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What can we learn from the growth of boutique fitness clubs?

This post was written by Australian Fitness Network’s Executive Director, Nigel Champion.

Boutique fitness clubs are no longer luxury enclaves to a handful of elite fitness fanatics; in the past five years they have become a global phenomenon that is disrupting not only mainstream health clubs, but also small box 24-hour operations. Boutique brands enjoying huge growth, some locally and some overseas, include Soul Cycle, CrossFit, Orange Theory Fitness, Pure Barre and F45 – and many more are rapidly emerging. According to a 2014 Life Fitness report, the number of boutique clubs in the US grew by 400 per cent between 2010 and 2014.

The 2013 AC Nielsen Report stated ‘Preferred exercise spaces are shifting – despite their high cost, small boutique clubs with a single activity are now the second most popular venue’ and the 2014 IHRSA Health Club Consumer Report showed that boutiques had 21 per cent of the $22 billion US fitness market.

So what’s so special about the boutique concept? On the surface it’s quite simple; give a small space a cool appearance and populate it with committed instructors delivering consistently great workouts. Done correctly, this results in an exciting experience with an element of exclusivity for the user – and significantly higher revenue per customer than traditional health clubs for the business operator. Soul Cycle, for example, charges around $35 for a single class, whereas a traditional club just across the road that also offers indoor cycle classes charges just twenty dollars more for an all-inclusive monthly membership. Clearly, the boutique model is the far more profitable.

Our industry delivers a wide range of fitness offerings, including pre-choreographed group exercise classes, HIIT sessions, traditional strength training, boot camps, Pilates, yoga, aqua classes, functional training and more in an effort to cover the wide range of consumer wants and needs. However, Gen Y (aged between 18 and 35) are excited by personalisation and the boutiques are satisfying this desire by offering focused workouts delivered by rock star instructors who live and breathe the brand. The higher profitability of the business model has enabled boutiques to recruit and retain instructors by compensating them far above the normal industry pay rate. In fact, many boutiques pay their instructors a base salary and then a bonus based on participant numbers. It’s not uncommon for marque instructors to be paid $200-$300 per class.

Boutiques provide a tremendous opportunity to attract more consumers into our industry at a higher price point. Many operators of the traditional club model are embracing the boutique concept and incorporating it into their facilities. One Fit n Fast club in Sydney, for example, recently incorporated YogaBar into its business model. Could you learn some lessons from the success of the boutiques?

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