For years, the traditional health club/gym has been the only option for those seeking in-door health and fitness activities. The traditional health club model consists of attracting as many members as possible by offering everything to everyone, a “one stop shop” for all types of fitness activities, including cardio equipment, weight training, fitness classes, and even swimming. However, over the past few years, the U.S. has seen an emergence of “boutique fitness studios,” ranging from CrossFit studios and bootcamp classes to spin studios to yoga, Pilates and Barre. Is this trend toward “a la carte” fitness here to stay? If so, how will it affect the traditional health club business?
In 2013, there were an estimated 32,150 health clubs in the United States with 53 million members.
Overall the U.S. fitness center industry was worth 22.4 billion U.S. dollars in 2013, almost double the figure from the year 2000.1 While these numbers are certainly impressive, there has been a recent proliferation of boutique fitness studios opening in major cities (NYC, Boston, San Francisco, Chicago) over the past few years that could pose a threat to the industry. Greg Tannor of Cushman & Wakefield, the commercial real estate firm, says he’s seen even greater demand this year for boutique fitness space, with a “tremendous amount of activity from spinning, rowing and Pilates studios.”2
Personalized fitness studios or boutiques captured 21% of the market in 2013.2 Studios like SoulCycle, FlyWheel, Pure Barre, and CrossFit are typically more expensive per visit than even the highest-end health club. For example, 2 classes per week at FlyWheel in Boston costs $200 over a four-week period. One month at Boston Sports Club in Boston costs $69 (including $50 for an initiation fee, assuming one year of membership). The boutique is roughly 60% more expensive.
Why would fitness consumers, who are generally younger and have comparably less disposable income than older generations, choose to pay so much for their fitness experience? One reason is the boutique fitness studios’ “pay-per-visit” model, replacing the hefty monthly membership fees of traditional outfits. In addition, the boutiques don’t charge the annoying initiation fee that everyone knows is a complete scam, since promotions waiving them are so common. Members can either pay per class or get a discount by purchasing classes in packs of 5 or 10.
Another appealing feature of the costlier boutique model is the much more personalized experience, from the more intimate look and feel of the place, being “known” there, and having a workout tailored to your individual needs. Because of this, consumers choosing the boutique experience might receive the most compelling benefit of all: personal identity. A special bond often develops among the consumers of a boutique fitness studio, due to their shared experience of having found a “hidden gem.” It’s a similar experience to vacationers who independently find that not-well-publicized but incredible site. The bond from the shared and unique experience is an intense one.
On a more tangible level, many boutique fitness studios have mobile apps to sign up for classes up to a week in advance, alleviating the disappointment of getting to the health club on a Thursday night only to find your class filled. There are also monthly subscription services available that aggregate classes from different boutique studios so that sign-ups are even easier and can let your friends know that you will be attending a class. Also many boutique studios send newsletters to their members with information on upcoming week and special events to foster a greater sense of community.
As reported in Forbes in 20143, some traditional gyms are fighting back against boutiques by offering ALL of the types of classes that the boutiques offer. Some gyms have even entered partnerships with boutiques, giving the boutique space in exchange for exposure to the boutiques often more well-to-do clientele.
Health clubs can offer all the classes they want. But in the end, there will still be consumers, perhaps the Millennial generation as a whole, who will prefer the more intimate and personalized experience of boutiques. If health clubs don’t want to end up as cheap gyms, they will need to become more adaptive to survive in today’s more customized, personalized and connected world.
2Source: IHRSA 2014 Health Club Consumer Report
3Source: Forbes 9/25/2014