It Is Time to Let Our Past Fade
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Thomas Plummer
Publisher's Note: One of the cornerstones of C.I. is to "Tell-It-Like-It-Is," or in this case, it's one of our Authors doing the telling. Our goal in presenting these viewpoints, whether correct or incorrect, anecdotal or empirical, is to spur debate. What is needed for this industry to reach new heights? The views on this are wide-ranging, and this article presents but a few.
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The standards of excellence we celebrate in the fitness industry would be considered failures in most other business models. If we consider the modern fitness era began in 1945, then after almost eighty years of opportunity, we have only touched 20% of the people in the U.S., meaning in harsh business language, 80% of the people in this country do not believe in what we offer nor are willing to support us.
Screams from the backrow seats say we have done better... We reached 23% pre-COVID, but that correction, along with the 2008 economic disaster, are part of doing business, and we are again huddling behind the 20% barrier. Yet, as of today, according to the National Institute of Health, 73% of the population is overweight or obese.
In simple words, we as an industry seem to be selling something the consumer obviously needs but does not believe we have the answer they are seeking. This 20% penetration rate will not change unless we are willing to question what we do and why we still do it if it is obviously not working...
Here are a few questions we should be asking in this industry that might lead to a deeper penetration into the market, more money for all of us, and most importantly, finally living up to the mission that we are here to spread the fitness message to a wider audience.
Just because we were right then doesn't mean we are right now.
The big box model, with vast square footage and designed to service multiple demographics in one location, was right in the 1970s for the markets of that era, but they are not right for today's market.
In the 1970s and 1980s, the small neighborhood gym barely existed, and we didn't see the rise of the first aerobics studios and small independents, in significant numbers, until the late '80s. In those years, the big box was a correct model because one size did indeed have to fit all due to lack of competition. The big box owner was forced to offer many different activities, such as racquetball, pools, workout space, kid's areas, big locker rooms and aerobic studios, because you had to have it all to attract the widest range of people possible to feed the huge cost of running that model.
This business worked back in the day because the owner might have had just one or two competitors within his five-mile ring of business. Clients would drive further, usually up to twenty minutes back then, because there was no other place to go if you wanted to work out... and the box owners offered it all to make sure everyone in the market had an activity to attract them to the business.
Now, you put 40,000 square feet in a market such as the Coastal Route 95 corridor of Connecticut, and you are likely to have a dozen or more competitors within your three-mile ring. Why would a consumer drive past a boot camp, a personal training gym, a Pilates studio, a cycle studio, a boxing gym and three Planet Fitness plaza sites to get to a one-size-fits-all gym that offers everything but really does nothing well? Bluntly, if this model still worked, where are the breakout groups pushing past 150 units and dominating their markets?
Is the three-step investor conundrum affecting long term growth?
When will we learn... when will we learn? If we look back at Bally Total Fitness and Living Well, and now, look at most of the major chains today, there is a pattern of failure we tend to ignore and repeat, and repeat again.
Initially, individual gym owners opened a business, either as an independent small chain, as back in the Bally era, or as a franchisee today. Secondly, the money guys/investment groups come in, buy out the original owner, then pay him over a several year earnout. Then, that owner goes away leaving a staff in place, maybe, or the investment group now has to run these gyms, spread across multiple states, with managers... then, the cracks appear, and system collapses into itself.
Three steps, and it is over. Three steps from the original owner, and you have investment groups attempting to create a system to run multiple units in a business they seldom understand. Remove the daily touch of a founding owner, and a few years later, you now have people running businesses with little vested interest in its success except to protect the original investment group.
Why is this important? Because the first step forward by the original owner in the market becomes two steps back as the image of fitness is now tarnished by a business offering poor service, endless billing mistakes, ineffective and often offensive marketing, and the ultimate plunge to low price because that is what you do when you do not know what you are doing.
We are not ready for the silver wave.
More than 10,000 people a day turn 65 years old. Lifespan today is estimated to be 80+ years, and those born in 2000 or later are expected to live to 100 and more. As of today, 35% of the population is 65+, and by 2035, people 65+ will outnumber those 18 and under. Finally, by the year 2050, the percentage of people 50+ will double.
We are not ready for any of this in the fitness industry. We run advertising for home fitness equipment featuring semi-naked, sweaty models so thin they are offensive. We sell price, price specials, the deals of the week and discounts, all designed to steal people from other gyms with zero appeal to the 80%, including the potential 50+ client who do not belong to the gyms but never respond to price because they haven't been to a gym in a decade, if ever. Price means nothing if you don't understand the product.
We build 1970s group locker rooms, still popular in prisons and low-end high schools, but offensive to adults with a little money in their pockets. Our staff is too young, our programming unrelatable to the 50+ person, and few of the chains have any type of extended, "how to do this," induction program without a client paying big money to hire a trainer from day one.
Yet, this 50+ client, in the top 35% of the population by affluence (makes approximately $100,000 or more) is the most neglected person in fitness but the most desirable because income and education are the two biggest determinants of someone joining a fitness facility and then staying as a member. The older client is out there, but in an industry dominated by the young forever culture, we don't speak their language and have done nothing to prepare for the wave of gray heading our way.
Our marketing is our biggest barrier to attracting the 80% not in gyms.
All price marketing is based upon a single, false assumption. We assume that, when we run any price-driven ad, there is an untapped market out there, stomping their feet and ready to break down your front door, if you just offer the right price combination. Go low, you scream, "They are at $10, and I will go to $9." Then, "50% off the joiner's fee this month, and this month only, until next month." Or, "Just one dollar down and then a cheap monthly."
Every price driven ad is based upon a market that does not exist, and all price ads simply target people who already get fitness, belong to gyms and are maybe changing gyms, moving or really just want the lowest price. None, stated clearly again, none of the 80% of the people not in a gym, who might consider fitness if they knew where to start, care about price as the first step. Price works for those who get us, with gym knowledge, but fails to attract those who don't know who we are and lack gym savvy knowledge.
We spend all of our time telling people what we do and how we do it followed by how much we charge. Yes, you have a room for the bigger lifters. Yes, you have a special cardio room for movie people. Yes, you have a private coaching corral. None of this matters if you haven't been in a gym ever, or in years, or failed in the last three gyms you tried, because this marketing breaks the most fundamental rule of marketing... always market to develop new clients but answering who is this gym for, do I fit in, and can I try it with little risk to see if I can even do this nonsense?
Price marketing does work for the bottom 35% by affluence, if they are in the 20% already in a gym, or that small group who tries because it is just so cheap, why not? The middle 30% by affluence, those roughly $50,000 - $100,000 in income, consider price but now seek differentiation. They are the people who won't pay for first class on a flight but will upgrade to economy plus for the bigger seats and better service.
We fail in our marketing for the top 35% segment. This group will not go to a giant box. This group likes small and elite, such as the country club they belong to, which only has 300 members. This group will not respond to deals and discounts because, if you have money, you know anything put on sale is either so bad it can't be sold at full price or was jacked up so high the discount is fake. Ever see a top-end Land Rover on sale? Neither have they.
Trial memberships work for the 50+ and for the top-end gyms, and they also have wide appeal to the those in the 80% who might try a gym at little risk. Those in the price range of $49 - $89 might try thirty days for $69 and give the client a taste of all you offer. Top-end gyms should only do six weeks for somewhere in the $129 - $299 range.
Where growth could come from in the future.
Growth is only possible by shifting to smaller, target-specific gyms based upon demographic populations and affluence. Except for rare markets, such as isolated cities in the Midwest and maybe upper-Midwest, why would anyone build a 40,000 square-foot box again? Too big, too expensive to create and maintain, and you end up surrounded by a dozen small competitors draining your top end clients who don't believe bigger is better. It's like laying in a field and being pecked to death by a thousand crows, each stealing a small chunk of your body.
The future is gyms targeting specific demos, such as fitness after forty specialists or adult sports performance. Note these gyms would be based on demographics, not tools or methodology, such as the worn-out group training gym or boot camp model.
A weird side note is that, if we look back to the 1950s and early 1960s, we started in this industry creating gyms based upon target demos, such as women-only gyms or bodybuilding gyms, and we should be heading back in that direction again.
The future also belongs to anyone who masters marketing to the 80% not in gyms. We can never get them all, but even 2% of 313,000,000 would makes us all a little happier.
Nearly 80 years in, and we haven't touched 80% of the market we chase. What we have done does not work anymore, but the potential to make money, and change the world, is right in front of us.
