Since SoulCycle first opened its doors in 2006, consumers have grown to love group fitness classes and the endorphin rush that comes with sweating alongside friends and strangers as the music blasts and the lights dim. According to Fitt Insider, between 2012 and 2015, membership at “traditional” big-box gyms grew by 5 percent, while membership to boutique studios grew by 70 percent. Research from MINDBODY shows that 54.3 million adults (or 27 percent of the U.S. population) participate in a group fitness class at least once per week.
And you, readers, are enjoying classes just as much as (if not more than) everyone else: 88 percent of aSweatLife readers went to at least one group fitness class per month in 2018. Plus, 72 percent of respondents dedicated some portion of their budget to classes in 2018 (up from 65 percent in 2016).
But while fitness is currently a $30 billion industry, talk of a recession is on everyone’s lips as certain signs seem to point towards an economic downturn. Consumers already seem to be adjusting their fitness spend, too; our research shows that our readers spent less on fitness in 2018 than they did in previous years (an average of $112.48 per month in 2018, down from $125.50 in 2016).
The boutique bubble will burst, and studios will start closing in a recession.
As we told Cheddar, boutique fitness studios are as ubiquitous as Starbucks these days; you can barely turn a corner without walking past an Orangetheory Fitness, a Pure Barre, a Row House, or a SoulCycle (or, as is the case on Wells Street in Chicago, all four on the same block).
But it’s really tough for a fitness studio to be profitable; we talked about it in-depth here when we analyzed ClassPass’s 2016 pricing changes. Studios that aren’t reaching capacity—or utilization as studios measure it—won’t be able to afford their own real estate.
In fact, we’re already seeing signs of this happening; Flywheel announced last week that they’re closing 11 locations, or more than 25 percent of their open studios, after making a big bet on at-home hardware that didn’t pay out. For a company that competes with Peloton and SoulCycle, this is a huge loss, and an ominous sign of things to come.
Studios will pour more into the in-person experience to drive loyalty.
With the market oversaturated, consumers have more options than ever for working out. To attract loyal customers (the coveted “regulars”) during a recession, studios will pour more into the in-person experience and their brick-and-mortar amenities by doing any of the following things.
While boutique fitness isn’t totally recession-proof, David Weston, Principal at North Castle Partners, says, brand, community, and the quality of the workout will be what keeps members coming back and paying for classes.
“I do think that brand, community, and workout efficacy matter significantly,” he tells us. “The community of the studio may keep consumers coming as it acts as somewhat of a haven from the stress of a recessionary climate. Sixty minutes of detachment from phones, email and everything else going on in their professional and personal lives is valuable. In addition, if consumers feel like they are truly getting the value for the money with the workout itself and achieving the results that they anticipate, I think they’re less likely to trade out of specific studios.”
Here’s how we think studios will ramp up their brand and in-person experience.
Hiring, training, and promoting “enter-trainers”
Even if you’ve never heard the term “enter-trainer” before, you can probably guess what it means: a personal or group fitness trainer who’s a mix between motivating coach and celebrity social media influencer. The typical enter-trainer is aspirational, with the physique of a ripped swimsuit model and the social media presence of the Kardashians. SoulCycle, Barry’s Bootcamp and Peloton have led this charge; look for other gyms to put more weight on social media following when hiring.
Luxury in-studio amenties
One dinghy shower stall and generic 2-in-1 shampoo/conditioner won’t cut it anymore. If consumers are paying $30 or more for a group fitness class, they want the shower experience to be worth an Instagram mirror selfie. Barry’s Bootcamp uses Oribe hair products to accent their ultra-luxe white subway tiled locker rooms; hip-hop yoga studio Y7 sources Malin+Goetz products, as does Flywheel.
Outside of the locker room, chilled towels might be handed out to sweaty patrons once class is over to leave a lasting impression. Studios will also continue to partner with high-end athletic apparel brands like Alo Yoga or lululemon to create branded retail for sale in the lobby.
Recovery is a major fitness trend for 2019, and boutique studios would be smart to invest in a few service options for their members. Cryotherapy chambers or localized cryotherapy wands, infrared saunas, salt rooms, and compression boots are all on the table—but at the very least, studios should invest in a few good foam rollers and possibly a percussive therapy instrument from Theragun or Hyperice.
Wellness under one roof
In addition to more options for recovery, boutique studios can enhance the in-person experience by offering more options for “one-stop wellness.” A studio can no longer be *just* a studio; they’ll now have free wireless and coffee to convert to a co-working space during off-class hours, or a juice/smoothie bar to keep members hanging around after class. They might give space to a massage therapist, acupuncturist, or physical therapist to treat their members.
This trend, called “wellness under one roof,” is being led by companies in New York like THE WELL and Lina. Big names like Equinox and Life Time Fitness are adding non-fitness features to their spaces as well; the new Equinox in Chicago’s Lincoln Commons will be worthy of a gym-only episode of Cribs, as is lululemon’s new flagship space in the Lincoln Park neighborhood in Chicago.
And while the financial benefits of these potential up-sells are huge, studio owners are also turning to these “one-stop wellness” ideas in order to build a true community among their members.
Studios will supplement—not replace— with on-demand
When we talk to studio owners about adding on-demand to their membership, the obstacle we hear over and over again is “You just can’t replace the in-studio experience we have. Our [curated playlists/awesome instructors/proprietary equipment] wouldn’t translate to an at-home workout.”
That’s probably true—but smart boutique studio owners will view on-demand as a way to supplement or complement the in-studio experience. They’ll be able to connect with their members even when the members can’t be in the physical studio, whether that’s a new mom squeezing in a workout during nap time or a loyal client looking to get a workout in on vacation with minimal equipment.
Jillian Lorenz, co-founder of The Barre Code, tells us, “We know that the ability to head to a physical studio to complete a 50 minute workout ebbs and flows throughout your life,” noting that a young professional’s flexibility is very different than that of a new mother’s time constraints.
“As a lifestyle brand focused on the power of our community, we don’t ever want our clients to have to meld to us; we want to seamlessly fuse with our clients’ lifestyles to provide an experience they can carry with them wherever their life takes them.”
Plus, studio owners can get creative with pricing memberships by mixing and matching in-studio and on-demand options. Having a budget-friendly on-demand option is a way for studio owners to maintain a connection to loyal customers who love their trainers and classes, but can’t afford an unlimited membership.
On the consumer side, Weston agrees that on-demand will be a way for consumers to supplement their studio workouts during a recession.
“Some consumers may opt to cut back on driving through tougher economic times, so certain segments of the population may opt to work out at home and utilize less expensive streaming services,” Weston explains. “Right now, I think on-demand serves as a supplement to in-studio and gym experience, but during a downturn some consumers may opt into on-demand as a way to tighten their spend but still get their exercise in.”
Our research shows that our readers have decreased their average monthly fitness budget, yes, but they’ve increased the portion of their budget dedicated to digital fitness and boutique classes. Expect consumers to continue allocating more budget to on-demand (which is much cheaper than a one-off group class) and less to boutique classes in the event of a recession.
Consumers may explore high-value, low-price fitness options
Finally, the recession might offer an opportunity for boutique fitness to acquire new customers who are seeking a “trade down” of their own, says Weston.
“The interesting thing about boutique fitness is that while it’s more premium priced on the fitness club curve, it does offer a compelling value proposition for specific customers. There are people out there that utilize more expensive, one-on-one personal training services which are typically priced in the $100 to $150 per session range. A boutique fitness class costs significantly less, typically low $30s per class and in some instances offers a superior workout. The value proposition is pretty compelling which could cause those consumers to trade down.”
Similarly, consumers who have previously stayed loyal to their mid-priced fitness clubs might opt to trade down to low-cost, big box gyms that have incredibly low monthly membership fees yet still offer similar amenities.
“For those that clubs operating in the middle of the pricing spectrum, they may be at the most risk as their members may opt to trade down from that price point into our high value, low price concepts, like Planet Fitness or Crunch,” Weston continues.
What we’re watching now: How ClassPass reacts to a recession
ClassPass, the ubiquitous app used for booking a variety of fitness classes (and now wellness appointments), has raised $239 million in four institutional rounds, and in seed rounds before that. At the same time, they took on some debt this year and sold shares on the second market—signs that point to them needing cash soon.
So here’s our concern: is ClassPass floundering in the face of needing more funding, and if so, how will the rest of the system react? So many studios rely on ClassPass for exposure to new clients and the occasional drop-in; if ClassPass goes down (especially during a recession), a major chunk of the fitness space might suffer as well.
Want to talk more about our research on the State of Fitness and what we predict for the fitness industry? Email .