Business

How the fitness industry are moving away from hoping you never show up

Published

5 years ago

January 11, 2020

January, with all its New Year’s resolutions, is easily the most important month for gyms.

But faced with increasing competition in the fitness industry, many gyms are moving away from a longstanding but sometimes controversial business practice.

Historically, many fitness clubs would rely on a portion of customers rarely using their memberships while still paying for them.

It’s in the interest of the organization to sell as many subscriptions as possible. You hope that they set it, and forget it.– Robbie Kellman Baxter, author of The Membership Economy

“If you think about the traditional gym model, they have limited stuff, limited equipment, limited space and people are paying whether they use it or not,” said Robbie Kellman Baxter, marketing consultant and author of The Membership Economy.

“So it’s in the interest of the organization to sell as many subscriptions as possible. You hope that they set it, and forget it.”

The gym and the buffet aren’t so different

In other words, running a gym is a lot like holding a buffet. Pasta and bread eaters — those who consume less, or the cheaper items, and cost the business less money — end up subsidizing the folks who hover over the more expensive oyster table.

And just like restaurants, gyms are notoriously expensive to operate. They require a lot of space, a lot of equipment, a lot of staff, and a lot of towels!

Add in that gyms are typically open 18 to 24 hours a day and you have a very expensive business model that becomes difficult to sustain if everyone is taking advantage to the maximum extent.

That means if you only use your facility membership a few times a year (or never!), you’re effectively subsidizing the hardcore gym rats, like the people who wear down the rowing machines and use up all the lemongrass-scented shampoo.

Sounds like a plan built on fitness failures, but according to Kellman Baxter this kind of business model is starting to go away.

Disruption hits the gym

Like many other industries, the fitness world is being disrupted.

“There are new entrants that take different approaches,” said Kellman Baxter.

“I talk a lot about Crossfit, which is a kind of fitness franchise. They believe that if people aren’t coming, they don’t get the benefit, and if they don’t get the benefit, they’re going to cancel.”

Marketing consultant and author Robbie Kellman Baxter says when services are limited, like at a gym or country club, there’s an incentive for organizations to sign people up — and hope they don’t show up. (Submitted by Robbie Kellman Baxter)

Kellman Baxter describes Crossfit clubs as actively encouraging and almost requiring members to come to the gym regularly.

Boutique gyms, including Crossfit, spin, yoga and bootcamp studios have more than doubled in numbers globally from 2013 to 2017.

They’re now the fastest growing category among brick-and-mortar fitness establishments, according to the International Health, Racquet and Sportsclub Association.

“People actually get results which makes them more loyal and it turns them into evangelists who recruit other members,” said Kellman Baxter.

Gyms welcome ‘retain and refer’ model

Some gyms, including Calgary’s Big Sky Fitness and Alberta’s former World Health chain, are welcoming the changing emphasis on building customer loyalty.

That means these gyms actually encourage their members to show up, and will do things like arrange check-in phone calls, organize events, and assign staff to accompany people’s workouts.

A lot of gyms are under pressure as a result of outdated practices.– David Brodmann, GYMVMT

“It’s no longer necessarily just about what’s the closest and cheapest,” said David Brodmann, president of International Fitness Holdings, which re-branded all Spa Lady and World Health gyms under the name GYMVMT.

“A lot of gyms are under pressure as a result of outdated practices,” he said. “We to a large extent welcome this wave of consumer choice and knowledge.”

As part of its recent makeover, GYMVMT “de-bundled” all the various services offered by its 19 locations in Calgary and Edmonton to give customers more flexibility in access and pricing.

Brodmann said the decision to move away from the one-plan-fit-all scheme was a “difficult but necessary” one.

“We took a real, fresh look at how we’re serving the modern consumer and concluded that not everybody needed everything that we were offering,” said Brodmann.

Spending more to sweat more

Similarly, Big Sky president and former Calgary Stampeder Brian Strong says he’s been able to grow his gyms’ membership yearly by doing things competitors might deem counterintuitive which increased costs.

“We arrange things like a snowshoe adventure,” said Strong. “We lead it and we bring all of our members for just the cost of the snowshoes. That’s part of the community part of the club.”

Brian Strong is the president and CEO of Big Sky Fitness, a chain of three gyms in Calgary, and says a high membership turnover rate is unsustainable. (Falice Chin/CBC)

Unlike most gyms, Big Sky also imposes a limit on membership numbers to ensure they don’t sell more than they can accommodate if more members access the facilities.

“Honestly the people who are here that use our club a lot — the highly active — they are also some of the highest referring because they’re happy,” said Strong.

“And honestly, they are the best ambassadors we have for our business.”

Written and produced by Falice Chin.
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Business

Roots sees room for expansion in activewear, reports $5.2M Q2 loss and sales drop

Published

22 hours ago

September 13, 2024

Anne Joseph

TORONTO – Roots Corp. may have built its brand on all things comfy and cosy, but its CEO says activewear is now “really becoming a core part” of the brand.

The category, which at Roots spans leggings, tracksuits, sports bras and bike shorts, has seen such sustained double-digit growth that Meghan Roach plans to make it a key part of the business’ future.

“It’s an area … you will see us continue to expand upon,” she told analysts on a Friday call.

The Toronto-based retailer’s push into activewear has taken shape over many years and included several turns as the official designer and supplier of Team Canada’s Olympic uniform.

But consumers have had plenty of choice when it comes to workout gear and other apparel suited to their sporting needs. On top of the slew of athletic brands like Nike and Adidas, shoppers have also gravitated toward Lululemon Athletica Inc., Alo and Vuori, ramping up competition in the activewear category.

Roach feels Roots’ toehold in the category stems from the fit, feel and following its merchandise has cultivated.

“Our product really resonates with (shoppers) because you can wear it through multiple different use cases and occasions,” she said.

“We’ve been seeing customers come back again and again for some of these core products in our activewear collection.”

Her remarks came the same day as Roots revealed it lost $5.2 million in its latest quarter compared with a loss of $5.3 million in the same quarter last year.

The company said the second-quarter loss amounted to 13 cents per diluted share for the quarter ended Aug. 3, the same as a year earlier.

In presenting the results, Roach reminded analysts that the first half of the year is usually “seasonally small,” representing just 30 per cent of the company’s annual sales.

Sales for the second quarter totalled $47.7 million, down from $49.4 million in the same quarter last year.

The move lower came as direct-to-consumer sales amounted to $36.4 million, down from $37.1 million a year earlier, as comparable sales edged down 0.2 per cent.

The numbers reflect the fact that Roots continued to grapple with inventory challenges in the company’s Cooper fleece line that first cropped up in its previous quarter.

Roots recently began to use artificial intelligence to assist with daily inventory replenishments and said more tools helping with allocation will go live in the next quarter.

Beyond that time period, the company intends to keep exploring AI and renovate more of its stores.

It will also re-evaluate its design ranks.

Roots announced Friday that chief product officer Karuna Scheinfeld has stepped down.

Rather than fill the role, the company plans to hire senior level design talent with international experience in the outdoor and activewear sectors who will take on tasks previously done by the chief product officer.

This report by The Canadian Press was first published Sept. 13, 2024.

Companies in this story: (TSX:ROOT)

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Business

Talks on today over HandyDART strike affecting vulnerable people in Metro Vancouver

Published

2 days ago

September 12, 2024

Anne Joseph

VANCOUVER – Mediated talks between the union representing HandyDART workers in Metro Vancouver and its employer, Transdev, are set to resume today as a strike that has stopped most services drags into a second week.

No timeline has been set for the length of the negotiations, but Joe McCann, president of the Amalgamated Transit Union Local 1724, says they are willing to stay there as long as it takes, even if talks drag on all night.

About 600 employees of the door-to-door transit service for people unable to navigate the conventional transit system have been on strike since last Tuesday, pausing service for all but essential medical trips.

Hundreds of drivers rallied outside TransLink’s head office earlier this week, calling for the transportation provider to intervene in the dispute with Transdev, which was contracted to oversee HandyDART service.

Transdev said earlier this week that it will provide a reply to the union’s latest proposal on Thursday.

A statement from the company said it “strongly believes” that their employees deserve fair wages, and that a fair contract “must balance the needs of their employees, clients and taxpayers.”

This report by The Canadian Press was first published Sept. 12, 2024.

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Business

Transat AT reports $39.9M Q3 loss compared with $57.3M profit a year earlier

Published

2 days ago

September 12, 2024

Anne Joseph

MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.

The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.

The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.

Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.

On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.

Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.

This report by The Canadian Press was first published Sept. 12, 2024.

Companies in this story: (TSX:TRZ)

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