Raise your hand if you're excited about the start of the new year.
We are, but mostly because that means 2014 is over. We've been in business for 19 years and never had anything close to what 2014 brought our way.
Just being open for business was a challenge during the first two months of the year, as a burst sprinkler pipe in our main facility and brutal winter weather forced us to close for 10 business days. Repairing the flood damage disrupted operations through April.
With our "busy" season all but lost and our local economy suffering throughout the year, it felt like the Great Recession all over again. With jobs scarce in our community, we were overwhelmed with cancellations, and our pool of prospects among the key 25-to-40-year-old demographic got smaller. We have seen all-time highs with members being sent to collections — a clear indication that consumers are hurting financially.
We had new competitive pressures. Gyms, personal training studios and group fitness studios popped up everywhere, and it seems like every church, fire hall and VFW is offering Zumba.
We also lost many staff members. Some were trainers who left to start their own facilities, and others proved to be bad hires. In fact, after firing only one employee in the past 18 years, we were forced to fire for cause four new hires, while several others decided that careers in fitness weren't for them.
We also were deeply affected by our first member fatality. So, yeah, we've had it with 2014.
We've been thinking quite a bit about 2015 — what we should expect, and how that might apply to the fitness industry overall. So, let's set the stage for 2015 with some observations and predictions. As MAD Magazine used to say, "suitable for framing, or wrapping fish."
1. FITNESS ON EVERY CORNER
This is how we refer to the proliferation of gyms, studios, group fitness classes and personal training boutiques that are in every community. When did fitness become like pizza?
We believe that this trend is more insidious than the proliferation of low-priced gyms that are the bane of full-service, higher-priced clubs. At least you can see those guys coming. With "fitness on every corner," none of these facilities seem all that important. Collectively, however, they can do a great deal of damage, especially since convenience and proximity still drive most people's decision about where to do their exercising.
We expect this trend to continue to some degree. With an army of Zumba instructors out there who want to find places to work, and with lots of places offering available floor space, it's easy to offer classes almost anywhere.
We do think that small fitness studios that offer personal training or group fitness are due for some changes...
2. Studio CONSOLIDATION
We love the word "consolidation" rather than "going out of business." That consolidation is certainly happening throughout the world of general-purpose, independently owned gyms, and we worry about that every day. But has anybody noticed that there are too many studios in most communities? Remember when there were Curves franchises right next to Liberty Fitness franchises that were right next to Butterfly franchises?
How many studios does a community need? Probably not as many as most have, especially since all we seem to be doing is taking the same "pie" of consumers and dividing them up among ever-smaller "pieces." So, everybody will make less money as more and more competitors throw their hat into the ring. There are too many CrossFit boxes, too many personal training studios, too many cycling studios, too many group fitness studios and the like. Many of them are not well-run nor did they have any real market opportunity in the first place. Some of them will have to close. There is not enough business for everyone, because of...
3. A STAGNANT PROSPECT POOL
It's commonly reported that fitness facility members comprise 14 to 17 percent of the U.S. population. That percentage has remained remarkably stagnant, and we suggest simply accepting the reality that it will remain that way. There is no "rising tide" of new memberships, and nothing is going to sway consumers' behavior at a macro level to change this.
Oh, sure, there will always be people who get excited about fitness who previously weren't. Heck, our collective businesses rely on this every January. But just as new people enter the funnel, an equal number are exiting. We see it all the time when people cancel and say, "I loved your club, but other things are keeping me busy right now." What we sell is simply not interesting to most people long-term.
And while we have no hard data to back up this impression, we believe that the drop-out rate from Zumba, CrossFit, low-priced gyms, and every other "fitness on every corner" solution is just as high, if not worse, than it is at most full-service gyms. None of them are "feeders" or complementary to your business. When people give up on exercise at their corner facility, they will not walk into yours.
4. VALUE AND PRICE MATTER
Active exercisers are going to wake up to the limitations of their $10-per-month club. Prospects and studio-goers are going to start to question the enormous amount of money they are spending at boutique locations. Zumba participants who pay $10 per visit, twice a week, are going to wake up to spending $80 per month. Before they become disenchanted, you want them to consider your facility.
But, be prepared to buy their business with some special offer. When Planet Fitness shouts "$1 enrollment fee" on national TV, prospective members are going to want to know what you are going to do for them. It almost doesn't matter what you offer, as long as you offer something — reduced enrollment fee or first month free or two-for-one specials. These days, everyone needs a coupon or discount to buy something, but it doesn't have to be anything crazy. So, give them something. They will never appreciate the value you provide if you can't get them past the initial price.
5. THE WEARABLES FACTOR
We can't write about the future without discussing wearables, and we'll state it plainly: They are not going to put you out of business. By the same token, they are not going to bring you lots of members. We've never met a runner who took up running because of all the technology that is available to track speed, measure distance and record progress.
Wearables are cool, and if your members are intrigued or using them, then get educated about them. You should work with your members to guide and encourage them via their wearable, just like you might help a member track their eating with an online tool.
Where will the most exciting wearable technology of 2015 come from as far as your members are concerned? From clothing vendors who are embedding sensors right into their garments. That will be exciting to your members, and to you, because those garments will tangibly gauge and record what members have accomplished, which they may well not have been able to accomplish anywhere but at your facility. They will want the world to know, "Look at what I did while I was at my gym!"
And that's what you want! You want 2015 to be the year when you show that your facility — and only your facility — has the price, the value and the solution that makes those other fitness locations inconsequential. Oh, and keep your sprinkler pipes well-insulated. Happy New Year!
This article originally appeared in the December 2014 issue of Athletic Business with the title "Bring On the New Year"
