces the GearTrends® magazines,GearTrends® website, and Specialty News (SNEWS),the insider trade news source for the outdoor and fit-ness markets. Copyright ©2004 by SNEWS LLC. Post-master: Send address changes to GearTrends® Net-work, 101 W. McKnight Way, Ste. B-305, Grass Valley,CA 95949. No part of this magazine may be repro-duced without written consent of the publisher. Notresponsible for unsolicited material. All rights re-served. Printed by Banta Publications-Long Prairie,100 Banta Rd., Long Prairie, MN 56347.

www.GearTrends.com • www.snewsnet.com

H O W F I T I S Y O U R

l e t t e r f r o m t h e e d i t o r s

business?business?

Therese Iknoian and Michael HodgsonCo-publishers/Co-editors, GearTrends Network

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THE SPECIALTY CUSTOMERThe person who buys at a specialty storemakes a lot of money—as a whole, moremoney than those shopping at any otherchannel. In fact, nearly four in 10 of thesepurchasers make $100,000 or more, withthe median income across the countrybeing $79,010. We found it intriguingwhen looking at the figures region-by-re-gion that those buyers in the South hadthe highest median income of $100,789,while those in the West had the lowest me-dian income of nearly $52K. Groupingseveral income categories, we found that47 percent of these specialty purchasersmade between $35,000 and $99,999.

The gender at specialty may surpriseyou. More than half of those buying aremale (58 percent), although purchases in7 percent of cases are for the household.The age of those heading to specialty ispretty much square in the primary wage-earner years (35-64) for two-thirds (66 per-cent) of purchasers; those 25-34 make upjust barely more than one in five (21 per-cent). Those older than 65 are few and farbetween (3 percent). These are educatedfolks: 55 percent have college degrees,while nearly a third has at least “some col-lege.” Remember our Westerners, above,with less income than the median? TheWesterners buying here also have moreeducation than the median—73 percentare college graduates. Non-high schoolgrads? Not at specialty.

QUICK HIT: A male-dominated, upper-income, Baby Boomer crowd with collegedegrees.

HIDDEN TREASURE: The younger crowdbeckons. And women? Why aren’t more atspecialty? Time for naval contemplation.

WHO’S GOT THE SPORTING GOODS?It’s not that those buying fitness productsat sporting goods stores don’t makemoney. They do. Their income is just moreevenly spread between $50,000 and up.But despite “and up,” less than a quarter(22 percent) actually eke into the

$100,000-and-over category—or a thirdless than at specialty. Between $35,000and $99,999, you’ll find nearly two-thirdsof buyers (62 percent). The median na-tionwide was $70,204, or 11 percent lessthan at specialty.

The guys are still laying out most of themoney at sporting goods too (56 percent),but now only 3 percent of purchases arefor household use. So we’d guess there aremore weight plates, lifting accessories andother basics being bought here that aremore traditionally “guy stuff.” Ages startto skew downward too: About a quarterof purchasers are in the 35-44 (24 percent)and the 45-64 categories (23 percent), forless than half overall. But now anotherquarter (25 percent) is also 25-34 (the XGeneration), and 7 percent are 65-plus.And it’s not as if these folks haven’t hit thebooks. Just a pinch under half (49 per-cent) are college graduates (only 6 percentless than specialty), but there are also morebuyers here who have “some college” thanat specialty (37 percent).

QUICK HIT: The place for male X Gen-eration and Baby Boomers, mostly middleto upper-middle income with a college education.

HIDDEN TREASURE: Why aren’t womencomfortable in your aisles? Maybe warmer,shop-in-shop concepts can attract them.

GETTING INTO THE DEPARTMENT STORESIn looking at the income of buyers of fit-ness products across channels, one pointthat screams out is that those buying atdepartment stores (such as Sears) are near-ly identical to those going to sportinggoods. Median income here is $68,632,but nationally none of the four regionsbreaks far from that figure. Like SG, mostare making between $50,000 and up to$100,000-plus, it’s just that a few more onthat curve are in the $50,000 to $74,999segment compared to SG (28 percent com-pared to 25 percent).

Now, though, the women take over. Theratio is nearly a flip-flop of that seen atspecialty and SG; women are the primary

» W W W . G E A R T R E N D S . C O M1 4 » F I T B I Z » W I N T E R / S P R I N G 2 0 0 4

This research was commissioned by SNEWS® LLC forFitBiz and GearTrends® and done in partnership with theNational Sporting Goods Association. As other NSGAstudies, this uses the National Family Opinion consumerpanel with almost 400,000 households. The panels arebalanced to parallel the actual household distribution asreported by the U.S. Bureau of the Census, in five areas:census region, income, household size, age of head, andpopulation density. This report represents projections ofactual—and only the most recent—2002 consumer pur-chases (latest available data) from a survey of 100,000

households. Replies were received from approximately69 percent of the sample.

WHERE IN THE U.S. IS WALDO? West: AZ, CO, ID, MT, NV, NM, UT, WY, CA, OR, WA North Central: IL, IN, MI, OH, WI, IA, KS, MN, MO,

NE, ND, SDSouth: DE, FL, GA, MD, NC, SC, VA, WV, DC, AL, KY,

MS, TN, AR, LA, OK, TXNortheast: CT, ME, MA, NH, RI, VT, NJ, NY, PA

INCOME HOW-COME: Since definitions of “middle class”and other income segments are nearly impossible to

pin down, we went with a federal definition of “mid-dle” income as about $50,000.

GENERATIONAL SCOOP: Baby Boomers are those bornfrom 1946 to 1964, the post-war generation now near-ing (yikes!) AARP age; in 2004, they are ages 40-58.The X Generation was born between 1965 and 1980and has a propensity for technology; in 2004, they areages 24 to 39. The Echo Boomers or Y Generation wasborn between 1981 and 1995 and have more dis-posable income than the previous generations at thatage; in 2004, they are 9 to 23.

t r e n d s & d e m o g r a p h i c s

user 54 percent of the time, but in 6 per-cent of cases the product is for the house-hold. So are these folks older? Yup. Thischannel attracts the highest percentage ofthose 65 and older (9 percent). We mightguess they are comfortable in the envi-ronment, having grown up with it. Thereare also more grouped in the category from45 to 64 (38 percent—or just 2 percenthigher than going to specialty). So we havean older customer, but also one with abouta third fewer college graduates (39 per-cent) than the previous two channels.

QUICK HIT: An older group (BabyBoomers and up), female, middle to upper-middle income, with at least some collegeeducation.

HIDDEN TREASURE: Figuring out howto attract the younger crowd will keep youfrom becoming extinct.

HEADING FOR DISCOUNTAs expected, those making fitness pur-chases at discount stores (such as Targetor Wal-Mart) make a lot less money over-all than the previous three category buy-ers. The median is slightly below $50K,and nearly one in four (24 percent) is ac-tually making less than $35,000. (Just ig-nore that 13 percent in the discount aisleswho make more than $100,000; they’re in-cognito, we’re sure.) Now, those Western-ers are throwing a wrench into the pic-ture again: The median income of fitnessproduct buyers at discount in the West ismore than $61K!

Here, women hold the reins, with sixof 10 purchases being used solely by thewoman with a mere 4 percent being forhousehold use. The age of these buyers,however, looks remarkably similar tothose at sporting goods: You’ll find near-ly a quarter each in the age groups, 25-34, 35-44, and 45-64 (25, 22, 25 percents,respectively, for a total of 72 percent). Buthey look: Suddenly the 18-24 Y Genera-tion members hit double digits (13 per-cent)—at least double the representationof that range in other channels, includ-

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ing SG. These folks still have some edu-cation in their pockets, with 36 percenthaving a college degree, or only a coupleof ticks fewer than those buying at de-partment stores.

QUICK HIT: Predominantly women of Xand Baby Boom generations—with a sprin-kle of Y types—mostly middle income, butalso some lower, with at least some college.

HIDDEN TREASURE: Men, men, men.Appeal to a man’s stereotypical shoppingsense; most don’t want to shop, just ac-quire a prize and drag it home, likehunters of yore.

SURFING THE NETAh, the Internet. For some, a blessing, forothers, the bane of their existence. Thosefolks actually hitting the “Buy Now” keymake decent money, with a median na-tionally of nearly $70,000, which is simi-lar to buyers at both department storesand sporting goods. But there is a widerspread of buyers across most incomebrackets from $25K and up—likely be-cause you can use the Net either for con-venience (no matter what the cost), or forscouring for the cheapest. In the North-east, the median income is nearly $80,000.Go figure. Maybe Net shopping is easierthan fighting snow storms.

Now, the percentages swing back to maleusers much like at specialty or sportinggoods (57 percent, with 5 percent of pur-chases for household use). Age? Younger,much younger, with 36 percent being the XGeneration’s 25-34 members. But group to-gether those Xers with the youngest of theBoomers (for a mega-age category of 25-44) and you find more than two-thirds ofNet buyers (68 percent). The 65+ crowddoesn’t come near the mouse-click, not one.These are educated buyers, with a tick morehaving college degrees (56 percent) thaneven those at specialty, while those with nohigh school diploma aren’t daring e-tail.Interesting to note is that only 31 percentof buyers on the Net in the North Centralregion are college graduates, but that 73percent of Westerners (135 percent more!!)are college graduates—obviously the Westis a wired, over-educated, techie hotbed.

QUICK HIT: A younger crowd, mostly XGen but also the youngest slice of Boomers,college-educated, in the middle to upper-middle to even high income brackets.

HIDDEN TREASURE: Getting womenand the older crowd comfy with comput-er shopping—if the industry goes elec-tronic as it matures.

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»

It’s that easy to bein-the-know, all the time.

Subscribe atwww.snewsnet.com.

SNEWS® is the best resource for keeping up with industrychanges, equipment reviews, trends, and who is goingwhere or doing what. I really appreciate SNEWS’ thorough-ness and, most importantly, the humor in their writing.

—Frank Garcia, retail owner, Advantage Fitness, Coeur d’Alene, Idaho

”“

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