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Out of Chaos Comes Opportunity


The classic definition of chaos is complete disorder and confusion. Much of what most of you are feeling in the industry today is a reflection of the chaotic state of the industry at the moment. Even the financial gurus of our industry, such as Rick Caro, declared 2009 as the worst year in modern fitness history when it comes to financial aspects.

Chaos is direct result of rapid change without a set direction. The industry is definitely suffering from this disease at the moment as illustrated by these examples:

     The chains such as Goldís trying everything from $9 memberships to full service $59 clubs.

     The equipment guys still trying to sell fixed equipment to an emerging functional industry.

     There is a lack of leadership in the industry on the business side as the old heroes, such as Tony DeLeede or Mike Chaet, fade and arenít being replaced.

     The emergence of a new breed of rock star, such as Todd Durkin, Gray Cook, Alwyn Cosgrove and Mike Boyle, who are driving change in the industry from the trainer up instead of from the owner down.

     The silliness of over a dozen new franchises emerging based upon a $9 model, all too late to the dance and all of who have missed the low point window, which is fading faster than I can write this article.

     One hit wonders, such as Zumba, that will be here today but quickly replaced by their many imitators. We look at these as saviors but a dance step or piece of equipment isnít going to save a dying concept.

     The end of the circuit club concept. Look at the loss in Curves in units and every other circuit club chain.

My business definition of chaos is that you reach a point where you suffer from information overload. In other words, it seems that change is happening faster in the industry than the average owner can adapt to in their business. Where do seek shelter when everything in the industry is nothing but a raging storm?

The thing to remember is that when chaos occurs, it creates ruin for many but opportunity for those who are ready. For example, Virgin Record stores close but Itunes emerges. Ipads rule but end the life of a typical desktop computer and most laptops and Blockbuster closes hundreds of stores but Netflix flies high and many new trainers opening businesses find homes in the old Blockbuster locations. Chaos for some is opportunity for others.

Here are five trends reflecting this chaos and what they mean to us in the industry:

The low priced guys have create a panic in the mainstream clubs

Those that get caught up in the panic overreact and match prices causing many to fail or to compete on low-end volume. On the other hand, opportunity exists for any club who wants to finally master the training aspect of the business. For the first time ever, we are forced to get results for our members since we now realize that they are not replaceable due to the cannibals eating the cannibals in the $9 category. There are, and always will be, a class of members that will pay a little extra not to wait for an hour to get in line for a beat to shit treadmill and there will always be a class of member that will pay a reasonable cost to get some help, have a clean club, have access to current equipment, such as kettle bells, and who couldnít give a flying donkey shit that your membership is $19 or $39 versus the low-priced guy down the street.

The opportunity for us is retention and a new source of revenue from training, something only apparent due to the chaos caused by the cheap players.

The failure of the big box club

            The big box club based upon an endless membership stream, but in reality doing nothing more than renting equipment, has been hit hard and is staggering in the corner. Some boxes will be reinvented as large training driven facilities but most will simply lower the price and fight it out at the bottom. Sadly, many box operators will fail in the next few years as they are forced to the floor quicker adversaries. Remember again, it is not the big that eat the little, it is the fast that eat the slow, that counts in business and the box operators, such as most chains, are just too slow to change from a membership model to a training centric model.

Their failure opens the door to the emergence of the small training based facility in the 3000-7500 square foot class. Anytime is a perfect example of this new class and the owners of the franchise are showing real leadership in that they are letting the franchise evolve per Howard Shultz and Starbucks.

The essence of the small facility is that you can make the same money in 6000 square feet that a typical Goldís makes annually in 25,000 in most markets with only 300 members. We have a number of units now that generate a million or more in only 6000 feet. Why canít the chains just infuse this concept into their boxes? Good question that we can ask the last guy standing. It is not just the size that is killing the big box, it is the business concept based upon an endless supply of new members to replace lost or burned up members.

The chaos here is that the big boxes are struggling for an identity with the consumer while the small guys are winning the neighborhood war and the war of leads and sales since they are dependent on generating about 25 new sales a month rather than 250 a box might need.

The pressure on society of the obese consumer

            Few clubs seek these folks and even fewer trainers know what to do with them. The chaos occurs in that we are still looking for the traditional sort of in-shape member and ignoring this growing (pun intended) segment of potential member. Trainers and mainstream owners who can master this group and make them feel at home in your facility will make a lot of money from this group in the coming years. And there is a valid case for someone becoming the next guru of obesity in the industry. Look at these statistics I generated on the web.

Over the past decade, obesity has become recognized as a national health threat and a major public health challenge. In 2007--2008, based on measured weights and heights approximately 72.5 million adults in the United States were obese (CDC, unpublished data, 2010). Obese adults are at increased risk for many serious health conditions, including coronary heart disease, hypertension, stroke, type 2 diabetes, certain types of cancer, and premature death. Adult obesity also is associated with reduced quality of life, social stigmatization, and discrimination. From 1987 to 2001, diseases associated with obesity accounted for 27% of the increases in U.S. medical costs. For 2006, medical costs associated with obesity were estimated at as much as $147 billion (2008 dollars); among all payers, obese persons had estimated medical costs that were $1,429 higher than persons of normal weight. In 2001, the Surgeon General called for strong public health action to prevent and decrease overweight and obesity.

We cry and sob as a nation about these numbers but how many owners or trainers are rushing to dominate this emerging field. It seems that television and the Biggest Loser does a better job motivating this group then we do as an industry because while we talk a good game about changing the world most clubs donít do a hell of a lot but sell memberships and replace those they run out the door.

The aging population and their need to be forever young

            Between January 1-December 31, 2011, over 7000 people a day will turn 65 years old. That is 7000 a day, not just a month or a year but in a single day. Here is an article derived from the web that best illustrates this open field:

 

MIAMI, May 28, 2010 (McClatchy-Tribune News Service delivered by Newstex) -- The sky is the color of freshly brewed coffee when Liliana Retelny slips her 27-foot shell into the still waters of Miami Beach's Indian Creek and begins her daily three-hour routine. She rows. She rows as the rising sun stains the clouds, as students practice with their crew teams, as the sounds of a waking city begin to fill the air.

Retelny, 47, is practicing to compete against rowers two decades her junior.

 

The Aventura, Fla., psychotherapist already has won two silver medals in the Central American Games, placed 20th in World Cup competition and second in her division in Israel's Maccabiah Games. All this in a sport she took up only four years ago, when her daughter was rowing for her high school team.

"I love it," said Retelny, who competes under her maiden name, Boruchowicz. "For me this is not work. It is not a matter of discipline. When I'm on the water, I'm the happiest. I feel alive and young."



 

The Costa Rica native is part of a growing cadre of baby boomers who seek the proverbial fountain of youth in swimming pools, on running tracks and in the gym. Many have taken up sports _ even extreme sports _ in mid-life, pursuing fitness not only to look good but to feel good.

"Boomers have always appreciated being physically fit, and they're not about to let go of that active lifestyle,"says Kara Thompson, spokeswoman for the International Health, Racquet and Sports Club Association (IHRSA). "They want to stay healthy. They exercise because it makes them feel better."

 

Again, who is going to emerge as the leader of this group? Chaos appears in the form of an aging population willing to pay almost anything to stay young but as of yet there are no rising stars that are becoming industry symbols of what it takes to drive this market. And yet again, we talk a good game but what percentage of most clubs are really over 55 and being serviced? Even the functional gurus are late to this game and havenít yet discovered this niche. Fitness after 50 is a business plan within itself and we can turn it into a vital method of driving business in the industry in the coming decade and there lies the opportunity.

 

The death of sacred cows

            Sacred cows are sacred cows and are so sacred we canít talk about them in public. We seldom talk about the cows at trade shows, articles donít appear in the magazines and speakers donít speak of this almost endless list of bad habits and ancient technology.  Take a look at this list of common things in the industry from 1995 and see if you can spot the cows:

     Circuit training

     Crunches

     Long, slow cardio for weight loss

     One-on-one training

     Packages and sessions for training revenue

     Low fat, high carb diets

     Traditional group exercise (aerobics)

Where is the cow? The surprise is that everything on this list from 1995 has proven to be false or has failed in the industry.

Circuit training is what trainers do to people without enough money to buy elite training. If we canít figure out how to service the client, put him on a circuit and let him go in a circle for six weeks or so and then he stops coming because he has hit a plateau. And most importantly, the clients are now smart enough to hate this training and find it extremely boring. Even Jillian Michaels knows circuits are boring and stupid.  In the era of equipment as the service portion of the club, circuits ruled because equipment was what we sold. Now, circuits are a failure and are what you do in your club because you donít know what you are doing.

Crunches are the sure way to trash your lower back. Just ask Stuart McGill, the premier back expert in training in the world.

Watching Oprah for an hour while walking at 3 miles an hour may be relaxing but it wonít do anything for a fat butt except make it fatter. And has anyone really walked up to you in the club and exclaimed, "I want the body like the woman on treadmill four, the one walking slowly hanging on to the handles. I always wanted to look like a slowly rotting pear.Ē

One-on-one is the least cost efficient method to train someone. It is too elite, too expensive and too restrictive for a business plan. If your training revenue is less than 20% of you net membership receivable base, you are not a training facility, you are a very vulnerable box mainstream club.

Packages and sessions are out; training offered at various price levels determined by the amount of people sharing the cost of the trainer is in. Why can Crossfit get $150 a month for people doing group person training and clubs canít figure it out yet?

The high carb thing just keeps going on even though books such as, Good Calorie, Bad Calorie by Gary Taubes keep citing the complete lack of research that supports this theory.

Even group exercise might be on the rope. There are two issues here that will determine the outcome of group (not cycling, which still has room to grow). First of all, it seems that all the young women that used to enter the industry to teach group are now becoming trainers instead and are not interested in group exercise. Secondly, group itself is evolving into nothing more than functional training and therefore it should be something we charge more for and hand over to trainers. If group wants to stay a part of the fitness scene, it needs to rapidly evolve and appeal to a younger generation of members who find it an, "old personís workout.Ē

Killing sacred cows is the only way to generate change. If you want to improve your life, create chaos for yourself. There is no growth without a motivating factor for most people. We are in an era of complete chaos in this industry: perhaps the perfect storm of failing clubs, changing technology and evolving members. There will be vast failures in the industry during the next few years, but out of that chaos there will be huge success for those who can capitalize on the changing conditions, as they exist.

Side Note: I am doing this as a one-hour keynote this year for Perform Better at their Summits. I will be in Chicago in two weeks and in Long Beach in August. Owners and operators and their senior teams should make it a point to attend one of these events this year. There is no better format to see the best in the world in training and fitness education. I will also do a version of this at the ACE Symposium this fall, another vital source of everything education in the fitness world and it too should be attended by owners and managers and not just their trainers.

Comments
Tambi Carrington 3 years ago
Poor Comment Good Comment
Thanks for the many thoughts. Here in California we are HAPPY COWs and I am ready to take the clients form all the scared cows! I couldn't agree with you more. we are targeting Seniors and Obese beginners through group personal training.
Frank Kole 3 years ago
Poor Comment Good Comment
We have been fousced on the beginner crowd and treat everyone who comes throught the door for a tour is a beginner these days. there is so much to lear and to teach our cliets today and they are excepting to be teached. And the boomers we have a large amount of them and they all take one on one training. They are all in my group classes. Probaly the hardest working out group I have seen in years. The fitness business once again is fun. Last time I think I had this much fun like this helping people was in the 80s when i started.
Thomas Plummer 3 years ago
Poor Comment Good Comment
Frank, I knew you in the 80's and I doubt you can remember anything but a haze. I think you are confusing memories with flashbacks. Be thankful you have Robyn to take care of you.Thom
Frank Kole 3 years ago
Poor Comment Good Comment
Lol! We make a great team! and yes thank god i have her!
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