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The last 10 years in the fitness industry have been marked by a strong shift from large big box gyms e.g. Equinox, 24 Hour Fitness or Holmes Place to boutique studio concepts such as Soulcycle, Barry's Bootcamp, or F45 in which the coach is the main ‘value creator’.
Clients started to come in because they felt a strong bond with a particular instructor, who is responsible for delivering a unique workout experience.
The success of a boutique studio is highly dependent on the quality of its coaches. Nonetheless, coaches still only earn $20-45/h or have to share up to 80% of revenues with the studio. This mismatch between the created value by the coach and their salary resulted in an increasing amount of dissatisfied coaches. They started realizing the change in customer behavior and a growing followership for their personal brands. The start of Covid accelerated this trend and instructors simply started hosting their own on- and offline classes from their living rooms or outdoors. They no longer needed the studios to run their business and finally started getting fairly compensated for their work, which could easily result in hourly wages of $100-150.
DIFG, the German fitness association, expects that the number of studio members will decrease by 10% over the course of 2021. Thanks to the subscription business model, gyms and studio operators are still able to pay their fixed costs. However, they cannot build up reserves to compensate for the months they had to close. The problem is not the lack of liquidity, but the risk of a debt overload, which will particularly hit the small studios. DIFG calculated that the compensation damage and the lack of new registrations results in damages of €480 million per month in Germany alone. January and February are historically the strongest months for gym operators (approximately 60% more sales), as ‘exercising more’ is one of the most common resolutions. But this year, they are missing out on the largest opportunity of the year. In comparison, worldwide gym industry revenues topped $96.7 billion in 2019, with 184 million members globally belonging to 210,000 health clubs. At the same time, the global wellness institute found that the entire wellness industry is growing at a historic rate of 5-6% p.a. and is estimated to hit USD 5 trillion this year. The online/virtual fitness market was at USD 6 billion in 2019 and it will grow by 33% p.a. to 60 billion USD till 2027. The New Consumer and Coefficient Capital surveyed 3,500 Americans and found that 76% of people switched to exercising more at home during Covid-19 - and 66% prefer it. Among millennials, the number is even higher: 82% made the switch and 81% like it more.
The combination of closed gyms and studios, together with an increasing demand for wellness services, will have broad implications, not just for gyms but for millions of fitness and yoga instructors, many of whom were laid off during the lockdowns. The hunger for fitness must be matched with alternative offerings and many instructors used the pandemic as an opportunity to build their own business. The online broker TD Ameritrade found that 59% of Americans say they don’t plan on renewing their gym memberships once the pandemic is over. These numbers should be a warning to an industry that employs 3 million trainers in the US alone.
We currently see the biggest disruption in the 'wellbeing industry' since decades and we believe that the main drivers of this market shift are the individual coaches. Therefore, we equip them with the right tools, so they can build a relationship with their members, both on- and offline. With zezam they are able to strike out on their own and provide the same seamless user experience to their clients as the big players. Based on our analysis, we expect three main trends for the years to come:
1) Local communities center around the best coaches
With the start of the pandemic, many coaches shifted their offline studio communities to their own channels and continued building stronger relationships with them. You can now train from home or outside in the park with your favorite community and instructor. The value proposition of a studio became less appealing and clients started training with their favorite coaches whenever and wherever they wanted, without signing a 2-year contract and paying a monthly fee. The direct relationships between instructors and clients will strengthen and the best coaches will capitalize on this shift.
2) Wellness will be hybrid
Clients are asking for maximum flexibility and want to train at any time, anywhere. They will demand to switch between livestreams, on-demand training plans and in-person workouts by their favorite instructors depending on their schedule. We expect a huge increase in outdoor workouts from spring through fall. Live streams continue throughout the year but peak during winter and less popular times e.g. 6-7 am, 12-2 pm and after 8 pm, when clients want to enjoy the convenience of training from home or their office. We have already seen a sharp drop in live streams during summer 2020 after the first lockdown. On-demand will be strong throughout the year and an addition to the in-person workouts when training alone.
3) Wellness will be multidimensional
Wellness is about more than just physical health, it is linked to a holistic health comprising physical-, mental-, spiritual- and emotional wellbeing. Body and mind concepts will be incorporated into one workout and a preventive lifestyle will substitute for the healthcare checkups by the doctor. With physical health and safety threatened during the pandemic, time spent in isolation has forced a reset to consumers’ priorities. Values, habits, and norms that shape what we consume and how we consume could shift dramatically.
Zezam democratizes access to entrepreneurship for body and mind coaches by making it easier for them to start, run, and grow an omnichannel business. A single, simple to use back office lets them manage and scale their community through one app - it's fully integrated and powering all revenue streams.
Zezam is building the Shopify for all body & mind coaches. Their management software allows freelance coaches to set up a website and app profile in 5-10 minutes on which they can present all their coaching services, such as private training, courses, workshops and even retreats. Users can now follow their favorite coaches on all channels and train in person, through live stream or on-demand with video training plans. The communication between the coach and user is guided by zezam’s frictionless CRM and marketing tools, which help the coach not only to grow their follower base but also to engage in new ways.
Gastkommentar: Niklas Schwake
Opinions expressed by Forbes Contributors are their own.