Innovate to Survive M
BY STEPHEN THARRETT AND MARK WILLIAMSON
ark Twain, a famous American author, said, “Prophecy is a good line of business, but it’s
full of risks.” Predicting or prophesiz- ing the future, while high risk and fre- quently wrong, can still offer great val- ue if grounded in the present. It is with this framework in mind that we pro- vide our predictions for the Canadian fitness industry in 2018.
Budget clubs will make a big splash Over the past five to seven years, bud- get clubs (typical membership under $10 a month) have wreaked havoc on the industry landscape in Europe and the U.S., and now, they have their sights and money targeted on Canada. While Fit4Less is presently the domi- nant budget operator in Canada with over 70 properties, it may soon see its playpen get a lot more crowded. U.S. budget giants Planet Fitness and Crunch Fitness are now gearing up to invade Canada, and with lots of private equity behind them. Once they open the flood gates to budget mania, one might expect some of Europe’s budget- club behemoths to start staking out ground as well.
Boutique fitness studios continue their march, but faster Boutique fitness studios have put a considerable hurt on the tradition- al fitness industry in the U.S., and in the past few years they have begun to make their presence known in Toronto, Calgary and Vancouver. Recent history in the U.S., Europe and Latin America indicates that once boutique fitness studios appear, they propagate rapidly. Studios in Canada are still in their in- fancy, but the abundant growth they potentially bring is just around the corner. If private equity gets involved, as it has in the U.S., the growth of bou- tiques will explode.
Virtual fitness streaming and on-demand will emerge as a new and essential element of the brick and mortar fitness value proposition In 2016, approximately one in five fit- ness operators across the globe offered some form of virtual fitness (group ex- ercise and/or fitness instruction). With new mobile cloud-based platforms— such as, FitCloud Connect, FORTE and Trainer Plus—experiencing success, the club experience is no longer just about what happens inside the club but also how it is integrated in a highly porta- ble virtual world.
The debt collector is calling Over the past several years, many club operators in the U.S. and Canada, em- powered by lofty growth goals and cheap money, have taken on consider- able leverage. With the recent blend- ing of rapid industry growth, the ris- ing cost of money, and notes coming due, club operators, including those in Canada, are finding existing debt lev- els to be more burden than boost for their businesses. In 2018, Canadian operators will need to restructure their debt and rethink their businesses, or they may find themselves fighting to remain relevant in the industry.
Stephen Tharrett and Mark Williamson are co- founders of ClubIntel, a U.S.-based research and consulting firm for the fitness and club in- dustries. Contact them at
www.club-intel.com.
Stephen Tharrett
Mark Williamson
“U.S. budget giants Planet Fitness and Crunch Fitness are now gearing up to invade Canada, and with lots of private equity behind them.”
January/February 2018 Fitness Business Canada 25
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