This week Matt and Rick discuss the health and fate of brick and mortar fitness business models. With the meteoric rise of digital streaming fitness services during the COVID pandemic, it is certainly a relevant question for fitness operators/investors. The big question Is the brick and mortar fitness business going to come back after the crisis and what are fitness businesses going to look like?  Check it out!

The explosion in popularity of digital fitness streaming services poses a significant challenge to brick and mortar fitness business models. Aided by AI, digital fitness is becoming more and more intuitive and appealing to a broader spectrum of people.

Even with the meteoric rise of digital streaming fitness services, Rick and Matt believe that the brick and mortar fitness model is not dead. The secret is there are two distinct fitness “avatar” markets; the younger customer avatar and the active aging population avatar.

A recent article discusses who is the streaming fitness consumer and came up with the assumption that 20% of the population that is streaming fitness right now were already into fitness.  That 20% of the population that already works out and are relatively fit have been consuming digital streaming fitness since COVID-19. The article also found that there is a division based on age brackets. There is the population over 40 years old practicing fitness and participating in online streaming fitness options.  Then over 80% are in the age bracket under 40. So double the amount of people are consuming digital streaming in a younger population than are in an older population.

Which customer of these two different populations should you be paying attention to coming out of COVID. As you examine the two different populations and the way they view technology, people over 40 are “technological immigrants”, meaning that they learned digital technology later in life.  Whereas the younger population are “technical natives” where they grew up with technology from the time they were born. Now it is not necessarily having technical proficiency, like how to use a computer or how to integrate the technology, but it is the perception of how do you view technology in your life?

Now when we look at the need to interact with the community in person and how it relates to technology, we see a real difference in the age groups. The population that’s 40 and older never mistook online technology for a replacement of community, it was just a tool to keep up with friends or whatever. Whereas the younger population grew up with technology and see some community in social media.  They feel like they were part of this extended community, when in fact, they were really never leaving their basement.  Not really knowing those people in person doesn’t matter. So which crowd do you think is going to be more disrupted as a customer base by digital streaming. It’s going to be the ones who can replace the in person with a digital streaming community, and they actually see it as real community. For the fitness industry, this younger technology savvy population is going to be more disruptive than a brand. It will be harder to get those folks back into a gym, because they are getting their exercise community digitally. Also, don’t assume that all those over 40 will come back into the brick and mortar fitness business as you will have to work hard to get them back in the gym. Now if you look at some of the digital fitness options like Peloton or the Mirror, they are not cheap.  So these digital offerings are going after that older active aging population.

Don’t expect the customers to come running back unless you build that community they want to come back to for guidance and the most important thing that brick and mortar businesses offer – accountability.  Because we are viewed as an expert in the client’s health and fitness, we are the health and fitness advisor in their lives guiding them on how to use fitness mechanisms and brands to achieve their success. For example, if you sit all day at work, and you’ve got some back issues from excessive sitting, then we can help advise on how to solve their issue with something very specific to them. That’s the fitness community where we are involved with the client with our guidance, accountability and technology.

What about accountability and AI in fitness?  There was a Google study by a behavioral ethicist which had people interacting with two different individuals, but one of the two people was artificial intelligence. So at the end of the study, 70% of the people preferred the AI interaction. ? The AI interaction made them feel better, and knew what to say, it could tell their mood AI did a better job of communicating personally. In a follow up study, they revealed the 2 people as a real person and an AI person resulting in over 50% of the people still preferred the interaction with the artificial intelligence than they did with the person. So in the future AI is going to get more advanced.  Then as an organizational leader and having an organizational culture you are going to need to be flexible, easily adopt change and look for opportunities with technology.

What’s going to happen in 2021?

  • Look for your competitive advantages.
  • Don’t mistake digital community for real community. Make sure that you are creating a nice community for folks.

Coming out of the COVID crisis, the success of the brick and mortar fitness business will largely depend on your customer avatar and how well you manage to convince them to come back to the gym. One strength that brick and mortar studios have is the human accountability and the community factors, which we believe will work in our favor.

Tune in to this episode and learn how the brick and mortar fitness model can adapt to change and market around our competitive advantages to survive.

Key Takeaways

  • The interesting numbers and age spectrum of people consuming digital fitness (01:28)
  • Understanding the fitness market and the different customer avatars (03:35)
  • How digital streaming is disrupting the fitness industry (04:36)
  • Why human accountability will be a significant factor in bringing people back to the gym (09:15)
  • How we can adapt to tech change and move forward with it (16:10)
  • Creating a nice community experience for your gym members (19:58)

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Mentioned in this episode

Matt Helland

Rick Mayo 

Alloy Personal Training Franchise




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