Episode #523: Unlocking Retail Revenue-Meghann Butcher on B2B Ecommerce for Fitness Studios

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1:00 Go get them. This is Pete Moore on Halo Talks. I'm bringing a new friend of Square to the podcast who we met back at Ursa HFA 2024. Megan, rep spark. We're gonna talk about retail. We're gonna talk about ecommerce, and we're gonna talk about how you as an owner operator can actually leverage your membership base, your community, and your retail square footage in the easiest and most efficient way. So Megan, good to see you again and, give us your background on how you got to this place. Yeah. Great to see you too. So we just to start, we are a software platform. We provide, b to b ecommerce, to really provide a way for brands.

1:46 So that could be brands that are in a boutique gym or a golf shop. So brands and then the buyers. So there's that traditional buyer, right, that you, have a buyer who has a retail store or you have that owner operator. You have that golf pro. You have that tennis pro who has retail as a portion of their shop. So we make it easy for the brands and those buyers, I'm gonna use air quote, buyers, to connect and transact in a single platform. Yeah. So most of the studio operators that that we work with or that we've met with, you know, every day is a fire drill. Yep. You know? Hey. This is like ancillary revenue. It's an opportunity. I know it's high margin, but, like, I just don't have time to get to it. You know? Intuitively, you'd say, okay. I've got a health club. I've got a 1,000 people that come through here a day. Or a studio, I've got, like, 200 people who are part of my cult that that come here and they kinda pass it through the pro shop. And the studio operator is not, like, necessarily those what's on trend. Like, a lot of shelf spaces is not really thought thoughtfully put out. So a lot of groups that you think would have, like, 30% of their revenue coming from, you know, retail or some component, you know, it's, like, a 7 to 10%. And I think a lot of it, you know, the date fire sale. So, like, what what are some of the things that you've seen where you say, hey. Look. I come to you and I say, hey, Megan. That's great. But retail has never worked for me, and I, you know, I feel like it's supposed to be a profit center. It's a cost center.

3:10 So how are you gonna help me do that? Yeah. For sure. So what we oftentimes see as well, these owners and operators aren't, you know, buyers, merchandisers by trade. They do, as you as you've mentioned, have a very unique opportunity, because they do have a membership. They have they're guaranteed to have, you know, x number of people come to their actual location, every single day. So we do feel that they have a unique opportunity, but they just like you said, they don't know how to do it. They need it to be easy. They need it to be seamless. They need to be able to quickly and easily place at once orders. They need to have a finger on the pulse of inventory. They need to maybe stock 2, 3 sizes of a product, but then be able to order it in different colors, maybe then be able to order it in different sizes. And they need to make it easy. They don't wanna call a sales rep. They don't have time. They really don't have time to call a rep for the brand and say, can you come visit my shop and show me what you have in your catalog?

4:07 You know, these these owner operators have a really unique opportunity that they get to know their members. And if they keep track of what they're wearing, what they're carrying, if they take a shower and go back out of the gym, what they're wearing as they leave the gym, if they have a purse, a bag, they have a really unique opportunity to get to know those members and be very intentional of the retail that they're stocking in that store. So so when you think about, ecommerce and and you think about, like, a a b to b ecommerce player or platform, if I'm a health club operator, I got 6,000 members. I know that 10% of those members are on a treadmill. I know they're probably buying sneakers, you know, every quarter. What are you doing on your end to be like, hey. Look. I know what your your traffic is. I kinda know what category you're in. I know what modalities you have going on inside. And then basically, I'm saying, like, put this in your in your pro shop or let me, like, curate your ecommerce store because I know the behaviors and the utility of of of what people wanna buy.

5:11 Is that is are you basically, like, looking at the data or or you're you're waiting for them to feed you some information? How how does that work to, like, leverage the information? So if we have that information and can get it back from some point of sale type system, then we can start doing those type of recommendations. We also do we have a whole recommendation algorithm where if that club, logs in, we know what they purchased before, more what they purchased, not not their sell through, but they're selling. So we know, you know, they do really well. They always reorder this certain brand. Well, here's 3 or 4 other brands similar to it. They are a pro shop or pro shop, a boutique gym in this geographical location. Okay? We know what's trending in that location. But it's really the onus is on the owner operator to get close to those members and understand what they want. It's it's really the ease of ordering, the recommendation engine. But, Pete, we don't necessarily ingest all that specific club member data unless they have a platform where we can, you know, ingest that POS data, and then we can start making some really smart recommendations.

6:16 Gotcha. When when you take a look at, you know, what the revenue potential could be, do you look at that on a, like, you've got x amount of square feet that you dedicate to retail? Let me let me tell you a story. So we we owned a, a company called Extend Bar down in Boca Raton. We probably had a 4,000 square foot facility. I'd say about a 1,000 of it was was dedicated to the retail, you know, and and, you know, whether it's Lululemon, whether it's Extend Bar branded. So so first question is, 1, what's the op what's the potential opportunity you think for a studio? Like, what dollars per month can they generate? Or if you have data, you know, like, the average group generates this amount per of revenue with us? And then the second question is, how much of it do you think should be branded, from that location? Are you taking over their branded materials as well or any co branding? Yeah. So to start with the branded part, we do so we support the brands that do do customization. So so in RevSpark on the brand side, we support a whole customization model where that boutique gym could log in. They could be looking at nomadic's towels or, you know, whatever, and then have the capability to customize and put their logo on it, put their branding on it. And, you know, we see that as a great marketing opportunity for these gyms. I mean, they usually have some sort of, you know, community that I I go to Radiant Hot Yoga here in, Newport Beach and,

7:49 you know, big fan. And I'm you know, you get members there, and they're right or dead. They wanna, you know, post that marketing material everywhere. So we look as that as that as a you know, there's a revenue opportunity. There's also marketing opportunity there. So the boutique gym could log in. They could go into our community area. They could filter down for, apparel, for consumables, for, you know, mats, for footwear, that are on that platform, and then they can also filter down to ones that support customization. So it makes it really easy for them to filter those down. Yeah. So so there obviously, if you're not part of a franchise organization, you got, like, 1 or 2 or 3 studios. For you to, like, call up Lululemon, you know, or or Nike or Adidas and say, hey. Wanna do a, you know, a promotion within it. You know, they might take your call and say, like, yeah, when you get to a certain size, you know, we'll talk about it. You know, is there are there rules related to and I don't know what kind of enforcement there is, but, you know, Lululemon, I'm gonna take or Aloe. Right? I'm gonna take their gear. I'm gonna buy it from you, and then I'm basically gonna have it, like, embroidered Yeah. Without asking them. Is one is, like, what's the rules on that now? Is that allowed? Or is that, like, a co branding, like, you know, infringement?

9:04 Yeah. So you're not really allowed to do that. And most of the brands, like, an Aloe or Lulu would get upset about that. So Okay. What what we would offer is we support a lot of brands that will do that for you. Like, Task is a really cool brand that's in the space that will customize and put logos and embellishments and screen prints on the product. And they think logo also? Yeah. With their logo also. Okay. So it's really big in golf. If you think about it, every pro shop you've ever been in has, like, the golf club logo and then Peter Millar or Johnny o or something on it. So, there's a lot of leisure wear brands that will do that too. Maybe not the size of a Lulu or an Alo, but smaller ones that are really unique to, retail locations that will put those put that on there and work with the clubs. They don't require, you know, 50, a 100, 10000 units. They're built to do that for 10, 15, 20 units and then reorder it, time after time.

10:04 This is Pete Moore. I wanna let you in on a little secret. There's this company called Promotion Vault, and what they do is they give out rewards from retailers that allow you to incentivize your members without having to do zero down and 1 month free, or giving away shakes or giving away t shirts. What you wanna do is build a rewards program that lasts, that people value, and that doesn't discount your own products and services. So here's the deal. There's something called rewards vault. The rewards vault is going to allow a member to set up their own profile. They are going to answer questions. You are gonna get those answers. You're gonna be able to target those members, and you're gonna reward them inside your club, inside your spa, and outside of the club and outside of the spa to get them to become loyal, to get them to pay their monthly dues, and to be rewarded properly for the actions. A lot of companies are cutting back on rewards. You shouldn't be. Promotion Vault's your answer. Trust me. This is real.

11:07 So from from a working capital and cash flow standpoint, what does a studio need to do? Is this a traditional, hey. You know, you're buying product. You're buying at wholesale. You know, it's a, you know, cash on delivery COD, or is it, you know, I have terms with you because, obviously, you know, there's a there's a finite amount of cash, and a lot of people have things tied up and things that don't move. Yeah. So what's really interesting is, with Wholesale, and a lot of people don't know this, typically, you can get good terms. So you can get, like, a net 30, net 15, net 60, depending on, you know, who you're ordering from. So that's super brand specific. That's not really something we would determine. But that would could be worked out between the boutique gym and the brand. But most people, do check out on terms. They get terms. They get net 30, net 15.

11:56 We also offer, an extension of the traditional, you know, in store platform where it's a pop up shop or a microsite. So those are used a lot for trunk shows, for, like, a holiday special, for, you know, special event, a mother's day about something like that where the club actually doesn't even have to stock that product, but they would work with a brand to a pop up shop. So it's like a b to b to c. And those transactions could be set to the member number of the member that's shopping. You could have somebody on-site from the brand and have members there just, you know, ordering, or you it can be completely digital where the club, the boutique gym can put together their own microsite, blast that out to, their members, and their members can shop. And, essentially, they never have to hold the inventory at all.

12:47 Gotcha. You know, what and I've been in situations where I've said yes to things. I was on the board, and, you know, extend bars. Like, we're gonna go to, some company in California, made in America or American whatever it was called. We're gonna do, like, a $100,000 of, you know, inventory. We're gonna create our own own apparel. We're gonna create our own brands. The the numbers never really work out on that. It was a franchisor, so we're sending it out. And it was all the different shirts and all different sizes and all different colors, and you kinda run into, like, you know, just the crazy warehouse. Are there certain items that you're like, look. If you buy these, they're gonna move. Okay? So, like, with Gold's Gym, I said, why don't you go buy some head the old school headbands, you know, that I have a couple here somewhere.

13:29 You know, buy, like, wristbands, headbands, key chains, cell phone cases, you know, with with your logo on it. What are some of the things if I say, look. I'm not stocking apparel because I just don't I'm I'm not in the apparel game. I don't want people to, like, hang out here and, like, shop. I just wanna, like, buy have them buy things that they're excited about. Almost like when you go to, you know, a New York Giants game. Let's say Ranger game because it's hockey season. When the Rangers win, I go and buy, like, a a hat or I go buy, like, you know, a puck. Yes. Or, you know, I buy something that, like, is, like, not I'm not making a, like, a a decision. Like, how many times I'm gonna wear this jersey? Like, it's $300. Right? Because I'm 52 years old. I can't really wear a hockey jersey that much around. You know, it look weird. Right? So so what are some of the things that you say? Like, look.

14:16 I'll tell you. This stuff moves, and this stuff, like, you gotta work it moving or, you know, people gotta really love your brand in order to wear it. So how would you answer that question? Yeah. I mean, consumables, I think, work really well. You know, someone's checking out and they need some electrolytes or something like that. I mean, that works really well, and we have a lot of consumable brands where that boutique gym can log on and just, you know, have some at the checkout. So those always move really well. I would say just your standard basic, you know, tank or tank tops, sports bras, but, you know, the basic colors. But that's where you can get exciting using a platform where, as a boutique, you don't have to order so many, and you don't have to spend so much time. I also think it's very unique for per location. I mean, here in Southern California in the summer, I mean, the gym that I go to, they stock bathing suits, they stock cover ups, they have cool bags. It's very intentional, and I think you have to be creative with it. You know? Do you what's that extra thing that you can do where, you know, the person who's welcoming everybody in is taking note of what people are wearing, what they're doing?

15:21 Do you offer gift wrap? I mean, just something different to be a little bit more creative than just, you know, you having retail there. Mhmm. Because these stores have a really like I said before, they have a unique opportunity where they they are guaranteed to have x many people coming through their shop. Now are they there to shop? Maybe not. But if you are creative, they will, you know, and and offer those things. Even things like candles, you know, we've seen those do really well. That's another great example. Yep. Accessories like bracelets. We have a brand called Pura Vida that does really well in these types of stores, so it's not taking up so much space. And it's also really important to move things around. So if you have 3 or 4 locations, move things from location to location so it looks like it's always new and fresh. We talked to a boutique owner. It was really interesting. He, he was like, I use that as my welcome mat. So I think of it as marketing, but I also think of it as my welcome mat where somebody gets the vibe of our gym by coming in and kinda seeing what type of of, items that we're stocking.

16:25 Gotcha. You know, with Xtendmar, we, we sold a lot of socks. Socks. The the the grip socks. Yes. That was that was a big deal. Back to back to the question of, you know, what percentage of the revenue, if you could disclose it to us, or dollars? You know, I've got a 3,000 square foot location. I'm doing 6 classes a day. I've got 300 members. You know, a lot of these groups that we see, it's kind of like an other revenue line. It's not even like they don't even, like, put down, like, you know, ecommerce or Pro Shop sales because they're it's not material. You know, what have you seen as, like can I get 30 can I make 5, $10 a month in revenue, you know, as a studio operator? Like, what what would you say you know, how what potential could this be? Obviously, there's no additional cost to be, right, except for, you know, refilling the stock. And can I really do anything with that other square footage? Or is it kind of retail or nothing as a revenue per square foot? So is it a is it a $5,000 opportunity? Is it a 1,000? Is it 10,000? Like, what what are some of the moments? Or you say, like, hey. Well, this this group's crushing it. Maybe there's some special sauce that they have, but just let us get in there, give you ideas, you know, and and this is gonna move if it's if it's, you know, presented properly. Yeah. Pete, I don't have those numbers, unfortunately. I wish I did. I'm trying to work with StudioGrow to get some of those numbers too to just kind of really dig into this space. I know in in, like, golf pro shops and tennis pro shops, I mean, they're netting with really small spaces there. I mean, some golf pro shops are dedicated purely to retail. So So what would be the what would, like, a golf pro shop be able to produce, like, just, you know,

17:57 like, a a course that's got 18 holes and, you know, maybe it's not like a top notch, you know, you know, 5 star, you know, club, but, you know, it it's just like a an ordinary middle market club. And, you know, do do, like, 30000, 40000 a month probably of of Yeah. Yeah. Apparel? I would say at least. At least. So, you know, it's it's different, but, but it's not. If you do it right and you can you can be active, but you have to have a strategy. You have to have you know, be intentional about it, and you have to know your members. Know your membership. What are they gonna want? Is it, a lot of moms at your club where maybe if you have some kids' stuff there, it'd be really cool. They're looking for you know, you have to think a little bit outside the box than just, you know, socks or mats or something that would be really apparent. And I think that's where there's a huge opportunity here. But, again, you have to be really intentional about it. If you're just gonna have that Yep.

18:51 Black tea and the this, you know, you're probably not it's not part of your strategy. It has to be part of your revenue strategy. As as any of your clients kind of wrap this into some kinda, like, reward points or any kind of program where, you know, they're spreading a certain amount that's giving them a certain benefit, or, you know, if they buy something from the club that is, is branded. I mean, they're basically like, you know, a free influencer or, you know, an unpaid or paying influencer. They're paid to, like, influence your your brand on your behalf. Yeah. Have you seen people, like, wrap that in? Because and the reason why I asked is because there was an iteration of this ecommerce inside of health clubs back in the day, and they had, like, a kiosk, you know, a screen, and it's like, well, you don't nobody needs that anymore. They they have their phone. You know? So you don't really need to put a device in there. So so is there anyone, like, using this and kinda saying, like, hey. Buy buy for me more or get a free class or something if you use our our ecommerce platform? I'm trying to think about, like, what's the what's the hook. Well, so it's not necessarily that, but they will do, like, what these microsites are these pop up shops, they'll say, you know, as a reward for doing this many classes, or, you know, a March challenge or something like that, You know, for this specific set of merchandise, you get 10% off or something like that. And the club completely benefits or the, boutique gym because they're never stocking that inventory, but they'll work with the brand to put together this microsite pop up shop. And that's kind of the reward.

20:18 And now they can decide whether they want it to be customized logoed or not. And then the members get to choose from that selection of product as part of, you know, their winning, if you will. So we see a lot of boutiques being successful with things like that. This is Pete Moore. Here's the last tip for you of the podcast. We are partnered up with a company called Higher Dose. Higherdose.com. They are the leader in workout recovery products, infrared technology, LED light masks, neck enhancers, and other products such as PMF mats and sauna blankets. If you have not gotten on the workout recovery train yet, your time and your stop is now. You gotta get these products in there before these workout recovery and spas end up saturating your market. Having your members walk out of the club and going into one of their locations for $200 per month where they're paying 39 to you, let's become an expert in workout recovery if we are already an authority in workouts. Higher dose, check it out. There's a wholesale code, and we look forward to helping you augment your products and services to meet the demands of your members. And, hey, let's get people happy, healthy, and sweating, and the recovery should be just as good as the workout.

21:47 We work with a company called Promotion Vault, which does gift cards and also does, store value and, like, instant gratification and and recognition for employees. One of the things we're tinkering with was this idea of, like, an employee saying, you know, you you know, higher dose because we we talked about it at, at IRSA, and that's infrared sauna, products and and face masks. Like so we're thinking about saying, like, okay. If there's let's say there's a woman that works at at a studio, and she says, look. I really want this face mask, which is a $349 purchase. How does the company potentially, like, build up to say, okay. We're gonna put a certain amount in your account for reaching your membership targets, reaching your meeting your net promoter score targets. And, you know, at the end of that 4 months, like, damn, you've earned your your face mask. Is there anything I I don't use this. Like, people put, like, wish list up on, like, Amazon. I just buy shit when I need it.

22:39 But, anyway, you know, like, is there something that maybe, like, is gets incorporated here as, like, we're gonna fulfill your rewards with apparel, like, as part of a challenge. I'm just thinking a lot of, like, where this goes because I feel like there's a hook here, but you gotta convince these studios to do it. You know, a lot of them probably come in that have not been successful with apparel and pro shop, but are probably, like, a little bit of an. And I wanna figure out, like, how do we help you promote this and say, well, you gotta kinda clear your mind of what the past was and think about it as the future and and how do we want these people who are part of a cult today. I keep saying cult because you have 300 people that belong to your studio, and they are your marketing source if they are getting results and if, like, that's their community. So they're happy to do it, but maybe figure out a way to get them to almost be, like, you know, like, network marketing. Like, put an affiliate code in and then get a percentage of it, or you could put take a percentage of it and give it to a charity. I don't I haven't been through your software, but I'm thinking, like, there's gotta be some kinda ongoing hook that might help proliferate this. Yeah. I mean, the at the end of the day, we're a pass through. Right? So the brands will be working with, with the, you know, owner operators to put that together. But we do have a lot of owner operators that will put together, like, I don't know, Ashley's picks or something like that. And then the members of the studio can go in and purchase and again, it's then direct wholesale. So we do have some that are doing things like that. Or here's the selection of products we've worked with. I don't know, xxx brand to put this together for

24:13 you. They're all gonna be monogrammed and or or customized. And, you know, if you finish this challenge or do this thing or come to these classes, you get to have, you know, selection of these products. Yeah. That makes sense. Yeah. I think I I've done a couple of, like, soul classes where it's like a 20 day challenge. You know, I get, like, a nice little, you know, hat with that little, you know, pom pom on top. The pom and I'm cost probably $10 and, you know, it's $700 worth of classes, but I did complete the challenge, you know, to get the pom. There you go. There you go. Yeah. So, look. We're gonna have all the information on on the, on the process and and how to contact you and your team to to get onboarded. Before we do that, if you get us any materials, you know, what branch you work with or, you know, the the whole wholesale pitch of how the platform works. And then the last question is, you know, if I wanna onboard, how long does it take to do that?

25:04 How many how many hours does it take to onboard with with with reps for for days? So as, like, an owner operator of a gym, it's free. You literally log on to app.repspark.com, and you can start seeing all the brands. You can start requesting access. You can start shopping. I mean, the goal is at the end of the day, whatever these, people are putting in their shop, in their retail space, they should be able to go to one place to do it. It should make it really easy. They should be able to see all their invoices in one place to pay the brands. They should see which invoices are coming due. So that's what we do. So for the owner operator, it is literally a push of the button. It's it's So you could be up and running, like, right after this podcast, basically. Yeah. Like, they could get up and running and and start to connect and connect with all the brands. For the brands, it depends. If the brands are smaller on Shopify, something like that, it's a day. If the brands are bigger, established, you know, bigger brands, then it could take a couple weeks. But it's really but for these owner operators, you literally log in, you get accepted, and you can start essentially kinda shopping and thinking about what you might fill your retail space with that might be very lucrative and exciting.

26:12 Great. Well, we've been preaching revenue per square foot, optimize your your your platform, and and try and get as much going through the 4 walls and outside the 4 walls. So I'm glad you were, able to, to come to. We were able to connect in person. You know, it'd be great if Eric was on, but that's okay if you could make it. Just kidding. Thanks for listening. As our first listener of this podcast live, And, you know, we'd love to help you get this proliferated throughout the studio. So anything that could help them optimize their revenue is is, music to our ears because we're trying to help them raise capital. And the more revenue I have per square foot and the more EBITDA, the the the more likely it is that investors are gonna say, hey. I like your model. Let's go build another one. So Yep. Thanks for getting involved. Good to see you, and, appreciate you guys, helping out. Thanks so much. Awesome.