Strategy•Jul 02, 2020
How COVID-19 Changed the Fitness Industry: Recommendations to React, Respond, and Plan
The global fitness industry is a competitive and populated market generating more than $80 billion per year in revenue. Boutique fitness brands compose upwards of 40% of the market and are growing at exponential rates. Boutique customers pay twice as much per month as consumers of big gyms such as Planet Fitness and Crunch. In March of 2020, as a result of COVID-19, thousands of gyms closed, owners and staff were scrambling to stay afloat financially, and millions of people were left without a place to workout. Although many fitness clubs have taken major hits, a few have managed to stay relevant.
Credera recently developed a framework to help organizations react, respond, and plan strategically during times of economic shock and uncertainty—especially in today’s climate. The Now, Next, Future framework) is a breakdown of what organizations should prioritize immediately, innovate strategically, and plan long term. This article will apply this Now, Next, Future framework to two types of specialized studios within the fitness industry: large, global fitness brands with more than 100 locations and small, local fitness studios with fewer than 10 locations.
Many gyms and studios have used this time to push the boundaries of what the fitness industry can deliver through an online format: going virtual with online classes, livestreams, and conducting personal training sessions via video conferencing. We are going to examine GRIT by Brit and Orangetheory Fitness (OTF), who have both been successful at doing this over the past few months.
now: addressing critical needs
GRIT by Brit is a boutique fitness studio founded in 2015 in the Dallas-Fort Worth area. They currently have three locations featuring music-driven group fitness classes that span cycling, weight sculpting, and outdoor fitness. Their tiered membership model is based on contract length and allows members to take advantage of their variety of classes at three locations.
This small fitness boutique quickly pivoted within days of the COVID-19 related closures. They immediately released a statement addressing studio closures, stating “GRIT by Brit is now offering on-demand workouts and will begin live-streaming classes” and encouraged members to attend. GRIT focused on their community, the “GRITFAM,” through a private members-only Facebook group, Instagram, and monthly fitness challenges with mailed prizes. These channels have continued to engage their community and keep them healthy throughout stay-at-home orders. On the pricing side, GRIT members had the choice of keeping their membership as is (i.e., to support the local studio), pausing their membership, or changing their monthly membership to an online-only subscription. These three options kept customers and their finances at the forefront of the “now” time period.
Orangetheory Fitness is a boutique fitness studio founded in Boca Rotan, Fla., based on the science of excess post-exercise oxygen consumption (EPOC) or “afterburn.” Each class is a one-hour, full-body workout, focused on training endurance, strength, and power. Since 2010, Orangetheory Fitness has grown its business to over 1,200 locations in over 23 countries.
On March 16, 2020, Orangetheory announced they had decided to close all corporate-owned studios due to the spread of COVID-19 with the goal of reopening on March 30. They quickly realized the impacts of the virus would last much longer then their initial two-week estimate and began rolling out their #OrangetheoryAtHome online workouts, which incorporate cardio and abs for a full-body exercise.
Through the hashtag #OrangetheoryAtHome the Orangetheory community has been able to stay active and thriving. They have leveraged the power of social media to continue building out their platform with a focus on community amid the pandemic. Orangetheory offers its daily workouts across a variety of different platforms including its own app, YouTube, and Instagram. Users are not being charged for the workouts but are attending donation-based classes.
next: strategic innovation
As of June 2020, GRIT has reopened all three of their locations after employee training, implementing proper social distancing measures, and re-educating clients on procedures. The studio released a statement before reopening:
“Employee education is the first step toward reopening, with a two-hour training required for both instructors and front desk staff. The training covers disinfecting procedures, no-contact check in processes, guidelines on keeping a safe distance from others, and more.”
They will continue to offer virtual classes indefinitely and restructured their membership plans to add flexibility for their clients’ individual comfort levels. They have also leveraged more data and technology in their reopening process by adding check in functionality to their app. GRIT studio members can check into their classes up to 100 meters away from the studio in order to maintain a socially distanced experience, protecting employees and customers alike.
During the same timeframe, Orangetheory Fitness has begun reopening their locations according to local regulations. As OTF locations begin to re-open, the Orangetheory app will remain an active resource to both members and non-members to find at-home workouts and healthy tips and tricks. During the past few months of at-home workouts, the Orangetheory staff has been hard at work creating a re-entry plan to protect all their members and staff. Their class sizes will be smaller, waitlists may be fuller, and equipment will be spaced to meet social distancing guidelines. They are implementing stringent policies on cleaning and disinfecting to prioritize the safety of all those involved. The Orangetheory website details all process and system changes made, including coaches and staff wearing PPE (Personal Protective Equipment), limited capacity, verbal symptom checklists for all members, required wipe down of all equipment before and after use, touchless hand sanitizer dispenser before you walk into the lobby, and asking members to arrive promptly five minutes before class to avoid congregating in the lobby. The Orangetheory team will continue to enforce social distancing and the proper precautionary steps over the “next” period.
what more can they do?
Both studios should continue to increase safety standards—meeting CDC standards and pushing beyond to best practices for social distancing to ensure safety of all staff and members of the studio. As members begin to return to studios all across the country, it is critical that the correct safety and health measures remain top priority. As studio members engage with the fitness brands, studios should gather data and work to understand the customer (e.g., visits, mediums, etc.) during the “next” period.
future: plan to compete
Based on our research on OTF and GRIT, and application of the Now, Next, Future framework, we recommend that fitness brands analyze their customer base and customer behavioral changes throughout the “next” phase to plan for the “future” phase. Revisiting their customer personas (e.g., the in-studio client, the virtual-only client, the mixed in-studio and virtual client) will help determine a strategic plan moving forward, as studios have been focused on retaining their client base, rather than expanding it. How will studios attract new customers in the “new normal” with their post-COVID-19 practices? We have listed a few recommendations for many players in the fitness industry as a result of potential “next” scenarios:
For individuals, action is clear—stay home, social distance, and wash your hands. For companies—stabilize your organization, innovate to meet changing supply, demand, and behavior, and plan to compete in the new normal following the crisis. Download the framework here.
apply the framework
We can work together to apply this framework through the following:
Now/Next/Future Executive Workshop – Our interactive Now/Next/Future Workshop (delivered virtually) engages an organization’s leadership team to apply the framework to the organization’s specific and unique situation to identify emerging opportunities and prioritize critical next steps to ensure sustainability.
Rapid Innovation Sprint – A Rapid Innovation Sprint (delivered virtually) brings expert resources to guide your team through tackling a key problem/question. This could be strategic business, product, or service innovation—or simply rapid ideation, prototyping, and testing of an opportunity/solution to a tactical problem.
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