Collaboration: What Do Transmissions Have To Do With Health Clubs, and Fitness and Wellness ?

 

I’ve deep respect for so many of the leaders and innovators in the fitness, wellness and health club business. I don’t want to appear as though I’m kissing up by naming names (you know what i mean). But, and this is a BIG BUT, some of those on that list might be suffering from a little short sightedness. You see I think scarcity thinking is holding us back from big opportunities by working together with an abundance view in our industry. What does that mean ?

Ford and General Motors recently announced they are teaming up to design new nine-speed and 10-speed transmissions for use in a variety of vehicles, a move aimed at improving fuel efficiency for the rivals' vehicles. Now you might ask why would rivals work together to design technologies that can provide a strategic advantage ? Because they understand the big picture that’s why. In this case the big picture is dramatic impacts on fuel efficiency. This opportunity pressed against the cost of attempting to develop it alone leads rational business people to conclude working together is truly the best decision.

Enter the fitness and health club space where the largest and smallest of exercise equipment manufacturers seem focused on developing independent solutions for every opportunity. An example are technology platforms and interoperability among equipment brands. Outside of C-Safe , a technology standard created by FitLinxx and generously provided to the industry years ago, there has been little if ANY collaboration around this. The same could be said about many other aspects of the club business, and the fitness and wellness industries in general (not wanting to pick on you equipment folks alone) where fear of competitive advantage prohibits many from working together on universal standards as they could. From caloric burn rates to communication protocols, there is a lot of opportunity for us to agree and move things forward.

Now there have been collaborations. The NSF facility standards, for example, were recently agreed to after many many years of effort. IHRSA has been driving initiatives like the Public Policy Council which relies on contributions to promote public policy and legislative agendas that benefit the industry. FIT-C has started with a group of forward thinking people to create technology standareds. There has been some collaboration among various service providers as well. But its not been enough and that collaboration has taken to long in my view.

Looking at other industries provides many examples of the benefits of industry collaboration. Without a protocol like Wi-Fi there would not have been wide spread adoption of mobile computing. In the instance of WiFi, industry leaders created standards with a vision to what would be possible, like GM and Ford are today. They realized that the benefits of collaboration outweighed the cost because the work would grow the market considerably for everyone and at a faster pace. 

What if competitors in our arena did more of the same: thought about opportunities for collaboration instead of identifying the uncommon ground? I just don’t think there is enough of that type of thinking in our industry today. Often people are too busy protecting their turf as opposed to seeing the bigger picture: the delivery of primary prevention as a larger commercial aspect of people’s health management in the future. If we are going to grow the market beyond the 16% of US adults using bricks and mortar fitness facilities in the US and in the rest of the world we will need to change our orientation. We will have to grow up and meet the promise of the future by seeing what that future will be and by working together to achieve it.

If we don’t spend more effort on this undertaking the risk will continue to rise. If we don’t collaborate more, organizations from outside our sphere are going to enter the space and meet the demand for services with technologies and business models that we weren’t contemplating. While free market economics allow for survival of the smartest and that is good, 

What do you think ? Is there enough collaboration in the health club, fitness and wellness industry today ? Why do you think so ? Thanks for reading and feel free to contact me to discuss your views. 

About the author:

Bryan O’Rourke is a health club industry expert, technologist, financier, shareholder and executive in several fitness companies. He works for Fitmarc, which delivers Les Mills programs to over 700 facilities in the US. He advises successful global brands, serves as a member of the GGFA Think Tank and serves as CEO of the Fitness Industry Technology Council. To join FIT-C visit www.fit-c.org . To learn more contact Bryan here today .

The Failure Of J.C. Penney's Ron Johnson - Lessons For The Health Club Industry

This week the former Apple and Target darling, Ronald B. Johnson, was shown the door by J.C. Penney’s board of directors. After 17 months of attempting to remake the Penney’s brand, Johnson failed, at least in the near term, as sales and cash flow plummeted amid his reinvention of the business model.

Johnson’s story and Penney’s plight provide great lessons on the challenges facing businesses and industries in today’s atmosphere of uncertainty. Consumer habits are evolving so much and the buying experience is undergoing a revolution that cuts across retail, health clubs and everything else. Don’t believe me ? Check out accenture’s recent retail research and this Forbes article as evidence . You see the bricks and mortar fitness industry is changing just as dramatically as retail and other industries are and established players are all going to have to wrangle with the issue of how they will remain relevant or die.

Some felt Ron’s arrogance would result in his demise; but what should one expect from a guy who was a Steve Job’s protage and engineer behind Apple’s retail rise with a stellar track record at Target to boot ? In fact that is why he was chosen. An article by Stephanie Clifford, Chief’s Silicon Valley Stardom Quickly Clashed at J.C. Penney, depicts Johnson’s attempt to transform the retailer. However, Clifford’s story fails to put some important parts in context.  J.C. Penney, though profitable, was seen as a poor performer that was losing ground to competitors like Macy’s on the high end and Kohl’s on the value end. (Yes Chuck Runyon its the bifurcation dynamic again :)). Its a similar situation several major health club chains face, as they are being picked apart by low price competitors and high end Equinox along with other niche micro gyms and studio concepts. Its easy for anyone to play Monday morning quarterback with Johnson’s strategies; but he was hand selected by the board exactly for being a change agent and innovator because the board saw an emerging problem. Did Penney's bold efforts fail more because of the way they were executed or how they were timed? I'm not sure, but consider that the tablet revolution started with the failed Newton, 10 years ahead of the iPad.

All retail competitors are facing the same challenges as Penney’s and while Ron failed, it sure is interesting how many people were curious about his strategies. An excerpt from Clifford’s article shares this: “Ken Murphy, senior vice president at Standard Life Investments, said that “many retailers, while openly cautious and dismissive of the JCP experiment, were actually nervously watching JCP’s plans unfold with some concern that if their strategy worked, the industry would be required to adapt faster than expected to a new trend in retailing.” You see because Macy’s, Kohl’s and others may be winning a battle with Penney’s, they might still lose the war to digital competition and a chameleon consumer whom they are desperately trying to figure out. This is the tight rope that the revolutionary Johnson walked and its the same one faced by many leaders in the health club industry today.

The same pressures that face Penney’s business model are impacting a number of significant health club brands today. Fitness First, formerly the world's largest club chain, failed last year. 24 Hour Fitness saw the majority of its senior leadership let go recently. These events and many others only evidence the high stakes game that is being played out across the health club industry, as it is with most consumer industries. Leaders know things have got to change but its hard to know just how. Sometimes they succeed and often they fail.

I’d theorize that leadership changes won’t be exclusive to 24 Hour or Fitness First . In the coming months more changes, consolidations and new entrants will emerge because in this day and age no industry or leader is immune from digital darwinism. Just ask Ron Johnson and J.C. Penney’s shareholders.

So what do you think ? How do you see the health club industry going through change like retail and other industries? Do you see changes in leadership in some health club brands ? Please let me know. I want to hear from you !! Thanks for reading.

About the author:

Bryan O’Rourke is a health club industry expert, technologist, financier, shareholder and executive in several fitness companies. He works for Fitmarc, which delivers Les Mills programs to over 700 facilities in the US. He advises successful global brands, serves as a member of the GGFA Think Tank and serves as CEO of the Fitness Industry Technology Council. To learn more contact Bryan here today .

Chuck Runyon And Bifurcation - You Gotta Love The Guy's Style

There are some leaders in the health club and fitness industry I really admire. The admiration might come from their accomplishments; who they are as people; or because of their generosity. Few stick out for all three reasons and that is why I was delighted to have some face time with Chuck Runyon, co-founder of Anytime Fitness, at IHRSA this year because he is someone I admire for all three.

Chuck Runyon has an almost "rebellion" like style . His active participation on twitter and of course his at times outspoken views are appealing to me. He's someone who likes to shake things up. Whether its been as part of the Public Policy Council of IHRSA or via his writings or tweets; you gotta love the guy's style.

It was a number of weeks ago while visiting the EU and in advance of IHRSA when Chuck addressed my “bi-furcation” trend via twitter  (see the exchange with Stuart Goldman below). Chuck tweeted “I disagree & the industry is experiencing segmentation in 4 distinct areas not 2 Call it quadfurcation.”

“Bi-furcation” is a well documented trend which author and consumer researcher Michael Silverstein defined and which a wide number of researchers have explored. Economic polarization of the market has been coined by Citigroup as the Consumer Hourglass Theory. For various economic reasons, the upper and lower classes bulge while the middle class is squeezed. The co-founder and former CEO of Planet Fitness, Mike Grondahl joked with me about the term at Club Industry a few years ago, since I attributed the success of Planet Fitness to the trend. Chuck obviously felt that it wasn’t the only driver of market changes for health clubs.

During IHRSA Chuck, along with my partner Robert Dyer, discussed the topic and I explained that “bifurcation” is a real consumer trend that is driving consumers up the value chain or down it. I also shared with Chuck my “S Curve” graphic showing how fragmentation is and will happen in response to this trend. However, as Chuck pointed out, there are other variables like convenience and economic dynamics that are creating different market responses. His case in point is my partners use of an Anytime Fitness outside of Fort Worth at $39 per month or the micro-gym / studio trend. He is right in that bifurcation alone is not the only driver to facility models. That is helping his company maintain higher membership rates than competing low cost chains, mostly because of the convenience factor.

Chuck took out a pad of paper and began segmenting the industry into four quadrants to include: High End Big Box, Low Cost, Convenience and Studio (see the original graph in the intro photo). He also drew the future of the industry into quadrants of Virtual, Nutrition (in home), Employer Medical (insurance) and Behavioral Motivation. I’ve included the drawings which I asked Chuck if I could post (notice the initials on the second drawing). He kindly agreed.

During my presentation at IHRSA on Trends Impacting The Health Club Industry I shared some graphics (not the originals) and mentioned Chuck’s views. I agree with many of them but maintain that bi-furcation is a trend driving consumption patterns of health clubs; but to Chuck’s point it isn’t the only one. Convenience is a big driver and part of Anytime’s secret sauce. After our meeting Chuck tweeted, “thx & next decade in fitness industry will b most competitive, most disruptive & most opportunistic! #IHRSA2013 “. On that thought we completely agree. Chuck thanks for sharing your views and taking time. I appreciate your helping to expand the dialogue on where the industry is headed  and yes Chuck 1 Bryan 0 is ok by me, although on our talk I wasn't keeping score ;).

So what do you think ? How do you see the health club industry growing ? Where are the greatest opportunities and do you agree with Chuck's views ? Please let me know !

About the author:

Bryan O’Rourke is a health club industry expert, technologist, financier, shareholder and executive in several fitness companies. He works for Fitmarc, which delivers Les Mills programs to over 700 facilities in the US. He advises successful global brands, serves as a member of the GGFA Think Tank and serves as CEO of the Fitness Industry Technology Council. To learn more contact Bryan here today .

Five Days In Europe: The Fitness Industry Is Alive And Well Across The Globe

Yes that is me in a coffee shop in Amsterdam and no not one of THOSE Coffee Shops ;) . I love coffee and was in that business for six years running a chain of cafes and a full roasting operation. So heading to Amsterdam I always enjoy some great espresso, after all Amsterdam is where coffee was spread around the world from in the 17th and 18th centuries. But that's not why I went this time. It was for a more interesting reason.

When one of the biggest players in the global fitness business invites you to come along to Europe and lend a hand, well who's to say no ? Getting to meet executives from some of the leading clubs chains in the UK and EU in general as well as distributors for Star Trac in the EU, Middle East and Africa is a wonderful learning experience. The information gleaned tells you something about where the bricks and mortar fitness business is heading from a global perspective. That helps me keep a perspective on trends and enables us to serve our customers at Fitmarc, Integerus and Fitsomo even better. More than anything seeing the turnaround at Star Trac continue through the eyes of its owner, Michael Bruno, as I have over the past few years, continues to be a motivating experience. There is no one I've met or known, save a handful of people including my partner and friend Robert Dyer and my wife Maureen O'Rourke, who are as committed to success and the customer as Michael Bruno. That he invites me to contribute to his global business is an honor I relish.

What's On The Mind Of Club Owners and Operators

In the interest of confidentiality, I can't disclose who we met with exactly, but what I learned was that many clubs are focusing on i) elevating their group fitness and in particular indoor cycling studios and classes and ii) focusing on small group training. Sounds like the US a bit doesn't it ? There is also keen interest in alternative cardio, particularly around Star Trac's approaching launch of the Commercial Treadclimber, which is likely to be a significant home run for the Star Trac brand. As with most mature markets, the UK market is going through the bifurcation trend of consumers, with budget and niche studios taking larger share. This only serves to reemphasize the need for smart competitors to get very focused on their core business models.

In 2010 IHRSA's Alison O'Kane has this to say about the European market in the Reuter's article Tighter Belts Shape Health Club Industry:

"Clubs doing well in Europe and the United States are either high end or budget clubs, because people want to cut back while still keeping gym memberships," said IHRSA spokesperson Alison O'Kane. "It's squeezing the middle market a lot...."Europe and the United States are the most advanced markets, so the trends will start there," O'Kane said. "There are more clubs open in Europe but America has more club members on average."

According to the European Health and Fitness Associations Annual Report the EU marketplace generates 22 Million Euros in annual revenues with 40,000 public and private facilities that serve 44 million members. This is of comparable size to the US market. Despite recent economic struggles things are looking up. There is a lot we can learn by paying attention to the European marketplace.

What do you think about the health club industry in Europe ? Do you see a similar focus on group fitness and small group training in the states ? I think there are many similarities and some differences but I'd love to hear your point of view.

About the author:

Bryan O’Rourke is a health club industry expert, technologist, financier, shareholder and executive in several fitness companies. He works for Fitmarc, which delivers Les Mills programs to over 700 facilities in the US. He advises successful global brands, serves as a member of the GGFA Think Tank and serves as CEO of the Fitness Industry Technology Council. To learn more contact Bryan here today .

Trends Transforming The Health Club Industry #IHRSA2013

Macro trends are reinventing the health club industry. This is the subject of my presentation at IHRSA2013 this year. Its always exciting to attend and present at IHRSA. I am so very honored and thankful to the professionals with IHRSA for giving me the chance to contribute.

When I say that the health club industry is being transformed, what I mean is that the same trends which have impacted retail, restaurants, transportation, hospitality and others are having very similar impacts on the club business. First, demographics are shifting; aging boomers and rising millennials are combining to impact consumer tastes and needs. Second, technology is creating the ability to perform services and deliver goods in ways that were unavailable only a few years ago. Third, the world is shrinking and global ism is creating a new realm of competition and opportunity. The convergence of these forces is reshaping our businesses and will for years to come.

What is the end result ? Who knows exactly, but during my talk on Thursday March 21st from 1:30 - 3:00 I'll share what I see the future as being. Hopefully you can attend. If you can't I'll be sharing the content here and via my slideshare account.

About the author:

Bryan O’Rourke is a health club industry expert, technologist, financier, shareholder and executive in several fitness companies. He works for Fitmarc, which delivers Les Mills programs to over 700 facilities in the US. He advises successful global brands, serves as a member of the GGFA Think Tank and serves as CEO of the Fitness Industry Technology Council. To learn more contact Bryan here today .