News & Trends

The new shape of the health club market

Posted by: Tom Simmons Tom Simmons
on May 5, 2013

The health club, gym, and fitness club market is stronger than ever, to the tune of over 52 million members driving $26 billion in revenue. To give that some perspective, movie ticket sales hit only $10.8 billion last year, a record for its industry. The fitness club market is clearly continuing to build muscle from the growing number of health-conscious consumers. But these folks want more than a treadmill, TV, and clean locker rooms. Many exercise enthusiasts are looking for several specific features from their health club. So what are they?

We asked Bill Horner, Senior Vice President/Chief Real Estate Officer of Fitness International, LLC, which operates 580 LA Fitness and City Sports Club locations in the U.S and Canada. The organization has met consumer demand well over recent years, indicated by its growth spike. Over half of its clubs — 355 to be exact — have opened in the past four years. LA Fitness will open another 60+ this year.

The LA Fitness club in Mission Viejo, Calif.

Here’s what Bill told us when we asked him what consumers want from their health club, why, and how LA Fitness and the industry are responding.

Let’s jump right into it. What do you think consumers want the most from their health club memberships today?

Group fitness is #1. We’re getting great participation in group fitness. At the same time, everybody also seems to be focused on the screen that’s in front of them these days. That’s why we’re putting individual screens on our equipment to provide a more personalized workout experience. Another area is personal training, which held up well, and in some places strengthened, throughout the recession.

Consumers also continue to want more convenience and flexibility. So with LA Fitness, your membership gives you access to everything at the club, except babysitting and personal training. We offer 50 classes a week, so members can get a spot in a class that fits their schedule. Having a good amount of equipment is vital too, so machines are available whenever members come in.

Why do you think there’s been a growth in group fitness?

It’s about socialization and motivation. It’s like when you’re in the back of the class and you don’t want to raise your hand. You’re trying to be under the radar, but you still want to participate. With group classes, members can be challenged, but without the laser focus of a trainer.

It’s also about commitment to meeting your exercise goals. Many consumers plan to go to their health club after work, but it’s easy to look up at 3:30 p.m. and skip it. But if you reserve a bike for the 6:00 cycling class, you’re more likely to go.

The health club industry has introduced many new group activities over the past few years. What’s most popular today?

We’re seeing Zumba and water aerobics rise to the top, and we’ve added classes to meet needs in both activities. Baby boomers are the fastest growing segment of health club membership. I’m seeing more clubs expanding their water aerobics classes to better serve the early boomers.

Why are you seeing boomers coming back so strong?

People used to hang it up after 60. They’d retire and lead more sedentary lives. But as Americans’ longevity has increased, boomers are recognizing that they have considerably more years of life left, and if they’re physically fit, they’re going to have a huge enhancement in quality of those years.

CrossFit has taken the fitness world by storm. What’s your perspective on trend?

CrossFit is an intense workout, and I think it has a niche market. Although CrossFit is generating huge buzz right now, it’s too early to predict the future of CrossFit. It remains to be seen whether it will carve a solid, lasting place in the fitness market, fizzle out as a fad, or morph into something with broader appeal.

From LA Fitness’ perspective, our organization is built on offering core, broad options that meet mainstream demand. We believe it’s worth understanding the CrossFit market better, and will make decisions from there.

Is LA Fitness adding CrossFit equipment or classes to its clubs?

We’re piloting CrossFit classes at a few of our clubs to better gauge consumer demand. We have a finite amount of space at our clubs, and our goal is to provide the best offerings for the greatest amount of members.

So we’re taking a measured approach, which is also what we did with indoor cycling. When we started to see interest in indoor cycling, we held the classes in our aerobics room. As popularity grew, we created dedicated cycling studios, and we’re continuing to add bikes to meet demand.

You said you’re installing personal screens on all LA Fitness exercise machines. How important will these screens be in the future?

Screens are increasingly relevant to the workout experience. You’d be hard-pressed to find a health club today that doesn’t have TVs. Now we’re installing personal TV screens on individual machines.

Eventually, I see these screens becoming web-enabled devices that let people surf the Internet, check their email, order their post-workout dinner, and do any other activity they’d normally do on their mobile device.

Any other predictions for the health club industry over the next couple years?

We’ll continue to see greater innovation in group exercise. The country’s health-mindedness will increase, and drive demand for greater exercise variety. Boomers will continue coming back in in droves. Health clubs will need to introduce new, appropriate exercises for them that don’t stress their skeletal systems, but let them work their muscles and increase their flexibility. So variations of Pilates and yoga, for instance, could grow.

Last question: How has LA Fitness capitalized on using social media in its marketing and overall business efforts?

We’ve embraced social media as a means to communicate with our members more often and more cost effectively, and thereby keep them visiting our clubs more frequently. We use our Living Healthy blog, Facebook, Twitter, YouTube, FourSquare, and Google + to provide health and fitness information to our members, engage with them, understand their needs, and motivate them to come in for a workout.

I always look at the health of the club by how many workouts it does a day. And considering the amount of members at the club, you want a solid percentage of members active. An active health club also brings people to shopping centers, ideally several times a week, so it has a vital role to play in driving sales and ensuring a strong tenant mix, which we see as another amenity for our members.

Bill hit on a crucial final point there. From a retail standpoint, the growing strength of the industry is making health clubs increasingly important anchors in shopping centers. For instance, Kimco has 96 leases with health clubs and gyms, eight of which are with LA Fitness.

In all cases, the health clubs are a vital part of our tenant mixes, drawing ongoing, reliable traffic to our centers. USA Today writer Haya El Nasser featured Kimco and LA Fitness when she covered this healthy tenant trend in a recent article, which we also blogged about in case you missed it.

The growing strength of the health club market is clear, and we’ll continue to keep our thumb on the pulse of new developments and opportunities that will translate into a stronger Kimco portfolio. What trends and opportunities are you seeing in the health club market?

This has been an installment of StoreFront, an interview series with leaders of successful retail businesses. For more interviews, visit the StoreFront page. To learn how you can be featured, email us. We’d love to hear from you.


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