How Fitness is Evolving (Part I)
Where we work out is moving to experience-led formats.
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A couple of weeks ago, I delved into the experience economy, specifically looking at how more 'experience' focused startups were disrupting cinemas. One of the key takeaways is the preference for experiences over material goods favoured by Millennials and Gen-Zs. When combined with their increased buying power in the coming years, this will have significant ramifications across the consumer & leisure industry.
This week I wanted to spend some time looking at how the fitness landscape is set to evolve.
Why is this interesting? The fitness landscape is facing two conjoined forces - Millennials and Gen-Zs are not only experience-seeking but also prioritise wellness more than previous generations. It's easy to point to the rise of Peloton and others in the connected fitness world and conclude that the future of fitness is digital. However, these concepts have a commonality with boutique (IRL) studios - they are 'experience' focused. It's not so much the where you work out, it's the why.
This article starts with a (brief) history of the fitness industry, before examining the ongoing trends seen in experience-driven fitness and at-home concepts.
1️⃣ A (brief) history of the fitness industry
The pandemic has ushered in a wave of at-home fitness concepts, primarily guided by fitness personalities with celebrity-esque followings. Peloton's Robin Arzon or Ally Love are prime examples - each with Instagram followings in the hundreds of thousands.
Taking a step back, the idea of at-home fitness is not a new phenomenon. The Jack LaLanne Show, an exercise television show, first aired in 1951, intersecting the rise of at-home television sets. LaLanne soon became an iconic fitness celebrity.
Fast forward a couple of decades to the release of the VHS tape Jane Fonda's Workout, which soon became the definitive at-home workout. In many ways, the rise of VHS enabled the world to have its first at-home 'on-demand' workout. The biggest drawback was choice – only one to three tapes were released per year.
Aside from marking the start of the lycra generation, Jane Fonda removed the perceived stigma surrounding fitness. Previously viewed as a masculine endeavour, fitness was suddenly in vogue. The 1980s saw an explosion in gym numbers driven by mega-chains such as 24-Hour Fitness and LA Fitness opening large-scale format gyms.
As we crept into the 90s and early 2000s, large-scale formats continued to thrive. However, segments of the fitness population started to peel off, drawn by smaller designs centered around communities. Concepts such as Spinning and Bootcamps became more commonplace, resulting in the rise of boutique fitness studios such as SoulCycle or Barry's.
The past decade has seen the most significant shift in the fitness industry, driven by evolving consumer preferences as Millennials & Gen-Zs continue to gain buying power. The ‘experience’ factor is key to the success of any fitness concept - and has driven the continued success of studio models as well as connected fitness concepts like Peloton.
2️⃣ All About the Experience
Millennials have been said to prefer 'experiences' over materials goods by a margin of ~80%, underpinning the rise of the 'experience economy'. Consumers have shifted to experiences designed to be immersive, encourage socialisation and are shareable on social media, fulfilling the Millennial and Gen-Z quest for 'likes'. With wellness increasingly prioritised by these generations, the fitness industry has become a natural beneficiary.
Boutique studios, in particular, have captured the attention of these younger generations, designing their formats around the experience economy playbook. Classes of top instructors sell out within minutes of booking becoming available - yet they are more akin to productions than fitness classes alone. Instructors have their own performance 'style' – how they push the class, the music they play, and their motivational talk track.
The result is a powerfully immersive experience sharable with friends, in some ways comparable to going to a live concert.
Powerful brand aesthetics, such as the white and yellow minimalism of SoulCycle studios, create moments designed for social media. This results in generating a sense of IRL belonging. In turn, this forms a community around their concept, cementing consumer loyalty. 1Rebel, for instance, refers to its community as the 'Rebel Army'.
This is an important call-out. The economics of studio models is dependent on hitting a booking rate per available seat - similar to how hotels look to optimise booking rates per available room. The more studios can generate a following or a sense of loyalty, the more seats they can fill - which, in turn, enables their concept to scale.
Formats such as OrangeTheory, Barry’s and SoulCycle are successful pioneers of this model, as witnessed by their hypergrowth expansion - both nationally (US) and internationally.
This has set the stage for a period of bifurcation - consumers are willing to pay more for expensive experience-centred concepts that boutique studios reflect or resort to cheaper 'high-value, low-price formats' such as Planet Fitness. The middle ground has become somewhat vacant, especially as these lower-priced alternatives have sought to emulate much of what more premium options have long offered.
3️⃣ The Rise of 'At-Home' Fitness
The shift to at-home fitness has been underway for some time. For consumers living away from the primary domain of boutique studios (larger cities) are those who are time-strapped, options to workout at home quickly became favoured. For others, the pandemic has forced them to adapt. As a result, several at-home concepts, ranging from fitness creators to connected fitness, have flourished. All built without the need for a traditional gym.
Connected Fitness
In some ways, there is a Netflix-Blockbuster parallel to the Connected Fitness – Physical Studio dynamic. Connected fitness players, such as Peloton, Mirror or Tonal, have emulated and scaled elements of the studio playbook (such as the instructor stardom or focus around their communites) to millions of homes without the expensive real estate and large instructor base.
Peloton is perhaps the most notable player, with a user base now in the millions. Peloton's magic comes from its positioning - it is as much a production company as it is a fitness company. Its content is built through a highly curated stable of celebrity fitness instructors who, like in studios, are more performers than instructors alone.
To illustrate this narrative, consider Robin Arzón, a Peloton original instructor who joined the (then) startup in 2014. Arzón is now a celebrity in her own right, commanding an Instagram following just shy of 800k followers with classes that draw in 20,000+ riders - comparable to the concert attendance of the biggest pop stars. Her talk track is motivational, geared around her desire to leave the law world to follow her passion - fitness. Her class attendees aren’t looking for just a music playlist - they’re fans, and want to workout with Robin.
The remaining lineup of instructors complements one another, much like a production cast. As Anne Helen Peterson notes, they are ‘meticulously individualized’ from Jess King as the rave kid, to the chilled vibes of Emma Lovewell and so on. This enables subscribers to find the instructor they are in the mood for - in a way, they know what to expect.
Classes are heavily scripted - instructors often share intimate stories and details, which fosters a sense of closeness despite the lack of IRL connection. On social media, fans can follow the lives of instructors, which further adds authenticity to their online narratives.
Perhaps most importantly, Peloton's competitive edge compared to other connected fitness concepts is its community. Social media groups with sometimes hundreds of thousands of members, an unofficial podcast and TikTok fan accounts all speak to this community factor - or Peloverse.
This community interaction significantly bridges the virtual-IRL divide, further reinforced by in-person touchpoints by Peloton itself, such as the opportunity to attend a real-life class at Peloton studios or getting a live class shoutout.
Fitness Creators
While an undeniable standout success in the pandemic, connected fitness concepts are not cheap and are unattainable for many. However, online classes powered by fitness creators have become a parallel success story.
Like many other instances – writers to Substack, gamers to Twitch, and so on – fitness instructors have become 'creators' as they capitalise on internet-powered entrepreneurialism to build and monetise a following. Whilst online fitness was a relatively nascent concept for these creators only a few years ago, the pandemic has removed much of the friction consumers had towards working out at home - and attending online classes. In turn, this has provided creators with a wide and captive audience.
A period of 'unbundling' of fitness instructors from traditional gyms has followed. For creators, this provides a potentially much more valuable revenue stream than traditional gym commissions, which can be up to 50-70% of their hourly rate.
Tools have emerged to support the fitness creator economy. Playbook, for instance, helps fitness creators launch their own subscription businesses - assisting them with building & distributing content and monetising a following. Others such as Fitplan or Fiit have built their own community and work with creators to create content around their proposition.
With many invested in basic home gym equipment combined with how ingrained digital media has become in our lives, fitness creators are in vogue.
4️⃣ Toward a hybrid era of fitness
At this point, it’s worth taking a step back to understand how all this ties together.
Studios, connected fitness and fitness creators all share a commonality - consumers are not paying for just the workout instruction, they are paying for the experience. In all these instances, the concept is largely built around an individual whose mission it is to provide you with a ~45 minute performance.
Of course, there is an argument over which experience ‘formats’ will win - where will we work out in the future?
As restrictions start to ease, the pandemic shift to at-home fitness is unlikely to be fully permanent. However, there there will be some stickiness as consumers now understand how to workout at home - at-home workouts have now become a real substitute for many IRL studio concepts.
For some, the change will be more dramatic. Investing in a Peloton, for instance, will likely crystallise a consumer's decision to workout mostly at home. For most, the pandemic shift to at-home fitness likely signals an era of hybrid fitness.
Chains such as Barry’s are good examples of how IRL studios can succeed. They continue to successfully borrow from the experience economy playbook, have a passionate community and are differentiated enough from at-home concepts. In short, they make it worth coming to an IRL class. However, these points of differentiation are hard to build and other concepts may be commoditised by at-home concepts
Final Thoughts
Whilst there is already a sea of options ranging from fitness apps to fully connected fitness concepts, there remains room for some of these platforms to add further depth to their propositions. The ambitions of several players are noteworthy:
Peloton has built outwards from its initial cycling niche, supporting several formats, including running, yoga, and meditation. Now highly acquisitive and already omnichannel with some IRL studios, we could see Peloton emerge as a major disruptive force across wellness more broadly.
Apple's foray into fitness follows the Peloton playbook without the connected machinery, utilising the Apple Watch as the key connector.
Several studios continue to build out their online propositions - SoulCycle and 1Rebel are prime examples.
At-home concepts will continue to gain momentum, and force studios to focus on their experience factor. The concepts that come out on top will successfully bridge the virtual and IRL divide, creating an omnichannel offering across different workouts. This may go beyond fitness and incorporate wellness attributes as we start to look at fitness more holistically.
Sources & Additional Reading:
“The Netflix of Wellness”: Inside the Hollywoodization of Peloton | Hollywood Reporter
Investing in the Experience Economy | Mercedes Bent
The Future of Fitness | Sarah Stebbins
The Rise of the Fitness Creator | Joe Vennare
Inside the Peloverse | Caitlin Dewey
Toward a Unified Theory of Peloton | Anne Helen Petersen
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