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The Lip Looks into His Crystal Ball for 2005

What do I see for us in the coming year? A lot of changes. Here are my “predictions” based on what I've been seeing and hearing.


  1. A leveling-off of commercial, for-profit clubs.

    The club-building craze will not stop (hundreds more small, “express” clubs on the slate for 2005, plus mega-clubs in construction in large-market areas), but there will be a close-the-doors, going-out-of-business rumble reminiscent of the early 1990s post-recession era.

  2. Continued growth in the not-for-profit fitness facility sector.

    YMCAs, JCCs and hospital-based facilities will grow, both in terms of new facilities and in massive renovation plans.

  3. Slower net growth in memberships.

    New member growth will still move ahead but at a slower pace, and attrition will rear its ugly head at a greater rate this year in part due to the economy, in part due to dissatisfied customers.

  4. The big will get bigger.

    Those who are acquiring clubs, building more clubs and merging with other club organizations will have a banner year.

  5. Hard times ahead for indistinct ma-and-pa clubs.

    Except in rural areas where they may hold on, this year is the beginning of the end for this segment of the fitness market starting in heavy-population and/or high-competition areas.

  6. The rubber hits the road for tired old mid-sizers.

    Ditto the above. This sector has held on for too long because of low debt but has been slowly declining for years. This is the year that the final decay starts.

  7. More fragmentation of the club marketplace.

    The consumer is lucky in 2005. There will be more and better clubs to choose from in all shapes, sizes and prices. Woe to the locked-in, dependent-on-dues clubs.

  8. Changes in sales and retention.

    Feature selling will finally begin to disappear. More effort will be made to establish in-house profit areas and less wasted time and money will be spent on those halfway out the door.

  9. A move to attract management from outside the industry.

    An industry crisis that nobody wants to talk about is that we don't have enough managers at any level to supply the growing demand. And our wage-and-benefits packages are substandard. I see a major shift in this category.


  1. More mergers and acquisitions.

    I see smaller strength equipment companies being bought up by cardio companies or vice-versa in an attempt to compete with big equipment sellers who offer “one-stop shopping.” Wrong move, but it'll happen.

  2. Some poorer players leave the field.

    Goodbye to those who have been holding on by a shoestring — both in equipment and services. They won't be able to compete and will lose what market share they've had.

  3. Specialty players step out.

    Those with unique equipment offerings (such as exercise documentation ala computerization or true circuit training capabilities) will flourish.


  1. Uncle Sam and health care costs.

    Reactive care rather than preventive care has us on the verge of a bankrupt medical system. Fitness facilities are the likely place for the beginning of a new health care movement.

  2. The beginning of reimbursement.

    Some insurers, HMOs, PPOs and others will take bold steps to implement proactive exercise measures. The result won't be memberships but short-term documented programs in qualified clubs.


  1. A slow-growth year.

    This is the hardest call of all, but the one on which so much in our industry will be dependent. Early predictions are for a slowdown in earnings growth and capital spending, which means a slower economy and less available discretionary dollars for most folks.

  2. Some big “ifs.”

    The war. Record national debt. Higher interest rates. Jobs leaving the country. What effect will each and all of these have on consumers?


  1. A major player will disappear

    Look for one of the major gym chains to either consolidate, re-structure, merge, be acquired or be absorbed in the marketplace.

  2. A new kid on the block

    It is likely that a new club association, organization or alliance will surface.

  3. The breakup of aerobics.

    The majority of clubs lose money with group exercise and will not stand for this much longer. Look for a re-thinking of group exercise in clubs and the emergence of independent group-exercise-only studios (and probably a national chain).

  4. If clubs don't do it this year, someone else will next year.

    It may be the last year for clubs to make an impact with members. If not, our customers will become somebody else's customers…in droves!

And finally, one we can count on: we will all get a year older (and, we hope, wiser) this year. Have a great 2005.

Michael Scott Scudder is a 30-year veteran of the fitness industry. He is president of FITNESS FOCUS, a club management training company. He can be reached at 505-690-5974, by email at or at his Web site,

TAGS: News
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