What Are The “New” Realities Disrupting The Fitness, Health Club, And Gym Industry?
The fitness, health club, and gym industry will change more in the next decade than it has over the past 60 years. Driving these rapid changes are macro-trends that influence the way the world creates, distributes, buys, sells, and consumes health and fitness products and services. The Ultimate Guide to Health Club Management includes addressing and adapting to the new trends, realities and challenges the disruptive health club industry and operators will need to consider in their overall strategic planning.
Overall growth in the health club industry will continue for the foreseeable future. Consumers will continue to seek ways to improve their health via primary prevention, including regular exercise, improved nutrition, and stress management to counteract escalating obesity, inactivity, unhealthy aging, and preventable diseases. Advances in technology and open access to capital will continue to fuel an explosion of business model innovation. New competitors will redefine consumer expectations around experiences, offer uniquely different value propositions, and rapidly disrupt the global fitness landscape.
These are challenges that offer exciting opportunities for consumers and competitors who will figure out how to meet the emerging demand for fitness, health, and lifestyle experiences with new combinations and creations of services and products. The rise of the use of technologies along with data, Artificial Intelligence (AI), as well as new scientific discoveries and innovations, will offer solutions to many challenges fitness, health club, and gyms face today and will face in the future. The promise of growing markets will lead to tremendous investment in new commercial fitness, health club, gym, health brands and business models and will improve the ways consumers can personalize how they take care of their health and fitness.
3 Main Areas Of Change That Define The New Realities Of Fitness, Health Club, and Gyms
These changes are being driven by a host of dynamics, including mega-trends, but the main areas will encompass these three things :
- Increased Competition. The battle for the “share of the health and fitness wallet” will continue with consumers being the ultimate winners. New fitness, health club, and gym 'studio' business models and concepts, including digital solutions and completely new service offerings, will bring a level of convenience and experience consumers have not yet seen. The competitive landscape will continue to become more complex with a lot of options for buyers. This will require operators to hone their strategies and clearly define the consumers they are seeking to serve and the economics of their business.
- Consumer Expectations. Changes in consumer desires continue to evolve and require companies and commercial models to innovate a great deal. Consumer expectations will reign supreme and the fitness, health club, and gym industry is evolving and will continue to evolve to meet those heightened needs and desires.
- Innovation. Health and fitness delivery systems and business models are likely to look very different in the future, and involve who new ways so that fitness and health experiences can be uber-convenient, hyper-personalized, and delivered anywhere and at any time. It is a time for massive innovation to occur in order to be relevant to the expectations in the marketplace.
How The Fitness, Health Club, and Gym Marketplace Is Changing Today
The battle for fitness consumers is not new. What is new is the pace and number of disruptors that have emerged. Consumers are more rapidly adopting a plethora of new platforms, brands, and fitness gym, health clubs, and business models and experiences available to them, from subscription services to studio experiences and more. These new models are being introduced and expanded at such a rapid pace that in a decade we expect the market to look nothing like it does today.
How did the gym industry arrive at this point? Traditional gyms reigned supreme for many years. They still hold a significant portion of the US market although the battle over retaining members remains. With large, loyal customer bases, many brands still enjoy solid cash flow and a foundation from which to innovate. However, budget models, digital providers, and new studio platform businesses are testing their competitive strength, wooing consumers with lower prices and incredible new experiences. Most growth in demand over the past ten years has come from boutique niche concepts and budget gyms. As large brands displace smaller chains by leveraging scale, these same businesses are now threatened by digital platforms that are built for innovation, speed, and customer experience design. They are designed to disrupt along with all parts of the experience with unique offerings that solve for friction in the consumer’s journey. In other words, they are improving on things we “love” in our fitness experiences and fixing the elements we “hate”.
To fitness, health club, and gym operators, pressure from competitors is nothing new with new formats and upstart brands having challenged fitness business operators for decades. Unlike more easily disrupted single-category retail models like books and shoes, that succumbed to prior e-commerce trends, multi-category fitness operators have been protected somewhat from true disruption by a combination of factors including the social aspects of the health club business and less rapid advancements in alternative offerings. But, several emerging trends, along with the advent of digital technologies, are and will impact that dynamic.
The Shakeup In Fitness, Health Clubs, and Gyms Happening Now
Many things are happening in the fitness, health clubs, and gyms space that reflect the tsunami of change underway and foretell the new future we will see.
- D2C Models. We are now entering a world of more direct to consumer business models (D2C). Think Peloton, Daily Burn, Class Pass and Mindbody’s direct to consumer offerings among many others. In a world where consumers want what they want, when they want it, with speed, many businesses are seeking to cut out the middleman. Bypassing gym outlets or using health clubs as a means of acquiring customers for their digital solutions is behind the efforts of a number of well known digital and supplier brands seeking to launch subscription services that cut out traditional fitness businesses. Some of the firms are even building targeted brick and mortar showrooms and experiences to further entrench their competitive advantage via digital subscriptions. Learn more about Peloton’s brick and mortar retail strategy here.
- Hyper Convenient Services. Not only is on-demand streaming fitness programming hyper-convenient, concepts like GymGuyz actually delivers personal training to your home. The ClassPass Live service incorporates group training with heart rate at home for a live group experience. Platforms like Volution, among others, are the “Ubers of Fitness” as well, providing super convenience for customers on-demand. Consumers are going to become accustomed to very convenient fitness solutions and new services will emerge to give them those.
- New Channels and Formats. An increasing number of consumers have multiple memberships and digital fitness services they use. Nearly forty percent of fitness studio members also have another gym membership according to IHRSA. The bounty of new community-based fitness solutions poses a challenge to traditional models as well. Recent examples include the Crossfit craze which entailed low costs brick and mortar affiliates and the digital workout of the day solution. Now with Tough Mudder, Spartan Races and other providers create fitness communities outside of health clubs and gyms. Consumers can more easily bypass brick and mortar health clubs or gyms and instead have their fitness experiences at home, at the office, or on the go. These models include entirely new businesses based on providing new services. They differentiate themselves based on new digital capabilities that help consumers connect with their new sets of needs. Deep pockets for innovation via venture capital and private equity funds exist with big war chests to fund these new business models. The multi-billion valuation of Peloton serves as an example.
- New Strategic Relationships. As these competitive challenges grow, gym and health club brands and operators will team with various traditional and non-traditional partners. For example, Technogym has partnered with 1Rebel and Rumble in the UK and unveiled a brand new digital platform and smart bike, to leverage the growing demand for at-home fitness solutions. Technogym Live, which enables consumers to stream fitness classes from top fitness trainers, as well as boutique operators such as 1Rebel and Rumble, at home, work, the gym or hotels, via smart bikes, rowers and treadmills, taps into the rapidly expanding at-home fitness market and showcases the company’s ability to continue evolving alongside the fitness industry.
- Technology Players. Looking into the future expect technology companies like Amazon, Apple and others to have more of an impact on the fitness, health club, and gym industry, challenging norms. Apps now offer health, fitness, and personalized recommendations to wearable devices and more. Expect the sale of gym memberships combined with digital services via major players like Amazon and others. And as technology startups find their sweet spot in the fitness space, they will continue to change the way consumers view and interact with their health and fitness.
What Does The Future Of Health Clubs Look Like?
The future for the fitness industry marketplace will be a lot about growth in the decade ahead and will offer limitless options and painless convenience. This future caters to consumer desires and is fueled by technology that vastly expands choices in every way but operates silently in the background. For example, personal assistant services will more often recommend and make fitness recommendations and choices for us. AI bots will work together, sharing vast quantities of data to optimize experiences, handle customer interactions, drive recommendations, and more. The consumer experience, as a result, will become increasingly seamless and painless. With millions of dollars invested and hundreds of startup companies all racing to solve for things we love and hate in the customer journey today, the future marketplace will feel very different. Expect a complex set of interconnected platforms to emerge allowing for a combination of services and experiences that have not been available to many previously. Connecting our fitness habits to our medical well-being through doctor-prescribed diets and physical health routines will become more mainstream. Technology will help us choose personalized “healthy for me” options and make them easily available.
With a plethora of new fitness and health business models, the fitness marketplace has truly changed already. Expect the pace and number of changes to grow as companies experiment to find their place in the new ecosystem designed to satisfy consumer demands. So what should health clubs, gyms, and fitness brands do in anticipation of this?
Five Strategies the Health Club Industry Should Focus On
1. Develop A Strategy
It is more important than ever that health club and gym brands have a clear business and differentiation strategy. The truth is that the vast majority of brands do not. In their book The Balanced Scorecard, authors David Norton and Robert Kaplan noted that 90 percent of organizations that do have a strategy fail to execute their strategies successfully. When it comes to digital strategy execution, as this McKinsey report reflects, failure rates are just as bad. Want to develop a strategy? Use this one page strategic plan process.
2. Innovate With New Business Models And Services Around Your Strategy
If you think strategy is a challenge, innovation is not easy either. How can you repeatedly implement great new products, processes or services? Continuous innovation is not easy and if you keep using the same method you will experience diminishing results. Here are 21 great ideas on how to innovate.
3. Embrace Trustworthy Strategic Partners To Guide And Advise You
Choosing the right vendor partner for technology, billing, and collection services, among other aspects of your fitness business, can have a big impact on the success and growth of your company. Considering partner and vendor relationships is more than just making a “wise choice”. You must know the differences between them and use them in the right manner and at the right stage of your business lifecycle. This is not often an easy thing to do but it is so important. Here are some things to keep in mind as you evaluate your selection of key vendor partners. Learn more here.
4. Focus On Being "Frictionless"
Successful gyms and health club brands will start every strategic discussion with the customer journey and work backward to design the required changes to make the experience as easy and frictionless as possible. They will create differentiated experiences by tirelessly removing customer pain in both physical and digital environments with a combination of services and new in-store experiences.
5. Embrace Digital While Leveraging The Human Touch
With pressure mounting on commoditized categories, digital and physical transformation including automating key operations and functions will be essential to the fitness, health club, and gym marketplace. Operators will need to rely on partnerships and develop platforms that enable multi-sided networks, collaboration, and integrated services to capture revenue outside traditional categories. These platforms will need to prototype and deliver new technology, business processes, and ultimately greater customer experiences fast. More than embracing the digital however, the biggest winners in the space will be those who use technology to leverage their brand’s “humanology”.
So what do you think about the changing marketplace and new realities for health clubs, gyms, and fitness businesses? I’d love to hear your views. Our partners and the team at ABC Financial are working very hard to help fitness, health club, and gym businesses compete in the growing and changing marketplace. Contact us at ABC Financial if we can assist in enhancing your health club, gym, or fitness business with our technology solutions and insights.
Kelly Card is the Senior Vice President of Partner Relations at ABC Financial. Check out her Fitness Industry Innovation Podcast where she interviews leaders from across the health, fitness, and wellbeing landscape. Kelly serves on the Board of Directors of the Fitness Industry Technology Council and is the Co-Founder of Industry FIT. She has over twenty years of experience in health club, gym, and fitness operations and co-founded and was President of Club-Apps, which was acquired by Netpulse in 2014. You can reach her kelly.Card@abcfinancial.com and follow @theKellyCard on Facebook & Twitter. Connect with and follow @IndustryFit for the latest in fitness trends and technology as well.