Opening a retail location in gym. Those in the business lend me your thoughts

[airvine91]

To put it briefly, I will be in the next couple months opening a retail supplement location within a local gym I go to. The room is rectangular in shape, has a back room, and is located by the gym entrance. Traffic in the gym is roughly 300-500/day. Size of the room is I would guess 250-300square feet. No more than 300. 70SqFt. of which consists of the backroom. They want 1500/month, I don't know if this is too much, but I think so at 5$/sq foot. Seems pricey, I will have to negotiate that.


Anyhow, what my dilemma is: I have to pay this rent. Assume say it's 1,000 a month. And assume my markup on product is 20% across the board and I sell $500 worth of product a day on average. That means I only take 800 at the end of the month. And that factor's in a removal of $500 of rent. I simply can't make that.

What would be the best business model for someone breaking into the local market? And how should I go about purchasing product to get the BEST lowest pricing? Is there a buying group I can go through, or only distributors? And would buying direct be best?

I'm in the south Florida area. City of Margate. Btw, there are no other supplement stores withing 5-10miles. So the opportunity is there.

 

[CROWLER]

I know the retail supplement business fairly well having owned a number of stores in gyms. I also know Margate.

I would strongly suggest you NOT do this. $500 a day from day one is about zero chance of happening. After 3 months it is probably unlikely.

So why did I have supplement stores in the gyms? I owned the gyms so it was all profit. I didn't have to pay any extra for the space, I had a person at the desk already and it was a convenience to my members.

Better to upset you now than see you start a thread in 6 months selling off the supps you have bought and are closing down.

Ok so let's say you are not going to heed this advice and you are going to go ahead.

Why would anyone go to you to buy their supps instead of getting them at VS, GNC or go online and get better pricing? Convenience because you are in their gym?

Nope not enough of a reason, I can go online and buy from Nutra Planet for much lower price and a HUGE selection.

Even if there is no supplement store in a 20 mile radius we are at a point where just about anyone buying the sort of supplements you would be selling, are on the internet and know to buy online.

You would be selling a commodity which anyone with a few dollars can sell which mean there is almost nothing special to compete against the other stores with, except price. But because you are small you can't get the best pricing from the distributors so even if you sell at what your cost is you can't beat the big online stores.

Losing proposition in my opinion.

In business it is more important which businesses not to get into than it is to know which ones to get into. Who could make money doing this? The gym owner, heck he already has the space, has the person sitting at the desk so no real extra expenses. So why hasn't he opened one up already?

Possibly he is too smart to do it. He would rather have some guy pay him a guaranteed $800 a month for doing nothing.

 

[airvine91]

I know the retail supplement business fairly well having owned a number of stores in gyms. I also know Margate.

I would strongly suggest you NOT do this. $500 a day from day one is about zero chance of happening. After 3 months it is probably unlikely.

So why did I have supplement stores in the gyms? I owned the gyms so it was all profit. I didn't have to pay any extra for the space, I had a person at the desk already and it was a convenience to my members.

Better to upset you now than see you start a thread in 6 months selling off the supps you have bought and are closing down.

Ok so let's say you are not going to heed this advice and you are going to go ahead.

Why would anyone go to you to buy their supps instead of getting them at VS, GNC or go online and get better pricing? Convenience because you are in their gym?

Nope not enough of a reason, I can go online and buy from Nutra Planet for much lower price and a HUGE selection.

Even if there is no supplement store in a 20 mile radius we are at a point where just about anyone buying the sort of supplements you would be selling, are on the internet and know to buy online.

You would be selling a commodity which anyone with a few dollars can sell which mean there is almost nothing special to compete against the other stores with, except price. But because you are small you can't get the best pricing from the distributors so even if you sell at what your cost is you can't beat the big online stores.

Losing proposition in my opinion.

In business it is more important which businesses not to get into than it is to know which ones to get into. Who could make money doing this? The gym owner, heck he already has the space, has the person sitting at the desk so no real extra expenses. So why hasn't he opened one up already?

Possibly he is too smart to do it. He would rather have some guy pay him a guaranteed $800 a month for doing nothing.

I'm not naive. I do realize allot of these truths. I know right off the bat that the rent is too high for the space offered.

But I do currently work at VS. I do know for a fact I could market products cheaper than GNC, and VS minus their selection. Profit would be slim if I approached that way.

I do happen to be a very knowledgeable person. At VS I have many loyal customers come in just to talk to me for a good 30minutes at a clip. I help with things from HRT, Heart Health, Fitness, Muscle Gain, Sex Health, etc. Everyone I know says I gave them help the doctors didn't. I'm also about ready to go for my NASM exam and will be certified soon. I felt maybe building a strong bond with the customer, being very helpful, and offering only products I trust and recommend would give an edge over say GNC. Not everyone has time for research or posting on forums. I'll be honest, I spend at least 1-3 hours a day listening to health talk radio, SHR (superhumanradio)/BodyRx, PubMed, Forums, Medical Papers, etc. I also have allot of experience with trial and error with supplements, training etc.

That aside, I do also realize that even if the customer isn't aware of nutraplanet or other etailers as I am, they may eventually google the product and price shop me online. They already have my advice and already like the product so they re-order elsewhere. So yes, I see the dilemma already. In fact it seems the more I think about it, the dilemma multiplies.

But I'm an optimistic person. And more than that I'm not going to not do anything because there are many reasons it wont work. I can either do something or continue living life as I do, and I refuse to not pursue something and make it grow into a potential fortune.

What are ways I could make this work?

Btw, I like Anabolic Innovations products. I remember the Swole Stack and how great I felt when I was taking the combination. That was a long time ago though Unfortunately all we carry at my VS location in Coral Springs is TestoPro and HGHpro

 

[CROWLER]

Good info thank you!

How to make it work? I wouldn't bother wasting your time.

So you undercut VS, then a year from now the gym guy kicks you out at the end of your contract and puts in his own store. OR a guy around the corner owns a building he can't rent out so his kid says HEY DAD let me put a supplement store in there. Kid opens it up, doesn't have to pay rent and blows your prices away.

Control your future, don't let someone else control it.


I would really suggest you do something different with more profit potential and less downside risk.

Do you ever watch Shark Tank or restaurant nightmares? They may be cheesy but they have tons of great info. They show how many people started business they knew had problems but did it anyways and lost tons of time, energy and money.

Great to be optimistic! Better to be practical as well, it will keep a person from making a mistake to begin with.

Many bricks and mortar stores are going the way of the dinasaur. It is like opening a book publishing business when almost everyone will be buying downloadable books online. Look at Blockbuster, Circuit City, Borders Book Stores etc.

Do something online. Takes much less money and more potential profit.

Make a product which people will say WOW and then they text their friends about it. No one is going to text their friends about saving $5 on a jar of Muscle Tech. Create a business which people do the word of mouth advertising for you as opposed to you having to try and do advertising to get the word out.

 

[CROWLER]

Sort of strange I just now got an email with a link to this video.

Great advice at 2:19 of the video http://www.toiletpaperentrepreneur.com/money-equity/msnbc-your-business-with-mike-michalowicz

 

[airvine91]

It's a sad reality for myself right now. I'm sure I will have this talk again tomorrow with my lawyer/friend when we go over assembling a business plan tomorrow.

The thing though is I DO love the customer engagement. I love helping people make a more informed choice and share knowledge.

I know it was just an example, but I did see how the store could have easily turned into a commodity dealer. I saw myself more along the lines as a brick and mortar Need2BuildMuscle, where they carry novel products that no one else has and work! Not exactly like them, but point being I'd have things you wouldn't find elsewhere unless you were in the know and/or shop at NutraPlanet.

So I guess time to take a step back and look at things smarter. Ultimately I would like to go to someone like American Pharmaceutical Group or whatever Supp manufacturer and formulate and package my own product. But that is way out of my budget. I could not do that unless I raised serious money that no one would be willing to invest.

Does the online retail really seem the best route? Maybe I could still partner with the gym. Gym members can perhaps buy online, get a unique discount for being a gym member, and pay no shipping and have their order picked and held at the gym? Basically buy it online w/ no shipping cost, and then 1-3 days later show up at the gym for a workout and walk out with their package? There's an angle right there. The gym is a chain and I could apply this concept to all the other gyms and circulate a monthly flier to all of them.

 

[CROWLER]

You said it is a sad reality do you mean you already signed papers to do this?

If so I apologize and I would have answered your questions much differently. HUGE sorry if you are in this already.

If you have not signed the papers I would get out now and do something much better.

As to is it much better online, no I didn't mean to indicate that.

If you 100% have to do this then do it the VERY best you can, which I am sure you will. I would be happy to speak with you via email and phone I am sure we can come up with some great ideas. You can reach me directly at MichaelP [at] AISportsNutrition.com

I sent you a PM.

 

[BPjohn123]

I completely agree with Crowler, I helped run a store located just beside a large gym in my city. It is a headache for the owner, high rent, low margins, and always competing with NP and other online retailers. Another friend of mine here owns a store also, but he also has tanning beds which are ridiculously busy almost year round and help pay for the overhead. His supplements barely sell, they are more there for the convenience of his tanning customers and few that straggle in from the gym downstairs.

 

[Rahl]

You said it is a sad reality do you mean you already signed papers to do this?

If so I apologize and I would have answered your questions much differently. HUGE sorry if you are in this already.

If you have not signed the papers I would get out now and do something much better.

As to is it much better online, no I didn't mean to indicate that.

If you 100% have to do this then do it the VERY best you can, which I am sure you will. I would be happy to speak with you via email and phone I am sure we can come up with some great ideas. You can reach me directly at MichaelP [at] AISportsNutrition.com

I sent you a PM.

Reps just for being a stand up guy and laying all of that out there AND offering to lend a hand. All good advice.

 

[EasyEJL]

Overall i'd say you are better off operating a smoothie/snack shop vs a supplement shop. You can go with a higher margin, and will likely do as much business anyhow

 

[Rahl]

Overall i'd say you are better off operating a smoothie/snack shop vs a supplement shop. You can go with a higher margin, and will likely do as much business anyhow

I tried to talk my brother out of opening a gym/fitness center a couple of years ago. He did it anyway and went bankrupt. The guy next door opened a smoothie place that sells ****ty sandwiches. He's got 2 locations now. Great point.

My advice then was go into the business of something people want. Not something most people don't like. We...are a rare breed.

 

[bdcc]

Online purchasing is so easy nowadays. You can offer the best advice in the world and people will appreciate it, they will often also want the lowest price.

I used to buy in trade and sell to friends. To make it cheaper for them I had to sell with a $5 profit margin most of the time. They would only buy from me because I was cheaper and it saved them time, the advice was a bonus.

I would have had to sell hundreds of products per month to make any living from it and I didn't have any outgoings for premises.

If you are confident you have enough of a following then think of another way to sell them products with lower overheads. An internet site, portal or affiliate account maybe.

 

[CROWLER]

I tried to talk my brother out of opening a gym/fitness center a couple of years ago. He did it anyway and went bankrupt. The guy next door opened a smoothie place that sells ****ty sandwiches. He's got 2 locations now. Great point.

My advice then was go into the business of something people want. Not something most people don't like. We...are a rare breed.

Great point.

Imagine what would happen if he gets all set up. The gym owner keeps getting his $1500 a month from him and the gym closes. Bam he loses all the goodwill, name recognition, customers etc and then scrambles trying to find a new location which can take months.

If it was a good idea the owner of the gym would already be doing it IMO.

 

[airvine91]

Here is the email I sent to my lawyer/friend who will be helping me:

Hello xxxxx, I have been going over many of the possibilities with my idea. It seems that given the cost of rent, the relatively low margins (dealing brand labels), and obstacles in raising funds, that there will have to be some significant change in my plans.
Simply put, if I do manage to raise funds, the business is set up to fail if I plan to go in to business like a GNC. The world has gone internet (virtual), and it is hard to compete with the service/selection/pricing offered by a Vitamin Shoppe.

If this were to become profitable I'd have to purchase white label products, relabel them as mine. Or create a brand using a pharmaceutical group to produce a product for me. The latter is costly/risky.
The space is 1500/month. Say my margins are 25% and I manage to sell $500 worth of product daily which is far fetched. I'd barely make rent and the whole operation would serve to make money for some gym owner.

To turn this into a better proposition, I will have to come up with a new angle. I'm not giving up, but I'm not foolish. If opening a supplement store were such a great idea, he'd be doing it right now as we speak. He has nothing to loose by me going forth with this, and only
my rent money to gain.

As a consumer and business mind, what would you think could be done differently? What is the reality I'm facing?



- It looks like what I do, if I set up something in that space or another it will have to be something else Juice bar for instance with supplements as something I'd carry on the side. I can't rely on supplement sales it seems. Ive apparently come late in the game, and online is the way of the future. I don't want to be a dodo bird come back to life lol

 

[MidwestBeast]

- It looks like what I do, if I set up something in that space or another it will have to be something else Juice bar for instance with supplements as something I'd carry on the side. I can't rely on supplement sales it seems. Ive apparently come late in the game, and online is the way of the future. I don't want to be a dodo bird come back to life lol

Smart move. I'd definitely say this.

Great advice, Crowler!

And bdcc, my buddy managed a GNC on a military base and aside from the guys who didn't watch their wallets ("$100 for 5lbs of protein? No problem!"), everyone else would come in, talk him up for a long time, get all his advice (he was a bio major) and then leave without a purchase, going to shop online. So very good point that online has the upper hand, now.

Best of luck to you, airvine!

 

[airvine91]

I discussed this with my father, he offered me his advice and said it would be more advantageous that I go to work for a supplement company I believe in as regional or district salesman then after a year or so request to be able to distribute their product at better margins than had I never worked for them and try this supplement retail/etail at that point in time.

I told him the supplement industry is not what he's used to, and likely saturated already with reps. He was at one point the exclusive rep for Sharp for the South East many years straight. He currently has the exclusive for Fuji branded batteries in the U.S. that's his main business now.

 

[nattydisaster]

Listen to everything CROWLER says

 

[EasyEJL]

Listen to everything CROWLER says

Except for when he says "Hey lets go for a bike ride this saturday" as a casual ride for him is like 60 miles.

 

[nattydisaster]

I know this is completely irrelevant, but I read the story of how subway got started and it was pretty genius.

A kid wanted to open a sub shop and got a loan from his doctor/neighbor. The kid used the money to start it and ran it by himself. It bombed. So the doctor said, lets open one on the other side of town, that way people think it is doing so well that we already had the money to open a second one. If it fails, we will close shop.

Fast forward some years, now you have Subway. Looks like it worked

 

[MidwestBeast]

Except for when he says "Hey lets go for a bike ride this saturday" as a casual ride for him is like 60 miles.

"You must spread some Reputation around before giving it to EasyEJL again."

 

[MidwestBeast]

I know this is completely irrelevant, but I read the story of how subway got started and it was pretty genius.

A kid wanted to open a sub shop and got a load from his doctor/neighbor. The kid used the money to start it and ran it by himself. It bombed. So the doctor said, lets open one on the other side of town, that way people think it is doing so well that we already had the money to open a second one. If it fails, we will close shop.

Fast forward some years, now you have Subway. Looks like it worked

That is awesome!

 

[purebred]

To put it briefly, I will be in the next couple months opening a retail supplement location within a local gym I go to. The room is rectangular in shape, has a back room, and is located by the gym entrance. Traffic in the gym is roughly 300-500/day. Size of the room is I would guess 250-300square feet. No more than 300. 70SqFt. of which consists of the backroom. They want 1500/month, I don't know if this is too much, but I think so at 5$/sq foot. Seems pricey, I will have to negotiate that.


Anyhow, what my dilemma is: I have to pay this rent. Assume say it's 1,000 a month. And assume my markup on product is 20% across the board and I sell $500 worth of product a day on average. That means I only take 800 at the end of the month. And that factor's in a removal of $500 of rent. I simply can't make that.

What would be the best business model for someone breaking into the local market? And how should I go about purchasing product to get the BEST lowest pricing? Is there a buying group I can go through, or only distributors? And would buying direct be best?

I'm in the south Florida area. City of Margate. Btw, there are no other supplement stores withing 5-10miles. So the opportunity is there.

I am in Miami, FL and am looking for a Point Person to refer clients to. I have a lead generating system but I do not have enough people to diversify. Contact me via PM and I will be able to present you with a business opportunity that will allow your business to thrive.

I'm in the business of positioning businesses to succeed and I deal with finances. Get back to me at your earliest convenience if you are interested in pursuing my business proposition further. We will move our business outside of these boards.

 

[airvine91]

I PM'ed you.

 

[Problem]

Good thread. Been thinkin about this too, but i figured it's not a 100% win, and i don't like risks...


goodluck bro... if i was in your area i would definatly buy from your store

 

[steam]

good thread