The Big Boxes are being eaten alive, or at least nibbled at in a significant manner by the small, low cost of entry, specialized studios. Can they recover and compete or will they lose market share?
Everywhere I go, I hear the same thing – the small boutique studios are “nibbling” away at our market share. There is yoga, cycle, barre, pilates, functional training, Curves, Cross Fit, Orange Theory, Boot Camps, Kosama, etc… Research I’ve seen shows that at least 25% of the small studio offerings have members that are keeping membership to their regular “traditional club”.
This makes me believe a few things:
- Clubs are NOT differentiating their programs to their members ENOUGH – they are viewed and rightfully so, as diluted offerings that cater to the masses but not the individual.
- While there was a time when all things to all people may have made sense, now is a different time – where people want specialization, customization with like-minded people and what they perceive as a premium experience. Regardless of how “close” people want to get with their fellow exercisers, they do want to “belong with like-minded people that they view are like them”.
- Sometimes boutique members are paying 2-4X their club dues for the specialty class fees per month with much less in offerings and no or limited childcare or amenities
- Many people are reluctant to give up on their “big box club” altogether, creating an opportunity for traditional clubs to rebound and recapture these members with unique specialized offerings and to redefine fitness.
- I believe the body craves and needs variety (but with routine) – traditional clubs are more suited to sell this then limited modalities.
- All revenue spent in studio or boutique offerings by traditional club members is revenue lost for traditional clubs. Not to mention the patrons that have found a solution elsewhere.
- Boutique Studios have rightfully identified a niche in the marketplace that fulfills a fundamental consumer need:
- They have built a community of like-minded people
- The Boutique Studios have created what we have discussed year after year – “Clubs”… we used the terminology of “Clubs within a Club” – but we have clearly failed as an industry in delivering “Clubs within a Club” – at least if your market is being eaten away by Boutique Studios and Functional Training Offerings
- Functional Training is another avenue that is of the same genre as Boutique Studios:
- Groups of like-minded people working out together towards common goals in a “community” environment – sometimes even a “cult-like” or “tribal” community
- The attraction becomes around the “playful” “workout”, NOT necessarily the place, but convenience cannot be ignored
- Sometimes instructor driven
- But ideally, format & philosophy driven
So here’s the recommendation to Boutique Studios and Functional Training Facilities:
- Make your experience so great no one will leave your community based on unique factors that “big boxes” can’t / won’t ever replicate or be able to replicate – introverts within a safe space / extroverts that need an escape / specialized “anti” establishment
- Beware though: If the big boxes or traditional clubs decide to invest, brand, and deliver unique “Clubs within a Club” in a true, authentic & meaningful way – it could spell trouble for your easy to replicate delivery system and higher rent per ft2 model.
Here’s the recommendation for Traditional Clubs:
- Know your members intimately – this can’t happen without data mining and cloud based analysis
- You must deliver what they want, when they want it and the way they want it
- Treat every program as an individual business unit
- With a business plan
- Revenue & Profitability Goals
- Retention Goals
- Customer Satisfaction Goals (NPS)
- Adherence and results goals
- Build communities within your club with a “Mayor” (Champion) of each community on staff/ even if this is one of multiple roles
- No Champion = No Results (This is driven by people) – which means recruitment and training (probably a change in approach)
- Brand the community/program so it is relateable and identifiable by the consumer (internally & externally)
Questions to Ponder:
- Will boutique and small group training business models destroy well established big box and traditional clubs?
- No. The are limited and the body craves and needs variety. And the big boxes offer too much value. But they will impact revenues and profit.
- Is there a place for specialized training in most of the US markets in addition to traditional clubs?
- Yes. Most clubs are years away from realizing how to adapt from a “club” perspective to a program perspective.
- Will what is happening in the US market with specialization, customization and unique experiences make the overall delivery system better?
- Yes. The level of sophistication in delivery is being enhanced causing “all boats to rise”.
- Will “big box” clubs stay silent or redefine their spaces and offerings to cater to the changing consumer demand?
- I believe they will attempt to redefine. Some with leadership/organizational commitment and resources will – many will not. Those with resources and commitment will re-create the delivery system once more.
By the end of 2015, 44% of the US population will be women over the age of 40. Additionally, 85% of current US brand purchases are made by women… this demographic feeds the group fitness demand for quality programming (with childcare) and it will continue on this trajectory for at least 30 years. Clubs need to pay close attention to women and group fitness.
- Member knowledge is paramount in delivery. Knowing what your members want inside and outside your four walls; their personality around fitness; their goals; their wants desires, buying behavior and lifestyle is going to be more important than ever. “Big Data” isn’t something to be feared in this space, but something to embrace to better serve.
- Big Boxes and even traditional 15K Plus ft2 clubs need to be rethinking their group and functional training spaces.
As we all know the industry is evolving – evolution goes from simple to more complex over time. Are you an amoeba or a mammal?