In the past decade, all industries have experienced an increasing stream of innovations that are rearranging supply chains, creating new products and services, and turning business models on their heads. These trends are reshaping how business is done. Whether it be bookstores becoming digital or the explosion of retail merchandise being purchased through the Internet (which now accounts for nearly half of all retail U.S. sales), technology is driving this evolution. The recently launched iPad was the most quickly adopted new consumer technology in history, and in less than a year, tablets now rank as the fourth largest category in consumer electronics.
No industry or business model will be immune from this rapid change, and the echoes of technology’s impact are being heard across the health club and fitness industry today. In the past five years, the growth of traditional U.S.-based fitness facilities has slowed significantly, as have memberships in general, according to research from the International Health, Racquet and Sportsclub Association. Increasingly, alternative fitness offerings are creating options for consumers that don’t require monthly memberships or travel to a facility. Although no definitive research proves that traditional health club models are being directly affected by alternative fitness options, it is clearly a trend to watch.
A poor economy and the growth of “budget” clubs may have undermined the health club industry, but digital alternatives from Nike Plus, which serves millions, to a wide range of personal health and fitness applications also now serve scores of consumers. As with the music industry of the 1980s, the health club business is facing a new paradigm of consumer expectations, options and delivery methods that will transform it. Consider this: In 2002, most music or movie industry executives would never have considered Apple as having the potential to be the largest distributor of digital content and entertainment in the world. Less than a decade later, that is precisely what Apple is. How can the health club industry learn from the rapid change experienced in the music and other industries?
A lot can be learned by embracing, not ignoring, technology trends. The traditional brick-and-mortar delivery model will not be the sole or the greatest source of fitness delivery. From in-home gaming systems to mobile applications, evidence of relevant alternative consumer options are mounting. If the mainstream health club industry fails to embrace the degree of change that is and will continue to affect its businesses and learn to increasingly align its delivery with emerging consumer trends, it could potentially suffer severe competitive intrusions and miss the opportunity of being part of the future it set out to create: a fitter planet for the benefit of everyone.
How can club professionals address the growing threats and opportunities that technology is creating? Begin by understanding these five key trends that will drive and reshape consumers and industries, including the health club business, in the coming years.
- Cloud computing. Technology platforms that serve customers in a 24/7 delivery scheme are becoming a more critical and strategic aspect of all businesses. Lower storage costs, faster bandwidth and platforms that provide powerful software solutions through a service model have revolutionized information technology. What is possible today could have only been achieved by the largest companies a few years ago. Cloud computing will enable intelligent health club operators to serve their customers more effectively and at very low cost, improving both retention and membership acquisition. To be successful, health club operators must set technology platforms as a key competitive advantage and important priority for their success.
- Mobility. According to many experts, mobile devices are going to reach nearly 150 million U.S. users sometime in 2012. Soon, the majority of Internet search will be performed through mobile devices. Mobile Internet access will affect marketing and service delivery in a variety of ways. Local search and geo-location apps such as Yelp, Foursquare and SCVNGR, among others, are going to transform how health clubs interact with and market to their members. Old methods of marketing will be replaced by more targeted promotional and engagement opportunities. Customers also will become accustomed to paying for items using their smartphones. Starbucks, for example, recently adopted a mobile phone payment system, and this trend will revolutionize the way members pay for services such as personal training. Is your website mobile? Do you have an app for mobile devices? Are you marketing using mobile location services?
- Socialization of the web. All websites are going social and for good reason. Facebook’s reach across the web has transformed the way people share online, with adoption rates that are changing Internet search and affecting Google’s dominance. All content on the web is becoming social. This is creating huge shifts in how consumers are discussing, evaluating and engaging with brands. Is your website structured for complete socialization? Are you using Facebook’s connect interface? If a health club isn’t enabling a complete social experience for its membership and customizing content for its users, it is missing a huge opportunity.
- Gamification. The use of game play for non-game applications is increasing rapidly. A 2010 Entertainment Software Association survey found 69 percent of U.S. households play some form of interactive game. The success of platforms such as Farmville are only the beginning of what is to come. Also known as “fun-ware,” its purpose is to engage customers and motivate them to participate in behaviors for fun. A few key areas with immediate potential for health clubs include training, customer engagement and knowledge sharing. The first global gamification summit was recently held in San Francisco where marketers for major global consumer brands collaborated on best practices and opportunities around this trend.
- Virtual Reality. New technologies that enable the merger of the physical and digital worlds are emerging, and their potential is fascinating. Augmented reality combines the real and virtual, is interactive in real time and registered in 3D. Applications such as Layar will allow consumers to overlay digital information and engagement on the physical world. The applications are only limited by imagination. From QR codes that generate 3D imaging on a computer screen to applications that allow mobile users to see digital information layered on the physical environment, these applications will create interesting ways to deliver content and engage and inform consumers.
Bryan O'Rourke, co-founder of Integerus LLC, helps fitness and wellness organizations more effectively use innovative strategic, business and technology solutions. He has 25 years of experience consulting and serving in various for-profit and nonprofit executive capacities. O'Rourke holds an MBA from Southeastern Louisiana University and can be reached at [email protected]. Learn more at www.integerus.com and www.bryankorourke.com.