An Enlightened Prophecy for the Health and Fitness Industry in 2016
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Neils Bohr, a historical legend in physics, once said about prediction, "Prediction is very difficult, especially about the future." Yet, in today's universally and real-time connected environment, predictions and forecasts abound whether it's in economics, politics, sports or in the case of this paper, the fitness industry. We do not portend to see the future. Rather, we believe as Voltaire so eloquently stated in the Portable Voltaire, "It is said the present is pregnant with the future." Consequently, it is our intent with this paper to deliver ten predictions based on the industry's present state of abundance.
Ten Predictions for 2016
1. Boutique studios will continue to flourish and further alter the industry landscape. As of 2014, 42% of health and fitness consumers frequented boutique studios. We suspect this percentage will grow in 2016 as the "Millennial Effect" continues to push the demand for specialized boutiques. The boutique studio phenomenon is driven primarily by the Millennial Generation, which now represents the largest consumer segment in the U.S. and around the world. Millennials seek experiences that offer them adventure, authenticity, community, individual expression, inspiration, novelty, specialization, transparency and tribal alliances. These experiences apply to the fitness industry as well, and the boutique segment has managed to create a value proposition that delivers on these needs far more effectively than traditional fitness clubs. We would not be surprised if the boutique segment further upsets the applecart in 2016.
2. Budget club wars will heat up. Over the past several years, in Europe, Latin America and the U.S., the budget segment of the fitness industry has evolved into one of the fastest growing segments of the fitness club industry. It's not just the growth of this segment that astounds us. It is the enormous growth in the number of players in the segment with "unicorn-like dreams." In the U.S., which may be the most competitive, there is the industry leader with Planet Fitness, but challengers to their throne abound including Blink Fitness, Crunch Fitness, Charter Fitness, Chuze Fitness, Fitness Evolution, Gold's Gym Express, Retro Fitness and YouFit. In Europe, there is the industry pioneer McFit, headquartered in Germany; Basic-Fit of the Netherlands; Pure Gym, The Gym Group and Fitness4Less based in the U.K.; and Fresh Fitness out of Denmark. In Brazil, Fresh Fit, launched by Bio Ritmo, has emerged as the budget gym leader.
It appears that, in the U.S. budget sector, we are quickly approaching a time when the supply of budget gyms will exceed consumer demand, thus reducing the ability of the respective gyms to achieve a critical mass of members sufficient to achieve their ROI requirements. The fallout from this over supply dynamic is likely to be a blend of consolidation, repositioning and closures. The question then becomes, "Which budget club brands will rise to the top?" We don't have the answer for that. But we do feel confident in saying the landscape for budget clubs will begin to change in 2016, and possibly, dramatically.
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