The Evolution of the Industry

Charles Darwin said, “It is not the strongest of the species that survives, or the most intelligent that survives. It is the one that is the most adaptable to change.” With the continued acceleration of the fitness industry and the emergence from the latest national recession, being adaptable has never been more paramount to a club’s success — and with this change, it’s hard to pinpoint where exactly we’ll end up. How can we predict the future, and be able to respond and ensure that we develop a solution ahead of everyone else?

Let’s look at some of the recent trends in the industry to stay ahead of the curve, and make sure we’re evolving with those at the top of the food, or in the case — club chain:

1. The business model of clubs offering strength training, cardio equipment and showers for $10 per month is growing and taking an increasingly higher percentage of the market.

2. No obligation memberships are becoming the norm.

3. The $10-a-month business model has underestimated the initiative of its members to terminate memberships, even at such a low rate. Profitability at these types of clubs is under pressure due to high terminations, labor for customer service and the cost of new equipment and facilities as they transition from a new start-up to a more mature business.

4. The high-end clubs that provide tremendous facilities, excellent customer service, activities for the family, top-notch instructors and trainers, a wide variety of classes, pools, courts and snack bars/restaurants, along with the prestige in town of being a member — will continue to maintain the niche they have carved out and be profitable.

5. The 20,000 to 60,000 square-foot facilities that charge $45 to $75 per month will be under tremendous economic pressure to stay in business. They will have low revenue per square-foot, receive resistance from members to pay for six to eight fitness options when they are only using one or two, have difficulty keeping state of the art/maintenance/upkeep on equipment and facilities, and will face difficulty paying to convey excellent customer service from their employees.

6. A new business model is evolving. This model is the reciprocal of the $10-a-month clubs. The reciprocal consists of group exercise room(s), personal training and a small front desk area. This includes the cross training, Zumba, core-building, Pilates/yoga studios and strong man clubs.

What trends in business methodology and practices should we initiate to stay out in front, and also carve out a bigger market share to be more profitable?

1. The 20,000 to 60,000 square-foot facilities are going to get creative. They may need to subdivide the six to eight fitness areas and charge a separate rate for each one. This model will need to focus on providing results to its members.

2. The front desk process must become extremely streamlined for the smaller clubs — its entire capacity is coming in on the hour, each hour from 5 p.m. to 8 p.m.

3. Clubs need to take advantage of online sign ups and the purchasing of paid classes and personal training to create an additional revenue stream.

4. Front desk Kiosks or online joining on a tablet, or from a club’s website in the front lobby — easy membership sign-ups will be necessary.

5. Managing your business with great reports and incrementally increasing revenue, while decreasing expenses is paramount.

Our industry is evolving and success will be predicated on how well clubs adapt to the ever-changing and dynamic customer requirements. Your success is contingent on teaming up with companies that understand and who are on the cutting edge of providing solutions to bigger issues. The winners will be the facilities that proactively provide the solutions to the members of the fitness industry.

David Porter has been a sales consultant at Twin Oaks Software Development for many years. Previously he ran several businesses, including Suburban Athletic Club outside of Boston, which he co-owned and operated for 10 years. He can be reached at 860.829.6000 or dporter@tosd.com.