Major challenges and opportunities facing our industry - Les Mills Insights from IHRSA

08 Apr 2013

IHRSA Las Vegas was an outstanding event and we loved catching up with friends, old and new. Here’s a summary of the big issues we heard at the convention that reflect the challenges facing the 16,000 clubs we partner with:

Challenge 1: Budget facilities and now micro-gyms like Crossfit are eroding the traditional club membership base. How can mainstream clubs compete with this?

Challenge 2: The age of the average gym-member is steadily increasing. It’s getting harder and harder to attract younger people, the so-called Millennials, into traditional club environments. How do we keep our offering fresh and compelling for the next generation?

Challenge 3: “There’s been a huge growth in small group training but I haven’t been able to make it work in my club. How can I create successful small group training and other secondary income programs?”

Traditional clubs worldwide are losing market share to budget clubs offering limited or no service. Many clubs lose 10-20% of their members when a budget opens nearby. This can represent the majority of a club’s profit margin. At the same time we’re seeing a rapid rise in micro-gym concepts charging much higher rates than mainstream clubs and offering highly targeted niche training options. What does this tell us about today’s fitness industry consumers? How do we compete when we’re under fire from both ends of the market?

First up, the reality is that no-one is leaving our clubs because they’re having too much fun, making too many friends or getting in too good a shape... They’re leaving for the budgets because they don’t value what we offer enough to keep paying for it, and they’re leaving for micros because they’re prepared to pay more for something they perceive as being much better value.

What do members want?

The starting point of the fight to win them back has to be built on giving members what they want. And what do they want? Results and motivation. If we’re serious about competing with the new offerings we have to look at everything we offer through the eyes of our consumers. Research tells us there are three big motivators that keep them coming back: a stimulating environment and activities, a social experience and motivating health education (education is a major motivator!).

Run our facilities through an internal audit.

How fresh and contemporary are our spaces? What social activities do we co-ordinate? How ‘club-like’ is our club? Do we claim a thought leadership position on health and fitness in our market? The world’s best clubs have high-stimulation design features, beautiful spaces and offer a full range of motivating program options. We can’t compete with the budgets by cutting services and competing on price. And if we’re going to compete with the micros we have to take a good hard look at our program options.

Review our existing offerings - where do our programs sit?

The popularity of micros show us that the demand is there for programming that offers unique, powerful and addictive experiences. Review your existing offering. Is it stimulating? Compelling? Attracting new members or merely servicing the dwindling faithful?

Be on the right side of Millennials 

Millennials represent a huge opportunity. The risk for the industry is that going to the gym is what their moms and dads do and is therefore perceived as uncool. This is the ‘jackass’ generation that grew up with adventure tourism, ultimate thrill rides and a highly-connected fast-paced world. They will not give up an hour of their time to come to our clubs to be bored by traditional, generic offerings. The challenge is to come up with high octane, time-sensitive programs in a hip environment that give them authentic experiences. They don’t want to whoop and wear leg warmers. Some of the exciting innovations on display at IHRSA catered to this gap in the market. High Intensity Interval Training – short, sharp bursts of full on physicality is hooking this age group in. The use of anytime, anywhere programs delivered digitally or virtually in clubs deals to demand for portability and convenience. Cutting edge studio and club designs are imperative if we want to be on the right side of Millennials’ highly tuned status radars. We’re also starting to see compelling evidence that if we want to speak to this group, we need to employ them.

Small Group Training. The opportunity is huge, but only if you execute it right.

Small Group Training has had mixed results in the traditional club model. The opportunity is huge. A less expensive option than personal training, small group training offers individual coaching and attention while harnessing the motivational power of working out in a group. It increases social bonds and as it has limited capacity members can be charged a small fee. The most successful clubs have a dedicated space for small group and more successfully, “team training” (groups of 10-15 people). Even small studios (1,000-1,200ft2/100m-120m2) are proving popular. Some clubs have simply removed a few treadmills from an otherwise dead space and glassed off a highly attractive and visible team training space. Flexibility is critical. Options for members to book and pay on the day, or with an increased monthly fee option are considerably more successful than clubs trying to sell 6-12 week courses. Les Mills has just released a series of three team training classes - the Les Mills GRIT™ Series , and our 30 minute core training class CXWorx can also be taught as a paid small group or team training program. These have been our fastest selling classes of all time.

We’d love to talk to you about the programs we create and deliver to 16,000 clubs across the planet that help meet these challenges.

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Top Takeaways

  • What do members want?
  • Run our facilities through an internal audit
  • Review our existing offerings – where do our programs sit?
  • Be on the right side of Millennials
  • Small Group Training. The opportunity is huge, but only if you execute it right.