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The continued growth of boutique clubs is the hottest trend in the fitness industry.
In the United States alone, 42 percent of all club members are also a member of a boutique. Boutiques, also referred to as studios, provide specialized experiences of high value to their members. Their success is driven by a focus on being great at a few things, often only one thing, versus trying to be all things to all people.
Most people think of the boutique concept as related to small facility size, but only one of the top 10 drivers of boutique growth is related to size. Facilities of all sizes can learn from and leverage the underlying consumer experience drivers which have led to boutique success.
Boutiques Are Not a Storm; They Are a Category 5 Hurricane
According to IHRSA’s 2015 Health Club Consumer Report, boutiques drive $2.45 billion in monthly subscription revenue versus $1.49 billion for traditional commercial fitness clubs. That’s a staggering 61 percent more subscription revenue for boutiques than clubs. Boutiques show that when you deliver an impactful experience, members are willing to pay.
Fitness clubs now constitute a fully mature industry in most developed markets, and industry growth rates are falling in line with overall economic trends. Budget clubs and studios are contributing to an overall growth in health club membership but not significantly. The profile of the typical health club member remains the same, as does the percentage of adults who are health club members. In simplified terms, more facilities are now competing for the same number of members.
Boutiques Are Winning in a Mature Market
Independent mid-tier operators have seen the largest hit from the cannibalization of budget clubs and studios, as more members choose to leave their mid-tier club for a self-bundled option. Rather than a $60 membership in a big box with a wide variety of amenities, many of their consumers are getting a budget club membership for $10 to $20 and going to a boutique.
The underlying drivers of this shift in consumer behavior include:
- Consumers are increasingly seeking unique, personalized experiences. They have shown a willingness to pay for best-in-class experiences.
- Women continue to gain purchasing power and seek brands that provide community and branded experiences.
- Most consumers live an over-stimulated life and seek escape from an always-connected world.
- Millennials seek uniqueness, variety and adventure more than any other generation. For them, the boutique provides highly specialized content that appeals to their low boredom threshold and desire for experiences.
- Consumers are increasingly seeking digitally enhanced and delivered fitness experiences, such as basic activity tracking, remote coaching and deep social media engagement. Digital companies continue to aggressively invest in fitness technology with a particular focus on extending existing business models into the fitness space.
More on Millennials
Boutique growth is driven by Millennials, who make up 32 to 48 percent of boutique members in the United States, varying by boutique type.
Millennials want the following:
- Inspiration - The boutique is an experience that provides motivation for fitness as well as other areas in life.
- Uniqueness and adventure - Millennials believe that fitness should be fun and different. They notably still use treadmills, ellipticals and selectorized strength for their primary workouts.
- Authenticity and transparency - Boutiques typically have a non-membership model with up-front pricing and boutique information. Most of this engagement is from a mobile app, which is highly desirable to Millennials.
- To be part of a tribe - In our increasingly non-social world, Millennials seek the deep sense of connection and belonging with like-minded peers that boutiques provide.
- To express their individuality - Millennials often bundle multiple studios as part of their “wellness wallet.” They see the variety of brands and activities they consume as a reflection of their unique identity. They find brands that align with their sense of identity particularly appealing.
- A local feel - Millennials aren’t satisfied by just a friendly hello from the front-desk staff. They want staff who truly know, respect and care about them.
5 Ways to Create a Boutique in a Traditional Health Club
- Find and cultivate a specialty. Your specialty opportunity is where your key strengths and consumer demands meet.
- Begin by considering who your core customer is today, as well as who you want it to be. Take time to ask people who fit that profile what content and experiences they are interested in.
- Look inside your walls and creatively ask yourself at what you are the best.
- Remind yourself that you can’t be all things to all people. Focus on how you can create something of deep meaning and impact to your target member.
- Honestly appraise your capabilities and determine your areas of expertise.
- Think and act with a tribal mentality. Put your club’s vision, mission and values aside and develop an ideology and mantra that creates an experience unique to your boutique. Develop and expand key rituals and traditions that reinforce your tribe’s ideology. Once implemented, find forums for your community to celebrate its uniqueness.
- Engage the right people to generate a sense of ownership. Boutiques need a champion who takes ownership of the concept and infuses the passion and follow-through needed to keep the culture going. Consider compensating them such that they run the boutique as though they have partial ownership in the business. Give them enough flexibility to make it their own.
- Design in nimble innovation. Put aside your old ways of thinking about group exercise and training. Your content must be engaging, entertaining, and enthralling.
- Focus on your brand and your story. Don’t ride the coattails of the trends. Instead, create new ones.
The club industry is now a mature industry. In this new world, we must adapt how we price and deliver experiences. Clubs of all sizes are well positioned to leverage the power of the boutique, which is about the experience, community and results they deliver. It’s not about their square footage.
Today, many traditional clubs suffer from a syndrome called “competitive homogeneity,” which translates as an increasingly competitive market they become more and more like each other. Boutiques are a reminder of the need to be different and focused. Being all things to all people is a strategy that is unsustainable in a mature industry where competition is greater than it has ever been.
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Brian Kane leads the Precor marketing research and commercial management team. This article was written as a combination of his personal opinions, education sessions from IHRSA 2016, and many conversations with studio owners and the companies who serve them.
Precor develops and manufactures premium fitness equipment, software, and service solutions that help fitness facility operators grow their business and create a personalized fitness experience for their customers.