FITNESS CONSUMER OF TODAY: Driving Industry Change Like Never Before

Introduction In the roughly 30 years of the modern health club era, the mid-market club has reigned supreme. For consumers getting fit meant joining a traditional health club as a one-stop-shop where they got all of their fitness needs met. Sure they might also have some home exercise DVDs and run outdoors, but the central focus was always the health club.

The fitness consumer of today has changed. Health and wellness are no longer discretionary activities but rather a core part of their very identity. They wear yoga pants, running shoes and a Fitbit® everywhere they go as symbols of their active lifestyle. They no longer accept bland or boring experiences and are willing to pay for craft experiences which provide deeper benefits of community, high personalization and for some a cult-like sense of purpose and belonging. It’s not about losing weight or getting fit – it’s about connecting with a purpose and strengthening their sense of self.

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The Rise of the Fitness Studio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2It Begins and Ends with Trainers and Instructors . . . . . . . . . . . . . . . . . . . . . . . . . . 3A New Chapter for Indoor Cycling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4Indoor Cycling and Small Group Training . . . . . . . . . . . . . . . . . . . . . . . . 5Indoor Cycling and Hybrid Group Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . 6Indoor Cycling and Gamified Workouts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7We Are All Studios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Table of Contents

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1 The Top 100 Health Clubs of 2016, “Club Industry (2016). From http://clubindustry.com/2 IHRSA2015 education session “The Transformation of the Fitness Industry Through Technology.”

The Rise of the Fitness Studio The overwhelming majority of new club openings in larger markets (i.e. U.S., Germany, U.K., etc.) are either a “budget club” or a fitness studio, mimicking the trends of many other consumer service industries.1

Consumers are voting with their wallet on self-assisted experiences at a low cost as well as highly specialized experiences at premium prices. Institutional investors and franchisees have noticed and studios in particular are growing at an unbelievable pace. In fact, boutique fitness studios now make up 42% of the U.S. fitness market2.

But if you think that the future of the industry is just budget clubs and fitness studios, you’re mistaken. The better way of thinking about the market is as a continuum of convenience and personalization. Most consumers have low price elasticity for basic convenience offerings and high elasticity for personalized fitness experiences. For this reason, nearly every major gym organization we speak to is exploring how they too can become more studio-like.

This is the same reason most mainstream health clubs have such an obsessive focus on personal training. Consumers are willing to pay a significant premium for a personalized fitness experience. This is the underlying driver of small group training and premium group exercise offerings.

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It Begins and Ends with Trainers and Instructors At the core of the studio movement is the fitness professional. The classic studio story usually begins with a successful trainer at a big box gym who takes over a warehouse space down the street and fills it with old tractor tires, self-welded functional rigs, and used equipment off Craigslist. The ‘larger than life’ trainer is able to build their tribe and command incredible loyalty and member spend. The most popular example is of course CrossFit®, which now boasts over 13,000 open boxes globally3.

From the beginning of grit studios has also arisen glamour studios. They are heavily branded, located in desirable retail locations, are thoughtfully designed, and often feature their own mobile apps and branded apparel. Popular examples include SoulCycle®, Orangetheory® Fitness, and Pure Barre®. They are scalable and repeatable models which appeal to a broader set of demographics – particularly millennial women.

Regardless of format, the success of a studio concept begins and ends with the fitness professional. For as great as the equipment, layout, branding, and location may be – it is the trainer/instructor that makes or breaks the experience.

3 “CrossFit Is Breathing Life and Opportunity into Activewear for Investors,” Adam Lawrence,

Web site GURU Focus, October 17, 2016.

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A New Chapter for Indoor Cycling Indoor cycle bikes are an incredible tool which studios have embraced. Bikes have a small footprint, are easy to move, and offer an incredible high-intensity workout. This has led to a renaissance of indoor cycling, driven by three underlying megatrends (each discussed in greater detail later on):

1. Small group training combining high-intensity and functional training. CrossFit led this initial surge and many others have advanced it.

2. Hybrid group exercise driven by exercisers increasingly seeking unique and engaging formats and operators needing to compete with the emergence of fitness studio programming.

3. Gamified workouts powered by sensorized equipment and riders connected to a digital solution (i.e. leaderboard).

According to the 2016 IHRSA Equipment Report, indoor cycling bikes were the number one most used piece of

cardio with small group training.

14 | IHRSA Health Club Equipment Report ihrsa.org/research

EXECUTIVE SUMMARYUNITS IN OPERATIONAlthough treadmills are typically the most utilized piece of equipment among health club members, responding clubs

indicated operating more group cycling bikes than treadmills. Among strength units, dumbbells and selectorized

equipment were first and second in terms of strength units in operations. Exercise mats and resistance bands/tubing

lead the way for functional training units in operations.

STRENGTH UNITS IN OPERATION92

19.3

12.8

9.4

9.2

7.2

DUMBBELLS

SINGLE STATION SELECTORIZED RESISTANCE/STRENGTH MACHINES

BARBELLS

SINGLE STATION PLATE-LOADED STRENGTH

BENCHES FOR STRENGTH TRAINING AND ABDOMINAL WORK

OLYMPIC BARS/BARBELL BARS

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4.3

3.2

2.5

WEIGHT RACKS

PULL UP BARS/APPARATUS

MULTI STATION RESISTANCE/STRENGTH MACHINES

ABDOMINAL MACHINE/APPARATUS

CARDIO UNITS IN OPERATION15.4

11.5

5.7

4.5

3.8

GROUP CYCLING BIKES

TREADMILL

ELLIPTICAL MOTION TRAINER

UPRIGHT EXERCISE BIKES

RECUMBENT EXERCISE BIKES

ALTERNATIVE MOTION TRAINER

3.8

3.7

0.8

STAIR CLIMBER, STEP MILL, AND SIMILAR

ROWERS

UPPER BODY ERGOMETER

19.2

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Indoor Cycling and Small Group Training Small group training (SGT) is perhaps the hottest trend in the fitness industry. SGT is becoming a critical part of the overall training strategy for those who win with training. The best operators create a continuum of training options for members which spans from self-guided to one-on-one. As SGT fits squarely in the middle, it offers both broad appeal as well as delivering results. In a study from a leading fitness franchise, small group training was attributed as being the #1 retention driver, surpassing even 1:1 training4.

We’ve seen particular traction in programming which combines functional training solutions like Queenax™ and high-intensity cardio like Spinning®. In fact, according to the 2016 IHRSA Equipment Report, indoor cycling bikes were the number one most used piece of cardio with small group training5. According to data collected by the Fitness Industry Supplier Association (FISA), Indoor Cycling was the second largest category of product by unit volume and the fourth largest by revenue6.

4 Study conduct by Dr. Paul Bedford, RetentionGURU.5 “IHRSA Health Club Equipment Report: Spending, Utilization and Programming Trends,” page 50.

International Health, Racquet and Sportsclub Association, May 20166 FISA 2015 Report

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Indoor Cycling and Hybrid Group Exercise Studios have become the laboratory for group exercise content where there is a constant focus on trying new concepts and constantly improving a class format. Independent studios are usually at the bleeding edge of innovation – taking risks, failing fast, and learning quickly. They are usually trailed by studio chains and franchises and then traditional health clubs.

Our advice is to harness the power of the studio no matter what your size. Have the right tools in place -- functional training, indoor cycling bikes, racks, free weights, and accessories -- and then get out of the way and let your instructors and trainers shine. There is no one magic formula for facilities, so the ability to customize and modify is key.

In this sense, equipment becomes the ingredients and it is up to chef (the fitness professional) to create the recipe. From this approach has emerged an incredible variety of hybrid concepts combining everything from yoga to indoor cycling to functional training. Exercisers, especially those who bore easily, have responded well to the variety, excitement, and challenge of these hybrid formats.

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Indoor Cycling and Gamified Workouts The most discussed fitness facility over the past year has to be Orange Theory Fitness. After receiving an infusion of investment capital, their growth has ‘hockey sticked’ and will soon grow to over 1,000 doors7. What has driven their success is a winning formula of programming and their ability to transform their workout into a gamified experience.

Their workout is usually comprised of a treadmill, rower, and functional station. Each participant rotates through the three stations while their heart rate is being continuously captured. They coach to not only achieve key fat burning zones, but also toward recovery and balance of zones.

They don’t use indoor cycle bikes, choosing to use rowers instead, but are mentioned because of the success of the total experience, which is ultimately what matters. While exercisers are intrigued by heart-rate tracking and power measurement as technical features, they aren’t truly relevant until they are integrated into a total program. Solutions which enhance your instructor or trainer, versus compete or reduce them, should be the focus of your purchase decision.

7 “Join the fastest growing fitness franchise in the world!” (2016, October 25). Retrieved from

http://marketing.orangetheoryfitness.com/franchisees-2/

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We Are All Studios Studios are discussed in terms of square footage, which is a mistake. Studios have achieved success because they have a very specific focus. They choose to be great for a specific set of customers, versus average for a broader set of members. This obsessive focus is what allows them to execute and the results speak for themselves. Studios higher average net promoter score ratings, retention rates, and revenue per member versus most clubs8.

As an equipment supplier, we seek to provide you the right equipment, capabilities, and partnerships to enable your success. Ultimately however, it’s your fitness staff and facility that transform these tools and capabilities into exerciser value.

8 “Fitness and Health Industry Report for Listen360; Text Analysis of Net Promoter Score

Surveys,” page 3, Richard Thomas, EVP, July 2015.

Fitness and Health Industry Report for Listen360 | July 2015

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Fitness and Health Industry Segments

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0

20

40

60

80

100

High NPS

Low NPS

Avg. NPS

Range of Net Promoter Scores (NPS) Across Industries

*Our study focuses on the Fitness and Health Industry and the ten segments contributing to that overall industry. See the Methodology slide for more information. Comparative B2C Industry data is sourced from the “Temkin Group Q3 2014 Consumer Benchmark Survey.”

The Focus of this Study Comparative B2C Industries*

Average NPS is higher for Fitness & Health than for other B2C industries

NP

S

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About the Author Brian Kane leads marketing research efforts at Precor. His report represents a combination of industry research, in-depth conversations with operators and studio owners, as well as his own opinions.

The viewpoints expressed do not necessarily reflect those of Precor or the Spinning® brand.

Precor is a brand of Amer Sports Corporation. For more information please see www.amersports.com

© 2016 Precor Incorporated. The information contained within this ebook is correct at the time of printing.Precor reserves the right to make any changes without prior notice. 28. October 2016, 4:41 PM.

Precor, headquartered in Woodinville, WA, designs and manufactures premium end-to-end commercial and at-home fitness solutions. Since 1980, Precor has been a pioneer in creating innovative fitness solutions for customers, including the EFX® Elliptical, Adaptive Motion Trainer® AMT® and Preva® Networked Fitness. Precor is part of Amer Sports Corporation, one of the world’s largest sports equipment companies, with internationally recognized sister brands that include Wilson, Atomic, Suunto, Salomon, Arc’teryx and Mavic.

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