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24 Aug 2017 Health Club Management Handbook
 

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31608 Health Club Management Handbook - Connect four

Industry insights

From Health Club Handbook 2017 issue 1
Connect four


Millennials, technology, studios, reinvestment – the latest buzzwords to hit the fitness scene. IHRSA’s Kristen Walsh rounds up expert opinions on their impact and how they interlink

Kristen Walsh, IHRSA


EMBRACE TECHNOLOGY

 

Rasmus Ingerslev
 

“Technology is changing the customer journey and the perception of brands,” says Rasmus Ingerslev, chair of Stockholm Leisure Partners, Repeat, Barry’s Bootcamp Nordic, and the IHRSA board.

“The four walls of a health club will no longer be what defines it, thanks to the rapid development of a range of key technologies such as artificial intelligence.

“Technology has a scalability that’s unparalleled when compared to typical brick and mortar clubs,” he adds.

Drastic changes like these may be unsettling, but savvy club owners will look past potential disruption and find opportunity in the coming year, Ingerslev believes: “There’s no doubt we can increase member engagement by using technology in a smart way, which increases the relevance of our services and the likelihood that our members actually reach their goal of becoming and staying healthier.

“From a business perspective, this means increased retention, and with it increased lifetime value of a member. Everybody wins.” 

He continues: “Often, when trying to predict the future, our assumptions are based on a constant. In my view, our industry’s constant is that ‘people have to go the gym to get their workout’. Ironically, I believe the only constant we have is change. “Even today, people don’t have to go to the gym to get a guided fitness experience. Just look at the Pokemon Go app, which quickly attracted more than 75 million users last summer.

“We’ll see more new fitness options using augmented and virtual reality, artificial intelligence and other key technologies that will enable out-of-club workouts. This development can be a threat or an opportunity; it’s up to each of us to decide.”


 


Photo: SHUTTERSTOCK.COM

You don’t have to visit the gym for a guided fitness experience – look at Pokémon Go!

THE MILLENNIAL EFFECT

 

Dan Schawbel and Nerio Alessandri
 

The Millennial generation’s purchasing behaviours are likely to continue to significantly impact the industry this year.

As explained in The 2016 IHRSA Health Club Consumer Report, produced by consultancy firm ClubIntel, the Millennial Effect has already had a profound influence on how the industry packages its offerings.

According to the report: “The Millennial’s desire for entertainment, novelty, personal expression and a tribal connection is likely to be the root cause for why more than 85 per cent of studio members belong to more than one facility.”

Nerio Alessandri, founder and president of equipment manufacturer Technogym, adds: “Critically, Millennials are looking for fitness flexibility that enables them to manage and customise their exercise experience on their own terms, whether it be short and sharp exercise formats to fit their busy schedules or ‘smart’ equipment and wearable technology that connect them to their personal health and vital information.

“Overall, Millennials want their workouts to be fun and as interactive as possible.”

Meanwhile, ‘technology’ is the first word out of Dan Schawbel’s mouth when he’s asked what attracts the Millennial generation to a fitness club.

Schawbel is the founder and managing partner of Millennial Branding, a Boston-based research firm, and a New York Times best-selling author.

He explains: “They want free wifi wherever they are – they’re the most connected generation in history.

“Clubs should focus on having modern equipment, a strong online network and a solid social media presence.”


 


Photo: SHUTTERSTOCK.COM

Millennials want the flexibility to manage their exercise on their own terms

PROLIFERATION OF STUDIOS

 

Steve Tharrett and John Holsinger
 

When it comes to fitness, today’s consumers are willing to pay more for experiences that align with their preferences. According to Steve Tharrett, co-founder of US-based consumer insights and consulting firm ClubIntel, people will find money for “affordable luxuries” which align with their personal lifestyle values.

And one sector that’s really tapping into this is the boutique studio market. “At these studios, value isn’t equated with the price but with the experience, particularly the intangible aspect such as being part of a tribe, engaged in a highly specialised and guided experience,” explains Tharrett.

“These ‘affordable luxury’ expenditures speak to consumers’ hankering for novelty, adventure, personalisation and an ability to align the experience with their lifestyle and life stage.”

The boutique model – which has already gained significant traction in the US and Europe – looks likely to grow in popularity in the Asia-Pacific region in 2017, says John Holsinger, IHRSA’s director of Asia-Pacific.

Personal training-orientated studios in particular will create more entrepreneurial opportunities in many countries, with digital communication for better member engagement also growing in reponses to the region’s many languages.

As boutique fitness studios continue to experience rapid growth, it’s natural for health club owners to view these companies as competition. But with a shift in perspective, traditional health clubs can gain insights from the boutiques and use them to their advantage.

“Mature markets will see a widening of the gap between the full-/low-service options as the ‘need to be different’ segments our industry,” confirms Holsinger.


 



Consumers hanker for novelty, adventure and personalisation

REINVESTMENT IN CLUBS

 

Jay Ablondi and Rob Barker
 

Health club operators that reinvest in their businesses will continue to enjoy the greatest success in 2017, predicts Jay Ablondi, IHRSA’s executive vice president of global products.

Data contained in the 2016 edition of IHRSA’s Profiles of Success demonstrates a direct relationship between capital expenditure on equipment and facilities and outstanding performance in financial and membership indicators, he notes.

“Clubs in the top 25 per cent in terms of reinvestment posted stronger revenue and membership growth numbers than those in the bottom 25 per cent,” he adds. “The former invested a median of 21 per cent of revenue back into the club, and posted revenue growth of 4.9 per cent and net membership growth of 6.2 per cent; the latter invested only 2.3 per cent, and had revenue growth of 1.2 per cent and net membership growth of 0.5 per cent.”

In all, 90 companies, representing more than 4,800 locations in North America, participated in the latest survey.

Numbers pulled from The IHRSA Health Club Equipment Report: Spending, Utilization & Programming Trends reinforce the importance of reinvestment. Top performing clubs spent an average US$90,000 on fitness equipment and achieved an annual 10.2 per cent revenue growth, in comparison with 3.8 per cent for the overall sample. 

“The new normal of the fitness industry is that there is no ‘normal’,” says Rob Barker, CEO and president of Precor.

“While exercisers will always seek out clubs with traditional offerings like strength and cardio equipment, they are increasingly seeking out facilities that offer a unique and personalised experience. Operators that cater for these niche audiences by offering small group and personal training, indoor cycling, barre and functional training are gaining an edge within the industry.”


"The new normal of the fitness industry is that there is no ‘normal’ – Rob Barker

 



People are seeking out facilities that offer unique experiences like barre training

About the author

 

Kristen Walsh
 

Kristen Walsh is associate publisher for IHRSA – the International Health, Racquet and Sportsclub Association. Founded in 1981, IHRSA is the only global trade association, representing more than 10,000 health and fitness facilities and suppliers worldwide. Locate an IHRSA club at www.healthclub.com, and to learn how IHRSA can help your business thrive, visit www.ihrsa.org



Originally published in Health Club Handbook magazine 2017 issue 1

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