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We’re taking a look at some key trends that are shaping the future of leisure. This article will examine how the adoption of emerging technologies will impact customers and centre operators, and the ways traditional revenue models are evolving to reflect shifting customer priorities. Is there something we’ve missed? Let us know in the comments below.
Disruptive technologies on the way
Brian Gagne, CEO at Les Mills, warns that disruptive technologies like virtual exercise, fitness apps and online communities provide many more options for the millennial consumer - many of which are free. Millennials are early adopters, seek variety and value things that are cool, smart and experiential. He argues that immersive workouts are the future:
“Immersive workouts are one key to retaining members today, and as Generation X becomes a greater force, being innovative will become even more important”.
Immersive experiences create a visual sense of purpose to workouts, and help participants increase intensity of workouts without noticing how hard they’re pushing themselves. Aaron Stanton, founder and director of the VR Institute of Health and Exercise, agrees:
It’s quite possible that at some point VR systems will be one of the most used pieces of exercise equipment people can buy without realising it. It’s like the Trojan horse of exercise”.
Part of the reason for the slower adoption of VR may stem from expensive headsets and physical wiring that can sometimes hinder participants during high-intensity exercise - but brands across the world are running pilot schemes very successfully.
Wearable technology has brought gamification of exercise to the masses with consumer-friendly pricing and is proven to drive the behaviour of gym members who don’t like to work out. Leading market intelligence firm, the International Data Corporation (IDC), predicted in June 2017 that the worldwide wearables market will nearly double by 2021. Myzone CEO Emmett Williams says we’re still in the early stages of adoption, but true disruption will occur when the proliferation of data from wristbands, smart watches and more converges with other technologies. Imagine a virtual assistant - Alexa for instance - suggesting you haven’t hit your activity target for the day, and mentioning to you that an old school friend on Facebook is booked in for a spin class this evening - would you like to book in now? The challenge for clubs will be using all this data, turning data output into an action plans for individual members, instead of just presenting the data itself.
This might sound far-off, but it’s not just big brands experimenting with AI-enabled chatbots to allow class booking through Facebook Messenger and other channels. Many of the questions brands are asked online will be able to be categorised and standardised, and bots will simulate human interaction with customers across social media platforms to engage with prospective members where they are. Other exciting technologies being explored include facial recognition to cut down waiting times by automating check-in, already being trialled by Active Wellness. If facial recognition is quick and secure enough for use in UK and US airports to automate passport control, then why not consider it? Mike Rucker, VP of Technology at Active Wellness predicts the days of the membership card are numbered: “
In five years you’re going to completely eliminate the need for check-in cards or RFID, but I think you’ll see a majority of the clubs finally adopting some sort of RFID on the phone or some sort of facial recognition.“
By way of contrast, although we at Gladstone are excited to be trialling facial recognition technologies, we’re not so sure about the five-year prediction for the death of the membership card. RFID through mobile devices creates problems for operators with significant wet facilities, and current biometric hardware is prohibitively expensive - think about having to put readers into every door, locker, running machine or POS system.
Further reading: Is the membership card doomed?
However, with further advances in wearable, proximity, RFID, NFC and Bluetooth technology happening all the time, huge corporations like Disney have been heavily investing in this type of tech. Dubbing them ‘Magic Bands’, it’s genuinely exciting to see what’s possible with a wristband, RFID readers, location beacons and smart software. Imagine driving up to your gym, having an ANPR reader read your numberplate and open the barrier for you, flagging your arrival at reception so the welcome team can greet you by name when you walk in, swiping your mobile phone with an RFID sticker through the barrier, and slipping on a wristband to gain access to the changing rooms, use the lockers, sign in to different machines to track your workouts, and then buy yourself a drink afterwards - all with the same wristband? What could we do with that sort of data? What new applications and services could we develop with all this live information at our fingertips? What are the next level of usage reports we could deliver?View Gladstone customer journey case study video
Amazon Go’s concept supermarket in Seattle has pioneered a “Just Walk Out” vision, equipped with thousands of sensors, where customers enter, take what they want, and leave, and facial recognition is used to charge your purchases to your Amazon account. Would a similar concept work in the leisure industry? Customers could enter a facility and only be charged for the time they spend accessing each activity. Would memberships even be required? We are already thinking about the answers to these questions at Gladstone.
New and varied revenue models
ClassPass, FitReserve, PayAsYouGym and more are popularising a pay-for-what-you-consume model with a generation of gym-goers who are used to, and beginning to demand, a customised workout experience, delivered using the latest technology, without major financial commitments to a specific location. This drop-in model is disruptive to operators used to regular recurring revenue streams of traditional membership, and some are beginning to offer a 3-visit pass, or a 10-visit pass. Taking this idea even further, a new app has been launched - POP!N - based on a per-per-minute model.
Other health clubs are turning to a program-based model, whereby a customer buys a set of sessions tailored around a specific condition, problem or exercise. Whilst this is new to many commercial operators, in the public sector, program-based product offerings are commonplace. Pushing even further, the idea of virtual memberships is also beginning to take hold, with Lululemon and Reebok physical stores offering content through apps and websites, whilst Peloton, a platform to live-stream cycling classes, has had much success of late, at a $39/mo price point. Dynamic pricing is also expected to reach individual class bookings in the same way that pricing for hotels and flights fluctuates with demand. In the UK, these innovations may help push the private sector penetration rate above 10% for the first time.
Group exercise classes are widely recognised as one of the key engagement and revenue drivers within a club, and there are differing opinions on their future. Virtual group exercise is on the rise, in the form of streaming and on-demand workouts. La Shaun Dale, VP of content and programming at 24 Hour Fitness, expects the uptake to be sustainable.
“Digital fitness experiences are growing rapidly, and how they are consumed will continue to evolve and diversify. We can expect digital fitness group classes to be programmed alongside live programming and for clubs to use digital programming to fill in the gaps on the schedule, offer programming where they may not yet have live talent or expertise, and to fill programming in off-peak times that may not warrant a live instructor”.
This suggests a level of innovation which is sustainable: filling gaps in existing provision without detracting from current offerings in the marketplace.
The role of the personal trainer is changing
In more and more gyms - particularly those branded as “health clubs” - it is increasingly common for fitness professionals to take on many of the roles medical staff might have previously undertaken in outpatient care and rehabilitation, as discharge times are falling rapidly across Europe and North America. This means that for those looking to upskill, fitness professionals can set themselves apart in an increasingly competitive environment by fulfilling a variety of more specialist functions, like health coach and nutritionist. However, industry voices are in broad agreement that centre operators are unlikely demand degree-level education from their personal trainers anytime soon - simply because the increased costs associated with hiring more qualified staff would have to be passed to customers.
Kevin Steele, President of PTA Global, says
“Prevention is no longer ‘important’, but critical in today’s society. We in the fitness industry have the tangible assets to provide a key component of healthcare, and, to a certain extent, disease management.”
Picking up on the preventative idea, Gladstone-birthed startup, Impact, is already seeing great success with outcome-based memberships, and is working closely with the National Health Service and operators to deliver innovative health intervention programmes across the United Kingdom. They are tailored around each end-user to help with weight loss, or smoking cessation, stress alleviation or improved sleep, and are delivered at no cost to the end-user. The course providers use a highly bespoke suite of Gladstone software in order to deliver rich data back to the clinical commissioners, and can provide funding sources with detailed reports outlining return-on-investment down to each end-user, each week.Gladstone powered by iMPACT video case study; Health
However, whilst this might give local leisure operators the benefit of publicly-funded members coming into their facilities - and let’s not forget that the first and biggest hurdle in acquiring new members is getting prospective interested customers across the threshold - they generally are only funded for short-term periods of up to 12 weeks.
From an altruistic public health perspective, these courses are fantastic, and the rich data that connected leisure provides can go a very long way towards proving ROI in an easy-to-understand manner such that the funding is much easier to secure.
From a commercial angle, though, the leisure provider isn’t paid to do anything after the 12 week course, and currently there’s a lot of scope for improved marketing and sales to drive adoption once the course has finished, not least because questions remain about whether the health programmes do enough long-term. 12 weeks is certainly enough to form new habits and get into a much healthier routine, but ongoing support afterwards could be very helpful.
Further reading: What can leisure operators learn from hotel chains?
In the future we see the outcome-based membership as something more operators will look at offering. Much like the hugely successful “Couch to 5K” concept - consistently one of the most-downloaded health apps in the UK - gyms could offer memberships tailored around clients looking to run their first marathon/10K/5K, or an intensive weight-loss course before a wedding, or those looking simply to get fit without knowing where to start by offering a six-week course to demystify the gym for new members, building in the cost of personal trainers and widening the scope of the traditional induction.
So what does this shift mean for centre operators? Well, health clubs and personal trainers need to be ready to offer clients more than cut-and-paste exercise programmes: they need to be able to deliver specialist, tailored programmes for different sections of their membership. Mike Gelfgot, franchisee owner of several Anytime Fitness clubs in Ohio, agrees with this diagnosis.
“Short-term educational programs are the way to attract new members today and into the future. Your ability to communicate and inspire someone now matters more than ever. If you don’t have anything science-driven, program-driven to produce results and enhance experiences, you’re done. You’ll get eaten up.”
Club operators must know their members - and their local community - and ensure their programmes (and marketing) are targeted to their specific interests.
Marisa Hoff, general manager at Stevenson Fitness, agrees:
“First and foremost, you need to know who your target market is. Even in the eight years we’ve been in business, our market has changed dramatically. Our demographics are getting older. There was a time when high-intensity stuff was huge, our kickboxing classes were huge. But as our members are starting to get older, they want the great workout - but they don’t want the high impact.”
This could be as simple as reaching out to a local cycling club and offering post-race massages, or you could offer a small group for older members working on fall prevention. One-on-one training and large group training will continue to be bedrock foundations of the leisure industry, but small group training offers a unique community connection that multiple generations crave.
A new threat?
Thomas Plummer, founder of of the National Fitness Business Alliance, warns that health club owners need to face reality: change is happening, and those who fail to respond risk extinction. He references a major shift in fitness since about 2010 - namely the opening of training gyms. They were priced high, and drained mid-market operators of their most profitable clients, or those who paid for personal training. These facilities are experiencing the highest growth rate currently across the entire sector, and Thomas argues that this has split the industry in two.
"You either go low and fight for the bottom,
or you go high and chase a higher-return-per-member
served. There is no middle left”.
His advice? Room exists at the top. Mainstream brands who want to move away from a training penetration of less than 6% (the US average) could look at moving towards a figure closer to 40%. Add value and service to your memberships in a flexible manner and you have a chance to create a lot of revenue and stand out as an alternative to the cheap players.
The UK market, especially the private sector, has seen a lot of growth: 88% of the newly opened gyms in the United Kingdom have been private, with an average fee 36% higher than their public sector counterparts. 2018-19 is predicted to be the year that private sector penetration rises above 10%, after hovering around 9.7% The takeaway point here is that by adding value and service to your memberships in a flexible manner, you have a chance to create a lot of revenue and stand out as an alternative to the cheap players.