10 August 2022

#Gen3SGPT - The evolution of the SGPT fitness sector

Early indications would suggest that there is a grassroots movement underway, set to define #Gen3SGPT and the future of small group personal training for the next 10+ years.

But what is it, and what does this mean for existing small group facilities?

A perfect storm

As you sit today in 2022, take a look around you and make a mental note of the gym brands leading the market, particularly in the boutique and SGPT sector.  In 5 years’ time, likely less, the landscape will look very different and amongst the leading names will be some that you’ve not even heard of yet.

The fitness industry is one that has been historically slow to adapt.  The trends habitually come in cycles, but then frequently pass as quickly as they arrived.  Where change does not only occur, but actually perpetuates beyond a mere apparition, it is often a consequence of a seismic societal event.  The COVID-19 pandemic had all the hallmarks of being such an event, but would perhaps not have been enough on its own.

The reality is that a “perfect storm” is brewing. Prior to COVID-19, what the public wanted delivered in terms of fitness & wellness services was beginning to evolve. As COVID-19 hit, this caused a blip manifested by the unsustainable explosion (and then near collapse) of companies such as Peloton. Many facilities that were in decline were saved by government loans and other schemes setup to protect the sector.

Come the end of lockdown, it was practically impossible for almost any gym not to successfully grow its client base. People were so relieved to get out of the house, that anything looked good. Now, pretty much a year after lockdown ended, the willingness of many to accept a product or service that doesn’t quite deliver is once again starting to diminish.

Now, throw into the pot the war in Ukraine and an imminent recession - certainly in the UK, where a post-Brexit market has limited the country’s options. People are not only feeling the pinch, but it is beginning to have a material impact on their lives.  If your world is one where you are struggling to pay bills and feed & clothe your kids, it is ‘luxuries’ such as Netflix subscriptions that are the first to get the chop.  Not long behind follows the gym membership. 

August 2022 already brought a significant increase in the number of membership subscription payments that were declined for one or more days due to ‘insufficient funds’. Of course, August is known to be a challenging month for many facilities within the fitness industry due to clients going off on holiday etc. Nevertheless, the tea leaves don't lie, and if this continues into September and October gym owners will need to heed attention.

A move towards boutique and a sustainable lifestyle

The boutique fitness sector was growing rapidly prior to COVID.  Since the end of lockdown, there is clear evidence that this trend is pretty much back-on-track and is going to continue.

The “big box” gyms have long since known that there was trouble ahead for their outdated model.  Almost all of the big brands have either launched or are launching small group or boutique service offerings.  As these monolithic companies lumber their way into SGPT, it is the livelihood of the small, independent operators that is under real threat.

The good news is that few of these huge companies will get it 100% right the first time.  However, this is quickly followed by the kicker that, with their substantial financial might, it won’t take them long to make the tweaks necessary to get it right.

More broadly, the public are craving fitness & wellness services that fit with and match their lifestyles.  Training gyms of the early 2000’s have created swathes of men & women who look fantastic in their Nike Dri Fit tees but are practically unable to bend down to tie up their shoelaces! With a population living to an ever-increasing age, this is unsustainable.

Conversely, obesity levels are off-the-reservation! This is presenting huge challenges for the NHS in the UK, and all likelihood is that obesity will start to become a deciding metric in the offer of health services & insurances.

Traditional once-a-week “class based” activities, such as yoga and martial arts, are starting to realise that their offering needs to evolve. Similarly, for CrossFit attendees, the frequency of injuries resulting from a questionable training regime are starting to take their toll.

The bottom line is that people want to consume wellbeing services that gel with their lives, are sustainable, and that will help them maintain a healthy lifestyle right through until old age.

Having decent equipment; good coaches; and solid training programs are the absolute basics to even opening a training facility in 2022.  Similarly, randomly inserting the word “community” into your marketing doesn’t really cut it these days.

A flame burns brightest just before it goes out

Throughout decades of industry, many businesses have appeared to reach their peak, only to have crumbled to a fraction of their former glory just a short time later.

Renowned business author Jim Collins documents five stages of a business’s decline. I am firmly of the belief that, within the fitness industry, several of the current market-leading brands are already in the second stage of decline.

The first stage is “Stage 1: Hubris born of success”. This is something I can clearly identify first hand with several of the biggest names in our industry. Having achieved well deserved success, this then swells to excessive pride and over confidence. I have seen many successful gym owners choose to put their own brand or ego above customer service, with some shunning customer service almost completely in order to satisfy their own personal goals.

In every industry it is reputation for service that wins out overall. Despite what the “guru’s” may tell you, nobody has joined your gym because they like your logo. And it sure won’t be your logo that keeps them choosing to pay to attend your facility going forward.

Collins’ second stage of decline is “Stage 2: Undisciplined pursuit of more”. Having established a successful gym, some owners will rush into expansion without necessarily understanding what it is that made them successful in the first place – or worse, concluding incorrectly what it was that made them successful.

Companies like David Lloyd, Virgin, and Bannatyne are skilled at opening new locations.  They are strong, established brands that know what they are doing, and they have the budget to market.  Also, and of critical importance, they are replicating their proven model.  By in large, they operate a cookie-cutter approach.  They rarely tend to pick a new location and then randomly try something different.  Where they have, it hasn’t necessarily worked – even with the money they have to throw behind it.  Changing your model is tantamount to just starting a new business, as opposed to building upon the successes already achieved.

Two tribes go to war

As I look across the fitness sector and within the SGPT sub-sector in particular, I am seeing the signs of a divergence in thinking.

Heading off in one direction are the facilities who are, arguably, moving closer towards the big box model. Many of these are introducing the “open gym” concept as part of their offering and, in many ways, reducing the service element that their facility provides.

This is a ballsy move, but one for which I am not yet seeing “the angle”.  Small independents do not have the financial resources of the big boxes.  The big box is in a position where it can offer small group products, but supported with extensive facilities including swimming pools, saunas, cafes, etc.  The differentiator for the small independent has always been service and community.  Turn your back on that, and how do you compete?

I know many gurus are fans of the “open gym” element but, to me, it slightly reeks of desperation.  I would draw a distinction to this in the US market, where often the physical size of the facility lends itself more towards this.

By emulating elements of the large chain gyms, you immediately set yourself up for direct comparison. You also compromise the value of your core offering and put yourself in a position from which it is very hard to return. With this charge being led by some good, decent people, I hope that it is simply me failing to see the “secret sauce”. Personally, I am concerned for the future of some of these businesses.  Having been ‘good’ with the potential to be ‘great’, I fear a few may instead find themselves destined for the annuls of ‘mediocre’.

On the flipside I am seeing some exceptionally exciting evolution within the grassroots outliers within the small group space. There is a new generation of SGPT owner starting to make interesting moves. And by “new generation”, I don’t necessarily mean “younger”, but more that they are entering the industry with fresh thinking – some arriving from the route of having been fitness consumers, rather than necessarily having a long history of fitness service delivery.

These providers are names that few will have heard of yet, but they are making an impact in their respective areas. They are focussing more heavily on personal service. They are operating premium models, targeting a smaller percentage of the population, but delivering the ultimate service to them. With wealthier demographics being more “recession proof”, this is smart thinking on several levels – for the next couple of years, at least.

This new type of provider leads the third generation of small group personal training, or Gen. 3 SGPT, as it is known.

With a focus on the entire 24x7 member experience, this type of operation has long-term relationships with their clients foremost in their minds.  Member retention is a critical element of their service delivery, and they know that by providing the ultimate service their clients will see the rewards and will stay loyal.

The 2nd generation of small group facilities, which are the majority in operation today, are predominantly about the in-gym experience. Often built around one particular individual and excessively biased towards branding and the kit they have on-site, this is a generation of facility that makes a cursory nod towards member service by chucking out the odd recipe book or weekly check-in form, but whose enthusiasm perhaps more naturally lies with coaching sessions. 

I say this not in any negative or disparaging way. These are typically wonderful people, who care passionately about fitness & training and are often excellent coaches. However, as I have said before, we are an industry akin to the blacksmith – in which our craft is passed down from our master, and then replicated verbatim through the next generation. Those that do it well can have a good, solid business. Those who don’t, can skip that part and just jump straight to opening an academy! [Ok, yes, that last sentence was a bit pointed!]

The #Gen3SGPT offering is one that delivers on the aims of the previous generation, but does so by establishing the full, holistic service element at its very core.  On paper, Gen. 2 and Gen. 3 may seem very similar, but there are significant differences when it comes to the execution.

Is there an echo in here?

Of course, the majority of gyms are not moving in any direction at all. In an industry that hasn’t changed significantly in the last 20 years, why would there suddenly be a change now?  Well, because society is changing – both naturally and as a consequence of events thrust upon it.

Most gyms operate autonomously and not part of any group. They largely follow the path determined by their owner and often do ‘okay’. These are the lone wolves of the industry – businesses meeting the current needs of their members, whilst also providing an adequate lifestyle for the business owner.  Whilst some may aspire to more, there is no rule that every business needs to try to set the world on fire.  If you own and operate a convenience store, chances are you are happy with that and you don’t hide secret ambitions to be “the new Amazon”.

Nevertheless, perhaps 20% of gyms in the UK are members of one or more community/support/business group. Whilst often a fantastic support network, many do also become echo chambers that solely reflect and amplify the views of the group leader and/or their most dominant proponents. Often inward facing, businesses in these sorts of networks can run risk of not seeing the moves taking place in the broader industry until the point at which it firmly kicks them in the butt.

Throughout history it can be seen that revolution often originates from a grassroots movement.  Seldom is it led by ‘the establishment’, many of whom often find themselves on the back foot and relegated to a footnote of history as a consequence.

It is natural to follow and try to emulate the big names - those who currently enjoy success.  However, you could pick almost any industry, go back 20-years and the big names of the day are either gone or substantially diminished. Of course, enjoy peer support, but do not sacrifice freedom-of-thought for an easy life. No one wants to find themselves following the Pied Piper!

How will wellbeing & fitness evolve in the next 5-10 years?

I have a number of personal opinions upon where the future of wellbeing & fitness will be heading. These are based upon trends I see in the current market; the sorts of things that end users are discussing; and experiences of other markets.

To be clear, I do not think there will be any sudden change within the industry. I do, however, believe that in 5 years’ time it will be evident that change has occurred. The market will include a number of presently unknown brands amongst the ‘leaders’. Conversely, some of the current ‘leaders’ are at least a couple of stages into their decline, and will be a shadow of their former selves in just a few years.

These are some of my personal predictions, in no particular order:

  • The big box gyms will be firmly moving into the small group personal training space. This is less a prediction, by more a factual observation of what is already
  • Class based activities, such as martial arts, will likely see a reduction in interest as people start to look for a more-widely encompassing wellness solution. This is, of course, excepted for people doing classes for specific reasons (E.g., self-defence).
  • Functional training regimes, such as CrossFit, will likely find that they need to evolve to encapsulate a more diverse approach. As per the “There’s Something About Mary” 'bit', “7-minute Abs” is dead as soon as someone comes up with “6-minute Abs”!
  • Over time, members will place more value on the “restoration of movement” and general, long-term health. We are living longer and there needs to be a real focus on long-term wellness. An increasing number of members will fail to be impressed by chiselled coaches, glistening in chip fat, but unable to pick a pencil off the floor. Keep your tops on guys, it’s not 2015 anymore!
  • The industry will need to both broaden its definition of “positive body image” as well as start catering for a larger percentage of the population. With obesity being an increasing problem, the likelihood is that health service providers (such as the NHS) and insurers will look increasingly to the fitness sector to play a role.
  • Many members will be seeking longer term relationships with their wellness providers - but on a “by choice” basis, as opposed to an enforced membership model. The entire membership model is looking tired, and that in itself is something that will evolve over the next few years.
  • Emerging technologies will play an increasing role in service delivery, but not as much yet in training delivery. The whole metaverse/Web 3.0 thing is very exciting and will play a part in the industry, but it is a few years off yet. The metaverse and VR stuff is all fine for investors, but throwing a med ball against a massive wall that looks like a 2006 Nintendo Wii game  just doesn’t scale commercially yet. It's still for the NFT'ers and other Ponzi scheme protagonists. That said, increased gamification surrounding technologies such as Myzone are far more likely, and could bring a new round of benefits in the coming years.
  • Future success within the fitness industry will likely come from carving your own path and, without doubt, meeting the needs of your customers. Service is, and always will be, at the forefront of importance in any consumer experience.
  • The average member will be increasingly less swayed by a fancy bit of kit with your logo laser-cut into it. They will be more interested in how you can support their lifestyle both in, and out, of the gym.
  • The days of preachy diets and diet plans are coming to an end. Wellness should not require a complete sacrifice of lifestyle, but should be an integral part of it. It is perfectly feasible to have a healthy life, whilst enjoying a some higher calorie food or the odd glass of wine.
  • Box-ticking simply will not cut the mustard any more. If you are wellness service provider, you need to deliver a comprehensive and considered product – one that extends well beyond the member’s first 90-days at your facility.
  • Community needs to actually mean something. Of late, this word has been increasingly thrown around as a marketing message. Those facilities who build a genuine support network will be those who achieve the best results. A token-gesture Facebook group doesn’t impress anyone these days.
  • We are an industry that loves to group people together. Many facilities focus on the “20’s - 30’s”. Then there are those who focus on “women”, and others who focus on “over 50’s”. There is good intention to much of this, but the logic is questionable at best. The fitness facilities with a solid future are those that will focus on the individual and will recognise them for all of their nuances.
  • Clients were scarred by “online” due to it having been forced upon them during lockdown. Online will return to becoming an important part of a full, 360° wellness product, but likely in hybrid form. Members will actively want to continue their wellbeing journey whilst on holiday or traveling, and will be less willing to completely sacrifice their gains for a 2-3 week blowout.
  • A casual nod towards “mental health” is not enough. Fitness needs to incorporate all aspects of wellbeing, not just have it as a tacked-on eBook sat on the side. There will be an increase in the diversity of classes offered by wellbeing providers, stretching well beyond working out, to include mindfulness classes such as painting, or sculpting. Similarly, providers should be providing guidance on how to handle stressful situations; how to psych yourself up for a high pressure meeting; how to wind down before going to sleep; etc.
  • Those small, independent providers delivering budget services will really struggle in the next few years. For the large gyms, the model was only (just) viable due to large numbers of non-attendees. For smaller facilities, the numbers simply don’t stack up. Similarly, the middle ground is a crowded market, and there are few winners ‘in the middle’. Those who do the best will be those who establish their niche; deliver a unique (non-comparable) offering; charge a premium for their services; and actually deliver a service level to match.
  • The hard sell should have died-out years ago, but it seems to be undergoing a revival. Over the next few years, sales techniques will evolve to actually harmonize with and reflect the product being offered.  Incessant phone calls and badgering a prospect into submission is no way to start a long term relationship.

What is the future of small group?

We’re not talking “The Jetsons” here, but the future of small group will be a step on from its current incarnation.

#Gen3SGPT is going to shape the next decade of small group personal training.  Delivering a highly personalised service, the new generation of small group facility will actually deliver everything that Gen 2. SGPT should have, but in a much more inclusive and individualised model.

SGPT will cease to pigeon-hole individuals.  It will be a more tailored service, focussed on the long term goals of the client. Short-term programs, such as 6-week challenges (de rigueur with Gen. 2 SGPT) will take more of a back seat – wheeled out only occasionally as part of a broader program.

In all likelihood, the sector will move to a commitment free model, and will instead achieve recurring revenue through delivering a superior service.

Restoration of movement and positive body image will play key roles in Gen. 3 SGPT. Cliché toxic masculinity and blokes walking around the gym with their tops off will not be accepted within this new generation of facility, which will be welcoming to and accepting of all.

Community will return to being a ‘real thing’, rather than just a marketing construct, and wellness will be at the heart of every day living. In all likelihood, scheduled weigh-ins will be replaced or supplemented by softer metrics encompassing broader wellbeing, including mental health.

Training sessions will be just one part of a much broader wellness offering. Just being a good coach won’t be enough going forward. It is simply the base level that all clients should expect. Expectations will be that coaches are trained in mental health, holistic well-being, and also able to recuperate and help clients recover from injury.

Physically, the cool, vibey, dark & moody training studios of the 2010’s will update to become more open, airy and light.  Significant opportunities will exist for facilities to cross-sell and up-sell, not only through merch, but through providing value-add services that makes the client’s lives easier.  Examples might include meal prep services, etc.

Not everyone will be able to transition to Gen. 3 SGPT and many will be happy to stay as they are.  For the majority, they will be able to successfully see-out their careers, as there will be a sufficient demand for the current model for at least another 10-15 years. However, for new facilities opening and new business owners, embracing the Gen. 3 model is the way to not only secure a future, but to bring a positive impact into the lives of broad demographics of the population who aren’t currently being catered for.

The #Gen3SGPT bus is coming... Are you going to be on it, or under it?

Written by Chris Windram.


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