Charlotte is a great example of a thriving American City…. not too big, not too small - and enough energy to make you feel as if you are in the middle of a happening place. Somewhat by accident, during the 1980’s all of the major US banks found themselves with a headquarters there. Now, the streets of this 2nd-largest Southern City are lined with 70 floor office towers, and a dizzying array of public gardens and street fountains.

The city is packed during the day with thousands of executive and corporate women. While the competition from local health club operators is high, elements occupies a envieable market niche - we are only national upscale fitness brand for women. Since elements opened in Charlotte 2 years ago, we had caused two smaller fitness clubs, including Curves to close their doors, and acquired their membership bases. In general, it is very tough for these “microclubs” to compete against full-service women’s concepts, such as elements, as their members get bored very quickly. Member retention is an ongoing, and significant dilemma, for fitness center under 1,000 square feet. It is simply common sense… members are intelligent people, they are looking to improve the way they look… with only one service option - the circuit workout - a member will alwyas plateau, or simply get bored. Amenities such as treadmills, cardio, personal training, and classes foster social interaction, and offer diverse options for members, resulting in a higher retention rate.

After weeks of market analysis, Our team landed in Charlotte last week to announced our relaunch and expansion plan for the market, which I will detail later this week… [subscribe now] to receive this blog in your inbox.

Turn on any radio or television, read any newspaper, and the stories all have a similar tone… steep price jumps in groceries and gasoline, two important staples and a powerful indicator of economic performance.

One of the primary functions of a strategist is to forecast economic trends, well prior to them happening, and set the company course accordingly. As far as I know, elements is the only non-publicly traded lifestyle or fitness company to have a strategist as a part of the brand team. This foresight allows us to outperform many competitors on both a club and corporate level. The corporate performance is especially important for our franchisees and stockholders, as a powerful “mother ship” helps to ensure the success of all local clubs, programs and franchisees.

We had predicted the economic softening many months ahead of its arrival, and has also predicted that in the diet and fitness sectors, consumer purchases under $300 would hold fairly streadily, and consumer purchases under $100 would actually increase. This is attributed to several factors including the high perceived value from a fitness membership, especially at a premium club such as elements. It is also attributed to Americans canceling larger leisure purchases, such as golf outings and trips, in favor of smaller ticket, value driven purchases, such as fitness club memberships and weight loss programs. Even though elements is perceived as an upscale brand by consumers, it is not considered a frivolous or luxury purchase (such as a $700 pair of Gucci shoes), rather a necessity to maintain a healthy lifestyle.

We have taken several steps ahead of time to rally during this economic downtown, including focusing more of our corporate resources on developing and acquiring company owned stores and fitness clubs. This type of economy makes a great acquisition scenario for experienced operations team such as ours, and allows the company to derive more revenue from consumer-driven purchases, such as our BalanceD online diet and local club operations. This diversity in income makes elements significant more recession-resistant than our competitors, many of which have announced significant closings and cutbacks, while we continue to scale in the other direction. I do also attribute this to our prudent strategies on acquisitions and contracts, and my personal belief that each deal must stand on its own, and make sense on its own merits.

For well educated entrepreneurs, an economic downturn is absolutely the best time to start a business. Many long term agreements, such as real estate leases can be well-negotiated, sites are easier to come by, and contractors are more eager for the job, making prices more flexible. It takes 5-10 months to get a club open, start to finish, so the new location will be very well positioned upon opening, and will have a very solid financial foundation. We will be announcing several expansion deals this month including Nashville area clubs, Columbus Ohio regional development, and several very upmarket cities in the Northeast. Although the areas are diverse, each of the groups shares one common component, a well educated entrepreneur at the help.

I am heading to Charlotte, North Carolina this week, as we prepare to announce the expansion of our uptown Charlotte location, and the development of a company owned BalanceD Diet store, in uptown’s banking district.

Getting Beach Ready

As summer approaches, we prepare for the launch of 5 additional elements? locations, in major cities around the country. We are opening a second and third Atlanta location, and will soon be announcing number 4 in the popular market. Atlanta is a great example of our “cluster based” approach to club development. The Southern States cluster is supported by our Atlanta operations office, and includes clubs in North and South Carolina, as well as Georgia and Northern Florida. This “hub and spoke” approach to development allows elements for women to better support and manage growth, and to provide stronger training for our franchise and company club personnel.

We will soon be announcing the re-launch and expansion of our uptown Charlotte location, as well as new operations HUBs in Chicago, Miami, and California. The Miami HUB will support central and South Florida, and will also include a multinational support staff to launch Latin America growth and the brand continues our wave of international expansions.