Fitness cocktails and boutique cannibalisation

Fitness cocktails and boutique cannibalisation: David Minton on what’s next for fitness!

Fitness and technology expert David Minton shares insights from his latest report on the evolution of boutique fitness and explains how technology will help to power ‘Fitness 2.0’

Original Source: LesMills

Fitness industry expert David Minton

Fitness industry expert David Minton

What were the key findings from your recent report on boutique fitness?

The industry has exploded in recent years and in the long run, the consumer will be the winner. The consumer is going to have so much more choice, both in terms of boutique clubs and the programming within them, which is rapidly diversifying, with ‘fitness cocktails’ – where members take multiple classes back-to-back – coming to the fore. Already, we’re starting to see brands encouraging the consumer to do one class – whether it’s spinning, HIIT, boxing, or something – and then straight into a mind and body class. This variety and ‘double dose’ of fitness is proving hugely popular, both in boutiques, and also in clubs offering virtual fitness.

What does the rise of boutiques tell us about the modern fitness consumer?

The demographics tell us that the people using them – particularly Millennials and Gen Z – like to have choice, and they don't like to be curtailed by contracts. So, to be able to just dip in and out of boutiques is really appealing to them, even if they are going to pay a higher price. Boutiques benefit from having their roots in group fitness, whereby they provide an opportunity for lots of people to participate at the same time. To be successful, you need to appeal to the wider audience and you need to provide a compelling experience that will keep them coming back for more.

How do you expect the boutique business environment to evolve?

Over the next three years, there will be more mergers and acquisitions, with a lot more money coming into the industry. In London, and in America, we’re seeing tremendous investment in the boutique industry. This investment is coming, interestingly, from hoteliers and from property developers, as well as sports stars, and current world champion boxers. It’s not just venture capitalists and hedge funds bringing in the cash – everyone’s investing.

What impact is the boutique boom having on the wider fitness market?

Each year we do an audit of the UK fitness industry, and we’ve seen across recent years – in conjunction with the rise of boutiques – significant growth in group fitness studios across all 7,000 clubs in the UK. In private clubs, 62% now have dedicated group fitness studios, while this number rises to 72% across public gym facilities. So, that’s a hell of a lot of programming being offered in these studios, with a greater recognition that high-quality programming is key to driving attendances and keeping members for longer. It’s a trend we’ve recorded in the UK and one I’ve observed on my travels globally as well.

How can traditional clubs fight back against boutiques to retain their market share?

I think that some traditional clubs have already responded fantastically well by doubling down on their group fitness offering while making a bigger play around their additional facilities that boutiques don’t have. Operators like David Lloyd and Bannatyne have developed ‘club within a club’ offerings to compete with boutiques and they’re having great success with it. It’s also worth bearing in mind that the economics of the boutique model means sooner or later we’ll reach a point where we hit the limit of the number of people prepared to pay boutique prices for an individual fitness experience.

How would you describe the role of social media in shaping the new fitness market?

It’s funny – for years operators tried to ban mobile phones in clubs. Now, there’s nothing they want more than for you to take out your phone and start snapping pictures and sharing them. Boutiques were very quick to realise the marketing potential of social media – particularly on Instagram, where engagement tends to be much higher than other platforms – so they made sure their club designs were chic and shareable.

I think traditional clubs have been a little slow to realise the potential of both YouTube and Instagram – partly because it takes more time to get it right and nail the quality. The other reason is they’re still trying to work out, how much they should allow user-generated content to feed into their social media channels, versus high-quality, branded content. These are difficult questions and different club models will tackle them in different ways.

And what should the strategy for traditional clubs be in the face of growing home fitness offerings?

Without a doubt, technology is going to power the next great growth in fitness – Fitness 2.0 if you like. The interplay between the club and on-demand fitness will no doubt increase, and this will mix very well for clubs which can provide high-quality content and 360-degree fitness offerings for their members. Those who fail to adapt could find their members turning to influencers and fitness streaming services, so operators have to stay very aware of consumer preferences and what’s coming. Obviously, Peloton is making a big play in the home fitness market at the moment, which will be interesting to watch. In the back of my mind I keep thinking that, historically, people have purchased home equipment and then it’s soon become an expensive clothes horse. Will we see a different outcome this time around?

Tech giants like Apple and Google are also investing heavily in fitness, what does that mean for the wider industry?

Some of the biggest companies in the world and the smartest teams are homing in on our industry. Apple, Samsung, Google have all begun with fitness watches and that’s just the start of what’s coming. Competition will become fiercer, but these companies will also help to grow the market, so there are pros and cons to their involvement. Again, it will be the consumer who benefits most and new technology will help to heighten the member experience and offer data insights that we previously could only dream of.

How will this evolve over the next few years?

One of the most interesting developments over the next few years will be to see whether we actually all get fitted with computer chips. The technology already exists and chips would enable us to monitor our health immediately and offer unprecedented insights into our fitness metrics. But there are always going to be health and privacy concerns around putting technology into your body, so it’ll be interesting to see if it falls by the wayside like Google Glass did, or if computer chips fitted under our skin become as ubiquitous as smartphones.

Tech Will Shape Our Industry

Gerald Ratner, in 1991, achieved notoriety in the UK after making a speech in which he jokingly denigrated two of the jewellery products sold by his company. The so called ‘Ratner Effect’ caused the company’s near collapse. In the USA the hashtag #DeleteUber started trending in January and so far, 2017 for Travis Kalanick, Uber’s CEO, it’s been annus horribilis. Although Kalanick has stepped down from Trump’s advisory council, prompting another mea culpa, the embattled ride hailing company is still surrounded by controversy.  Uber’s troubles have resulted in market share gains for Lyft, it’s main competitor, according to TXN Solutions which tracks debit and credit spending. Uber spend across the US has declined since January by 2% while Lyft has jumped 30% on average. In Uber’s home city, San Francisco, spend was down 8% while Lyft jumped 24%.

For IHRSA attendees in Los Angeles the ride hailing service Lyft became the de facto service and for those with ApplePay, a Lyft (get it?) was just a finger touch away…how simple and intuitive. Lyft’s use of the latest technology provides a seamless digital gateway of choice and many lessons for the fitness industry.  Consumers are in control and brands need to stop interrupting with bad technology and trying to sell unwanted products or services and instead start having smart conversations and start listening. Lyft has that conversation and is listening after every ride and if it wasn’t perfect, how could it have been better. When did you receive a request to rate your instructor, the class, the PT, the club even. For me? Never. Those fitness brands who offer transparency of pricing are growing faster than ever and the same brands are open about the good, and maybe not so good, conversations they are having with their customers but they listen and respond. Peer reviews of the workout, instructors and the all-important experience keeps everyone on their toes. 

At the Networking Roundtable chaired by Bryan O’Rourke, operators degraded the heritage CRM systems that the industry is suffering under. So, will traditional CRM systems be dead in 5 years time? Probably. Some heavy competition is being tested in California. Reserve with Google, gives deeper booking integration so local search, which relies on live timetable APIs, becomes more transactional. Previously booking buttons would link away to a third party provider but now its deeply integrated. Mindbody, Full Slate, Front Desk, Appointy are all currently live on Reserve with Google and ZingFit, MyTime and Genbook are coming soon. Only Mindbody were demonstrating this integration at IHRSA but hopefully all will be there next year in San Diego. More competition is coming from Facebook who have recently added local reservations and integrated bookings. Its Events calendar has been turned into a standalone app, allowing groups of friends to book and buy activities together. Airbnb are linking the consumer to a world of fitness experiences which taps Airbnb’s community to offer highly curated opportunities. Even Yelp is accelerating adoption of local listings to include payments and bookings. It won’t be long before Amazon make an announcement in this area, linked to Alexa searches.  All these companies, plus Apple, have fitness teams analysing the industry and how they can disrupt it, search and bookings is an obvious one.

Reserve with Google was live in LA so IHRSA delegates could logon to experience the granular search, from APIs of live timetables, linked to seamless integrated booking. Reserve puts the consumer at the centre of the search and through Artificial Intelligence (AI), constantly learning what type of class or activity you like, will deliver your personalised push notifications that addresses the question of which class, where and what time before you’ve thought of it. Those poised to take advantage of this new era are the boutiques, fitness without boundaries, community activities and meet-ups. In the UK public sector sites and trusts have been early adopters of live timetables and APIs, concretely demonstrating the value of digital. For those of you who are still using Pdf’s, and heaven forbid, a Pdf on an app, then help is at hand.  AiT (Active in Time) http://info.activeintime.com/operator-software-explained/ a UK start-up company provide the free software and for a small monthly charge APIs for those who want to be part of the digital revolution. Over 500 sites in the UK and Ireland are now live and pushing digital innovation.  AiT offers to integrate your live timetables into these new search and booking services as they become available in the UK.

IHRSA is known for its roundtables, as mentioned above, and keynotes. Soraya Darabi, a Young Global Leader of World Economic Forum said we can’t create emotional attachment if we stand for nothing. So Lyft drivers stand for great service, good value and working for a company they admire. From Soraya’s experience at her local gym in Brooklyn she wonders if the fitness industry, which has the potential, will ever develop the same emotional attachment. Martin Lindstrom, a brand futurist, suggested ‘living with the client’ or listening to the consumer because how many fitness sites have anything more than a feedback form? Lindstrom used the supermarket Lowes to show how it was ‘small data’ that helped turn around a failing brand, not big data. Lowes relaunch has some fun elements but Jonny Earle, alias Jonny Cupcakes was off the wall. He created a brand and inspired customer loyalty from shops that don’t sell cupcakes but t-shirts. My favourite was the breakfast t-shirt which you could only buy between 7-11am.

The 21st annual IHRSA financial panel moderated by Rick Caro emphasized that detailed knowledge of the industry is limited even when big investments are being made. l hope Rick will come to London in October for IHRSA Europe and put a panel of UK investors together who have access to the most detailed data on the industry thanks to LeisureDB. LeisureDB will be presenting in October its data analysis platform and the historical trends from its annual State of the UK Fitness Industry Report and live monitoring of the industry from its Social Media Fitness Index.

Historically prospectors in the Californian gold rush needed a shovel and a sieve, now influencers do the spade work for you. ‘Cycologists’ create 45 minute experiences you want to pay $30 for and who ignite avid followers. I’m following Shannon at Aura on Third, https://www.auraworkout.com  and Nick at Cycle House on Melrose, http://cyclehousela.com...Who are you following?

- David Minton, Director of LeisureDB - IHRSA 2017