As you have undoubtedly noticed, the health and fitness industry is being invaded by a new, small species. And it is attaching itself to every street corner in major metropolitan areas, as well as numerous spots in the suburbs.
If you aren't already surrounded by them, before you know it, you likely will be, and the "them" is boutique studios.
Boutique studios make up 42 percent of the health club market, according to a 2015 CBS News report. That percentage has doubled since 2014. Boutiques also appear to be claiming a chunk of the industry’s reported $24.2 billion in revenue. According to the International Health, Racquet & Sportsclub Association (IHRSA), Americans spend an average of $52 for club memberships, while those who visit studios shell out about $100 a month for classes.
However, consumers are not the only ones being converted. Operators of multi-purpose clubs of all types and sizes are converting existing club spaces into “boutiques.” Some operators are even building entirely new structures with unique branding, with hopes of attracting the boutique crowd, as well as keeping current members from fleeing.
“I think club owners are listening to the customer,” said Cliff Buchholz, owner of four Miramont Lifestyle Fitness clubs in north-central Colorado. “Clubs like ours need to take a look and see how we can compete with boutique studios.”
Buchholz decided to compete not by just upgrading an old, underused space for tens of thousands of dollars. Instead, he invested millions of dollars into a new facility, branded REVE, that offers much of what can be found in the more than 50 boutique studios in Fort Collins, Colorado, where three of his four clubs are located.
“So many boutiques survive because their members—especially millennials—are not interested in a big club,” Buchholz said, explaining his reasoning for developing a different brand and location. “And they are willing to pay for it. If the customers are asking for it, [club owners] have to step up and do it.”
Association of Fitness Studios (AFS) CEO Josh Leve said that boutique studios are here to stay, but their bubble will deflate—but not burst—at some point soon.
“Ultimately, studios will go through a decline phase,” Leve said. “They won’t completely go away. There will always be a market for them.”
The Root of the Boutique Trend
A combination of factors may have contributed to the desire by some people to join boutique studios: disruptive children, generic weight rooms and diluted group exercise schedules at big box clubs. But the prime factor may be that younger generations are willing to spend more money in order to get a personalized workout focusing on a specific area of their body. Plus, they want to do their workouts with like-minded individuals.
For the most part, millennials are fueling the explosion of boutique studios. Many belong to a multi-purpose club and pay upwards of $40 many times a week for a boutique class at franchises such as SoulCycle, Flywheel or Orangetheory—or, of course, the locally owned studio down the street. According to IHRSA’s 2015 Health Club Consumer Report, non-boutique members spend 0.8 percent of their income on their membership, while boutique studio visitors devote 1.9 percent.
The million dollar question, then, is why is this generation willing to spend so much, and why hasn’t the industry capitalized on it sooner?
More than any other generation, millennials like to feel that they are part of a larger group of similar people, or a “tribe.” Working, playing and exercising alongside of those with similar interests, goals and world views is more important than cost or convenience. And most of the boutique studios and locally owned mom-and-pop outfits are keeping their money within their respective communities—another preference of millennials.
Nielsen and Les Mills conducted a report in 2014 that showed 63 percent of consumers visited boutiques due to who was there, and almost half noted the atmosphere as a reason for their choice.
Of course, millennials aren’t just showing up on boutiques’ doorsteps out of the blue. Boutique owners are successful in their marketing—be it marketing of the club, its original classes or playing up the instructors. Practically all is done on social media. And with a large amount of this “marketing” being posted by studio attendees, it comes at little cost and nary an effort by the studio.
“One reason for boutiques’ success is they are really targeted with their marketing efforts,” said Brent Darden, an industry veteran who used to be part owner in Telos Fitness Center in Dallas, when the facility first opened a studio a decade ago. He now is a consultant to the health and fitness industry and a regular speaker at industry conferences.
“When [a boutique studio] hires a great new instructor, they are really proud,” Darden said. “They will send out a bio, great photos and encourage members to take classes.”
Not all of the success can be attributed to millenials throwing money at boutique studios. A small part is also the nature of the industry. There are ebbs and flows, and every trend will level off, or even disappear. It happened with Jazzercise and racquetball in the 1970s; and now Zumba, the darling of the 2000s, is reinventing itself with STRONG, a high-intensity interval training regimen that uses music to help intensify one’s workout.
When Multi-purpose Clubs Act Like Boutiques
Multi-purpose clubs, chains and notable brands are now starting to play in the boutique space.
Town Sports International is known for its sports, recreational activities, circuit training and free weight areas in its New York and Boston Sports Clubs, but it now features UFX Zones. Traditionally less than 1,500 square feet within the clubs, these spaces have the intent of increasing personal training and small-group exercise revenue.
Gold’s Gym, which rose to prominence in the 1970s with a focus on weight rooms, recently unveiled Gold’s Studio. The new offering allows members to create a personalized studio-like training program.
All three companies declined to comment for this article.
Will the new brands within the brand succeed?
Darden said they can but only if some guidelines are kept in mind. He learned many lessons while developing the Telos concept in Dallas. Studios should be created as a separate space either within the club building or in a separate building. The studio should have its own brand, and they must focus on one area and do it well.
“I think clubs can be moderately successful if they created studios on par with free-standing [boutiques],” said Darden. “That means the personal touches, the offerings and having its own brand—a different name, look and feel.”
Boutique studios excel at creating the tribe concept of getting like-minded people together and making them feel like they are part of a group. Staff at boutique studios know clients' names when they come in, an instructor makes sure the members' equipment is set to their body type and ability, and they talk to members and make personal visits during the classes.For a multi-purpose club to excel with a studio of its own, they must do the same, Darden said.
Marisa Hoff is general manager at Stevenson Fitness in Oak Park, California, 20 miles outside of Los Angeles. She agrees with Darden.
“A lot of the training we do is to make sure our staff is doing everything they can do to provide that (boutique) experience,” said Hoff, who has lectured at industry events on how to cultivate the “feel” of a boutique in your club’s group exercise programs. “From the front desk to group ex instructors, we train them to do what they can do to build a community. We make sure our instructors do the three I’s with members—invite, introduce and interact.”
Buchholz and Hoff did not share revenue figures on their studios, but both noted that their boutiques are successful—be it monetarily or by member retention. However, they said this success was not immediate.
Leve at the Association of Fitness Studios is skeptical that big box clubs can compete with studios.
“From my own experience, I think it will be a challenge,” he said. “It is very difficult to recreate that [boutique] environment, that intimate feel, in a big-box health club.”