FITNESS CONSUMER OF TODAY: Driving Industry Change Like Never Before
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1 FITNESS CONSUMER OF TODAY: Driving Industry Change Like Never Before
2 Introduction In the roughly 30 years of the modern health club era, the mid-market club has reigned supreme. For consumers, getting fit meant joining a traditional health club as a one-stop-shop where all of their fitness needs were met. Of course, they might also have some home exercise DVDs and run outdoors, but the central focus was always the health club. The fitness consumer of today has changed. Health and wellness are no longer discretionary activities but rather a core part of their very identity. They wear yoga pants, running shoes and a Fitbit everywhere they go as symbols of their active lifestyle. They no longer accept bland or boring experiences and are willing to pay more for bespoke experiences which provide the deeper benefits of community, a high level of personalisation and, for some, a tribe-like sense of purpose and belonging. It s not so much about losing weight or getting fit it s more about connecting with a purpose and strengthening their sense of self.
3 Table of Contents The Rise of the Fitness Studio...2 It Begins and Ends with Trainers and Instructors...3 Indoor Cycling and Small Group Training...5 Indoor Cycling and Hybrid Group Exercise...6 Indoor Cycling and Gamified Workouts...7 We Are All Studios...8 1
4 The Rise of the Fitness Studio The overwhelming majority of new club openings in larger markets (e.g. USA, Germany, UK) are either a budget club or a fitness studio, mimicking the trends of many other consumer service industries. 1 Consumers are voting with their wallet for self-assisted experiences at a low cost, as well as highly specialised experiences at premium prices. Institutional investors and franchisees have noticed, and studios in particular are growing at an unbelievable pace. In fact, boutique fitness studios now make up 42% of the US fitness market 2. But if you think that the future of the industry is just budget clubs and fitness studios, you re mistaken. The better way of thinking about the market is as a continuum of convenience and personalisation. Most consumers have low price elasticity for basic convenience offerings and high elasticity for personalised fitness experiences. For this reason, nearly every major gym organisation we speak to is exploring how they too can become more studio-like. This is the same reason most mainstream health clubs have such an obsessive focus on personal training. Consumers are willing to pay a significant premium for a personalised fitness experience. This is the underlying driver of small group training and premium group exercise offerings. 1 The Top 100 Health Clubs of 2016, Club Industry (2016). From 2 IHRSA2015 education session The Transformation of the Fitness Industry Through Technology. 2
5 It Begins and Ends with Trainers and Instructors At the core of the studio movement is the fitness professional. The classic studio story usually begins with a successful trainer at a big box gym who takes over a warehouse space down the street and fills it with old tractor tyres, self-welded functional rigs, and used equipment off Gumtree. The larger than life trainer is able to build their tribe and command incredible loyalty and member spend. The most popular example is of course CrossFit, which now boasts over 13,000 open boxes globally 3. From the beginning of grit studios has also arisen glamour studios. They are heavily branded, located in desirable retail locations, thoughtfully designed, and often feature their own mobile apps and branded clothing. Popular examples include SoulCycle, Orangetheory Fitness, and Pure Barre. They are scalable and repeatable models which appeal to a broader set of demographics particularly millennial women. Regardless of the format, the success of a studio concept begins and ends with the fitness professional. For as great as the equipment, layout, branding and location may be, it is the trainer/instructor who makes or breaks the experience. 3 CrossFit Is Breathing Life and Opportunity into Activewear for Investors, Adam Lawrence, GURU Focus website, 17 October
6 A New Chapter for Indoor Cycling Indoor cycle bikes are an incredible tool which studios have embraced. Bikes have a small footprint, are easy to move, and offer an incredible highintensity workout. This has led to a renaissance of indoor cycling, driven by three underlying mega-trends (each discussed in greater detail later on): 1. Small group training combining high-intensity and functional training. CrossFit led this initial surge and many others have developed it further. 2. Hybrid group exercise driven by exercisers increasingly seeking unique and engaging formats and operators needing to compete with the emergence of fitness studio programming. 3. Gamified workouts powered by sensorised equipment and riders connected to a digital solution (e.g. leaderboard). CARDIO UNITS IN OPERATION GROUP CYCLING BIKES 19.2 TREADMILL 15.4 ELLIPTICAL MOTION TRAINER 11.5 UPRIGHT EXERCISE BIKES 5.7 RECUMBENT EXERCISE BIKES ALTERNATIVE MOTION TRAINER STAIR CLIMBER, STEP MILL AND SIMILAR ROWERS UPPER BODY ERGOMETER 3.7 According to the 2016 IHRSA Equipment Report, indoor cycling bikes were the number one most used piece of cardio with small group training. 4
7 Indoor Cycling and Small Group Training Small group training (SGT) is perhaps the hottest trend in the fitness industry. SGT is becoming a critical part of the overall training strategy for those who win with training. The best operators create a spectrum of training options for members, ranging from self-guided to one-to-one. As SGT fits squarely in the middle, it offers broad appeal as well as delivering results. In a study from a leading fitness franchise, small group training was cited as being the #1 retention driver, surpassing even 1:1 training 4. We ve seen particular traction in programming that combines functional training solutions like Queenax and high-intensity cardio like Spinning. In fact, according to the 2016 IHRSA Equipment Report, indoor cycling bikes were the number one most used piece of cardio in small group training 5. According to data collected by the Fitness Industry Supplier Association (FISA), Indoor Cycling was the second largest product category by unit volume and the fourth largest by revenue 6. 4 Study conducted by Dr. Paul Bedford, RetentionGURU. 5 IHRSA Health Club Equipment Report: Spending, Utilization and Programming Trends, page 50. International Health, Racquet and Sportsclub Association, May FISA 2015 Report 5
8 Indoor Cycling and Hybrid Group Exercise Studios have become the laboratory for group exercise content where there is a constant focus on trying new concepts and constantly improving a class format. Independent studios are usually at the cutting edge of innovation: taking risks, failing fast and learning quickly. They are usually trailed by studio chains and franchises and then traditional health clubs. Our advice is to harness the power of the studio no matter what your size. Have the right tools in place functional training, indoor cycling bikes, racks, free weights and accessories and then get out of the way and let your instructors and trainers shine. There is no one magic formula for facilities, so the ability to customise and modify is key. In this sense, equipment becomes the ingredients and it is up to the chef (the fitness professional) to create the recipe. From this approach has emerged an incredible variety of hybrid concepts combining everything from yoga to indoor cycling to functional training. Exercisers, especially those who get bored easily, have responded well to the variety, excitement and challenge of these hybrid formats. 6
9 Indoor Cycling and Gamified Workouts The most discussed fitness facility over the past year has to be Orange Theory Fitness. After receiving an infusion of investment capital, their growth suddenly soared and they will soon reach over 1,000 sites 7. What has driven their success is a winning formula of programming and their ability to transform their workout into a gamified experience. Their workout usually involves a treadmill, rower and functional station. Each participant rotates through the three stations while their heart rate is being continuously captured. They coach to not only achieve key fat burning zones, but also for recovery and balancing of zones. They don t use indoor cycle bikes, opting for rowers instead, but are mentioned because of the success of the total experience, which is ultimately what matters. While exercisers are intrigued by heart-rate tracking and power measurement as technical features, they aren t truly relevant until they are integrated into a total programme. Solutions that enhance your instructor or trainer, as opposed to reducing them or competing with them, should be the focus of your purchase decision. 7 Join the fastest growing fitness franchise in the world! (25 October 2016). Retrieved from 7
10 We Are All Studios Studios are often discussed in terms of square metres, which is a mistake. Studios have achieved success because they have a very specific focus. They choose to be great for a specific set of customers, as opposed to being average for a broader set of members. This obsessive focus is what allows them to execute, and the results speak for themselves. Studios achieve higher average net promoter score ratings, retention rates and revenue per member compared to most clubs 8. Range of Net Promoter Scores (NPS) Across Industries Average NPS is higher for Fitness & Health than for other B2C industries The Focus of this Study Comparative B2C Industries* NPS High NPS 0-20 Fitness and Health Industry Segments Low NPS Avg. NPS Fitness and Health Salon Yoga Wellness Pilates Martial Arts Spa Dance & Music Children's Programmes Fitness (Small-Midsize) Fitness (Large) Auto Dealers Hotel Chains Investment Firms Retailers Airlines Car Rentals Parcel Delivery Services Wireless Carriers Banks Internet Service Providers TV Service Providers As an equipment supplier, we aim to provide you with the right equipment, capabilities and partnerships to enable you to succeed. Ultimately however, it s your fitness staff and facility that transform these tools and capabilities into exerciser value. 8 Fitness and Health Industry Report for Listen360; Text Analysis of Net Promoter Score Surveys, page 3, Richard Thomas, EVP, July
11 About the Author Brian Kane leads marketing research efforts at Precor. His report represents a combination of industry research, in-depth conversations with operators and studio owners, as well as his own opinions. The viewpoints expressed do not necessarily reflect those of Precor or the Spinning brand. 9
12 Get more retention information: precor.com Precor, headquartered in Woodinville, WA, designs and manufactures premium end-to-end commercial and at-home fitness solutions. Since 1980, Precor has been a pioneer in creating innovative fitness solutions for customers, including the EFX Elliptical, Adaptive Motion Trainer AMT and Preva Networked Fitness. Precor is part of Amer Sports Corporation, one of the world s largest sports equipment companies, with internationally recognised sister brands that include Wilson, Atomic, Suunto, Salomon, Arc teryx and Mavic. Precor is a brand of Amer Sports Corporation. For more information please see Precor Incorporated. The information contained within this ebook is correct at the time of printing. Precor reserves the right to make any changes without prior notice. 2. March 2017, 9:13 AM.
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