The Death of the Big Box Business Model
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It's as if 1995 never left us in the fitness industry.
Walk into almost any big box mainstream player, especially the chains, and it is as if time is standing still. The machines might be newer, the colors a little different and the hairstyles have changed, but the basic business model dating back to the 1950s is still alive and well. Most of these gym operators are still trapped in 1995 and the glory years of fitness.
We have, in essence, become trapped by our own success. The fitness business worked financially back in the day, the chains prospered, the independents and franchises grew and everyone made money. What we did in the 1980s and early 1990s worked as a business model and made a lot of people a lot of money while fueling the growth that allowed chains to sell for monstrous money and made independents able to grow regionally and dominate. Even the franchises of the day, such as Gold's Gym and World Gym, which were based upon name recognition and image but without any discernible business model, flourished worldwide.
Times were good in the industry, every major operator was a genius and no one thought it would ever end... but the easy times are over, and the model and practices we used in that era will never work again.
The volume-centric business model we have built this industry upon, and that is now failing as evidenced by slow growth and tumbling prices, is based on these basic business concepts. The overall premise of this model is that we need an unlimited supply of new members to make the model work, and that is where the old model is failing. Here are the rules of the volume-centric model:
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