Many cycling studios within multi-purpose clubs sit empty for 80% of opening hours. This not only has a detrimental effect on business return, but is a waste of expensive real estate. Clubs running just two to three cycle classes a day could be missing out on up to USD$190,000*a year in membership revenue.
In stark contrast, specialized cycling boutiques are growing fast. They earn more than twice as much per customer, generate thousands of attendances a week and are some of the most lucrative spaces in the industry. They generate excellent return on their real estate and capital investment.
Clients of boutiques spent between US$80 and $117 monthly in 2014, while traditional health club members spent $37 to $761. According to the 2015 IHRSA & CLUB INTEL report2, 42% of US club members are now using boutiques – that is twice the number of the 2014 report.
Despite their high cost, boutiques with a single activity are now the second most popular venue for fitness. People are moving away from traditional clubs, which are losing their market share quickly3.
How do you turn this threat into an opportunity?
You can win the game with a strategic approach:
- Refocus your efforts in your underperforming studios to get better performance from your facilities
- Step up your game in execution. Boutiques are winning because of the mediocrity in club. Marketing, programing and the whole fitness experience needs to be superior for consumers
- Provide a high quality mass market cycle experience – create a cycling club within your club
- Mix a great cycle offering with other high quality programmes to add more value to your membership and create a much broader market appeal – i.e. top trends such as Strength, HIIT, Mind Body and Core classes.
By building a club within your club for cycling, you increase the chance of attracting the biggest generation yet: millennials. This market is swarming to boutiques, and millennials are the perfect target market for a club within your club. These young consumers are the future of your business.
Success doesn’t happen by accident. Achieving optimal performance will take dedication, time, resources and expertise.
“You won’t beat them at their own game. The business model for multi-activity type of facilities needs to be focused and divergent from boutiques … and you’ll kill them in the mass market.”
– Gerry Salmon, strategic fitness consultant for Les Mills New Zealand
*Based upon a club with 3000 members increasing from 18 to 40 live classes a week and bringing class utilization up to 70%.