Big Fitness is doing well these days, and that can have an impact on small gym businesses. However, the market looks set to continue growing over the next few years, which means there’s enough business to go around. The shape of the fitness industry is changing, and it may be unrecognizable by the mid-2020s. Success at the top is a good thing; it represents expanding opportunities for small gym business owners, here’s why.
The Shape Of Big Fitness Companies
I was reading a report about the Top 100 Health Clubs of 2016 that Club Industry posted last August, and as often happens, it got me thinking.
First, companies are buying up smaller gym organizations, and they are building memberships. These are constant sources of growth in the fitness industry. It’s a safe bet that consumers will continue to value health and fitness for some years to come.
Additionally, there are two tracks for the largest club enterprises: High-volume low-cost, and premium membership models. There are also healthcare related wellness companies, but they seem to be on the sidelines of the industry at the moment.
Two Models For The Major Players
Equinox is a premium gym lifestyle brand, and they own a range of companies that includes PURE Yoga, Blink Fitness, and SoulCycle. The group has made acquisitions that complement the core brand. SoulCycle is a perfect example of the way Equinox has grown by investing in smart new businesses that produce high margins.
On the cheap-and-cheerful end of the spectrum, Crunch Fitness is doing well, placed at number ten on the list. As I wrote a couple of years back, Crunch has an easy-to-handle, no-judgment entertainment-driven business model.
One Path For Small Gym Businesses
Big box corporate brands can run efficiently and generate consistent profits in low-margin market sectors because they have the muscle and the discipline to survive on razor-thin margins. The efficiencies of budget membership gyms and franchises say nothing about small businesses and startups.
You are not going to beat the big box companies on price alone. If you want to compete in this sector of the market, be prepared to throw huge piles of cash at a wide number of locations and attempt to squeeze out a profit based on efficiency. The way that bricks and mortar businesses are all becoming dependent on digital channels might disrupt Big Fitness at any time.
The next thing is that the big companies bear no relationship to locally owned independent fitness clubs, like the ones that make the bulk of Gym Insight customers. Club Industry based the reports on the size of Health Clubs by revenue, not as a judgment on the quality or experience they offer to their members. The report also implies that the condition of the fitness industry is pretty darn healthy.
Big Box Today Gone Tomorrow
Sears Roebuck & Co. dominated the catalog showroom market of the twentieth century. Where are they now? Sears and all of the similar retailers are either struggling or gone. In theory, that giant company could have digitized its catalog business and pivoted to e-commerce, but that has fallen to others, and Sears is a shadow of its former self.
More recently, other companies have suffered similar fates but more quickly. Blackberry and MySpace came and went in a flash. My point here is that the pace is accelerating like a diabolical treadmill that goes up a notch with every mile you run.
Finding The Next Big Box Gym Thing
Big box fitness companies are not immune to the rapid pace of change and threats for small fitness companies with awesome ideas and burning ambition; change can come from any direction. New gym businesses are always waiting in the wings, doing things corporate analysts and complacent managers don’t even notice, but the new model suddenly takes center stage at the appointed time somehow.
So, if there is a valuable takeaway from this report, it is to compete on the value-add. Start or redirect your gym in the direction of premium service with a unique offer to your members. The combination you choose is up to your creativity, imagination, and your take on the marketplace in which you compete.
Fagan, Lawrence. Crunch Fitness Business Model. April 21, 2014. http://blog.gyminsight.com/2014/04/crunch-fitness-business-model/ (accessed July 14, 2014).
—. SoulCycle Creates An Intense Experience. December 1, 2014. https://blog.gyminsight.com/2987-soulcycle-creates-an-intense-experience/ (accessed May 20, 2017).
Kufahl, Pamela. Club Industry’s Top 100 Health Clubs of 2016. August 8, 2016. http://www.clubindustry.com/profits/club-industrys-top-100-health-clubs-2016 (accessed May 20, 2017).
Nagy, Evie. How You’ll Work Out In 2020. March 3, 2015. https://www.fastcompany.com/3042597/how-youll-work-out-in-2020 (accessed May 20, 2017).