Many don’t realize that when Sam Walton created Walmart he build the company on the idea of taking care of people. He knew ever cashiers birthdays, paid them a great wage and helped out whenever possible when unexpected life and family events popped up.
Many do know this is a far cry from how Wal-Mart operates today.
A company that successfully grew into a giant in retail by taking care of people has now made the decision to focus on costs and profit.
This is a really bad idea for 2 reasons;
When the focus is on driving down costs to make a larger profit margin, people (both customers and employees) are the ones who get lost in the shuffle. Everything becomes black and white when only viewed as income and expenses. Customers and employees end up feeling used, taken advantage of and not cared for. Their loyalty and general outlook of the company becomes very negative, it’s the “you don’t take care of me so why should I take care of you” mentality.
The second is a big one. Low cost develops no loyalty or relationships with your customers. When you are the business built on “the lowest prices” you attract the customers who are only looking for low price. They do not do business with a company because they appreciate or value them; they do business with them because their prices are low. What happens if someone else can do a lower price? You guessed it; they jump ship and go with them.
Lowering prices and running specials, no loyalty amongst customers, suspect customer services, high staff turnover, only focused on sales and revnue; does this sound like any fitness business you know?
The current state of Wal-Mart draws striking similarities to large box gym chains (Gold’s Gym & LA Fitness to name a couple) & both will fail.
Customers have limits, no matter how low prices are or how many pieces of equipment you offer people will leave. No amount of discounts or offerings can make up for treating people like numbers or just plain poorly
When the focus is on cost and profits customers begin to feel like a number and a payday. If every customer is seen as a dollar sign they begin to feel unvalued and will take their business elsewhere.
There is a ceiling. Big gyms get by on tons of offerings in equipment, facilities and space at the lowest cost possible. The ugly side we don’t see right away is to pay for all of that while keeping people at a low monthly cost they need to squeeze every dollar that can out of them in “extras”. Plus what happens when the “new” chain opens up down the road and they have a pool or their membership is $5 less? You can only offer a lot for a little for so long until the math does not work anymore.
Most customers learn at one point that low price comes with a cost.
Big gyms will fail. There will come a point that they will no longer dominate the industry and be the standard in the fitness business. The only questions is do you want to be ahead or behind that curve when that happens?