Fitness Clubs May Just Be the Next Taxi Companies
Fitness clubs like those on the following list are on notice that digital disruption cometh their way. And, it’s coming faster than they may be able to react and adapt.
- Equinox ($1B+)
- Lifetime Fitness ($1B+)
- 24 Hour Fitness ($1B+)
- Planet Fitness ($200M+)
- XSport Fitness ($180M+)
That is a lot of revenue!
Yes! These fitness clubs run the risk of being disrupted just like Taxi Companies were in this, the digital era.
You see there is this phenomenon now fondly referred to as the Uber Effect. Taxi Companies sat on the sidelines, first not believing a crazy business idea powered by software could challenge their domain. Then secondarily, not just challenge, but totally turn their industry on its head. Frozen, paralyzed and unable to quickly react, they just sat with a front row seat to the destruction that the proverbial wrecking ball brought to their way of life and dominating control that had of door to door transportation.
Uber created a whole new way for consumers to get from point A to point B, and do so more cost effectively. The Uber Effect disrupted not just the Taxi industry, but it created a whole new sector within an old and less than innovative sector. Say “I” if you have gotten into the back seat of one of those old, rickety yellow cabs with no room for you, much less your knees!
Today, Uber still takes market share from Taxi Companies and followers like Lyft have entered the fray, bringing even more choice for the consumer. The Uber Effect may not end at Taxis. There is great likelihood that auto manufacturers will feel the Uber disruption in coming years too as the next generations opt for ride sharing and shared vehicle ownership verses personal vehicle purchases.
This same level of disruption is happening to Fitness Clubs. You may have noticed prices dropping at the traditional fitness clubs and thought that the price wars were simply about shifting share from club to club. Partially, but not entirely true.
If you work out a few times a week, you may also be hearing the stories of people defecting from your fitness club to studio clubs like:
- CrossFit
- Soul Cycle
- UFC Fit
- Yoga
- And, even KoKoFit
These single studio, small format clubs are becoming all the rage. Like all things routine, people are growing bored of treadmills, stairclimbers, weights and spin classes. They are leaving the routine of fitness clubs to join like minded coeds in studio format workouts. They are finding new ways to get from point A to point B.
To further complicate matters, the millennials are demographically becoming the target market for the fitness club dollars.
So, now couple the fitness club price wars and the millennials coming of age, with the single studio workouts and you have the conditions for industry disruption. But, not just regular disruption. Like all things in the digital era, all industries run the risk today of digital disruption.
ClassPass may just be leading the Uber Effect of the Fitness Club industry. With a $60M revenue run rate and entering 5 new markets a month, ClassPass is on pace to be on a $120-$150M revenue run rate by the end of 2015.
ClassPass is a subscription based studio focused business model. ClassPass has built a highly responsive software platform that powers the business model and works as elegantly on a mobile phone as it does in a web browser. Not only can your reserve your workouts via your their platform, but you can also track your workouts through the same application. All done with that powerful device that seems to never leave your side – your mobile phone.
In the markets they enter, ClassPass members get unlimited access to studio based fitness classes. As their website says, “One Pass. Unlimited Classes. ClassPass gets you into the best studios in your city.”
Unlike Uber, ClassPass does not own the end-to-end experience. But that doesn’t matter to still realize the Uber Effect. ClassPass is a mass marketplace for the small studio providers and the purveyor of great choice and quality of studio workouts to their subscribers. Unlimited studio workouts, for one fee.
I am sure the fitness clubs, like those listed above, are primarily focused on taking share from the other fitness clubs, and thinking there is no way ClassPass will last, nor challenge them. That’s exactly what the taxi companies thought about Uber and now over 50% of their drivers are no longer driving taxis, they are driving their own cars for Uber and Lyft.
Fitness Clubs Digital Disruption Is Next! How will traditional clubs compete with the Uber Effect? How will they compete in the digital era?
I don’t know for sure, but I know digital disruption cometh their way!