In my last column, I said club development and aerobics were going in opposite directions, but nobody realized it. Here's a more thorough explanation.
By 1996, club growth was in the beginning of its boom stage. Fitness facility numbers had doubled in a decade. Soon-to-be major club players like LA Fitness, 24 Hour Fitness, Gold's Gym and Life Time Fitness were developing plans for nationwide penetration of larger membership markets. Prior to these years, the health club market consisted of big athletic clubs; made-over, medium-size, once-racquetball facilities; and a grouping of smaller gym-type operations, some nationally licensed but most independently operated. The net inflow of new members still matched the net growth of facilities. Not much “middle” existed in the market — and that meant that nearly everybody profited.
Accompanying this growth phase were five simultaneously occurring dynamics that had change written all over them: The clientele in clubs shifted from the mostly under-40 population already interested in fitness to a much wider age, type and interest-level prospective member market who wouldn't respond to the typical health club offerings that fueled the early advance of clubs and membership. These members were different, but few operators paid attention.
Clubs were suddenly getting larger in size, as though bigger was better. Facilities were much more costly to build, to equip and to staff. These factors placed an automatic emphasis on “more members needed.” This meant that customer service would likely suffer — and it did.
America was rapidly becoming more automated, as evidenced by the use of computers (including the laptop), the newly developed cell phone, cable and satellite TV and the Internet. With this automation came a phenomenon still unexplained — the country became less active as substantiated by escalating obesity levels at all age ranges of the population. As an industry, we were struggling to increase the percentage of citizens that were members of health clubs, but we were not growing that rate as fast as the growth rate of new club development.
Cardiovascular equipment became the rage of the industry with LED and LCD screens, interactive programming and more appeal to the trainers who were orienting new members. Trainers were leading members to individualized exercise not to group classes.
As for aerobics programming in the average club, it had become step-oriented with higher movement difficulty levels. The less-fit, lifestyle-inactive, new members (and men) weren't able to participate in these classes. This was coupled with a movement on the clubs' part towards one-to-one new member training, which was primarily equipment-based.
The outcome was obvious. Niche facilities such as Curves arose, taking away little pieces of clubs' local market share. Personal training and group exercise studios began to flourish. Clubs tried to compete with each other by offering more and varied classes, not by adapting a business model for group exercise. While professionalism of class instruction grew, so did payroll and program costs. But in most facilities, overall participation began to drop.
Which brings us to today. Walk into most clubs, take a look at the group schedule, and you will see that club's version of “same old, same old.” Other than the pre-choreographed programs, the offerings vary little, whether you are in a small gym, a large athletic club or a not-for-profit facility.
I estimate — from my own studies and from corroboration by Rich Boggs, CEO of Body Training Systems — that 80 percent of all clubs in the United States likely lose money on group exercise. Group exercise participants number less than 10 percent of the total membership of the average club. Attendance statistics indicate that class visits in a representative facility amount to only 12 percent (or less) of total facility visits. Group exercise payroll and payroll taxes often take up 18 percent or more of total staff payroll. Objective measurements in many clubs show that group exercise is not only a losing proposition on the bottom line, but also that facilities are suffering many “opportunity costs” by having a group exercise program. Group exercise as a business is in a general state of disrepair.
All of this sounds pessimistic for the future of group exercise, but not necessarily so. In next month's third and final installment, I will look at where group exercise as a business is going and how you may be able to profit from it.
Michael Scott Scudder, a contributing columnist for Club Industry's Fitness Business Pro, owns and operates MSS FitBiz Connection — an online-based club consulting and training service. Michael can be reached at 505-690-5974 or [email protected].