Failure to Innovate: Will Your CrossFit Gym Thrive Or Survive?
by Patrick McCarty
In Bryan, Ohio (pop. 8,000), Russell’s Clothing Store was the destination for fine men’s clothing since 1881. For over a hundred years, if you wanted a suit, shirts, ties, shoes, or tuxedo, you went to Russell’s. In fact, Russell’s served not only Bryan but all of the surrounding communities.
In the early 1980s, business slackened for Russell’s. Competition from the dreaded Defiance Mall, a thirty-minute drive from Bryan, chipped away at business. Despite offering the finest clothing with the best customer service, Russell’s couldn’t contend with a mall a half-hour’s drive away.
In 1988, Russell’s closed its doors forever. A landmark was gone.
It’s Not About Market Saturation
The story of Russell’s Clothing Store is not a story about market saturation. The towns served by this fine haberdashery did not experience a glut of like-businesses all vying for a slice of the same pie. No competing businesses opened next door.
Yet something changed. Russell’s attempted to remain in business by standing firm to the model of success that had served it for decades, but failed to realize the world around them was changing. Offering quality suits at a fair price was not enough. Great customer service was not enough. Convenient location was not enough.
What Russell’s, and many similar businesses that have suffered the same fate, failed to understand is that the pool of consumers is not a mountain — it’s a river. It’s constantly meandering, changing, seeking, and hungry. Businesses that fail to stay ahead of the curve will fail. Businesses that offer the same thing, year after year, without innovation, will fail.
Even CrossFit boxes, which seem like a fail-proof venture.
CrossFit Could Be Next
Keeping the Russell’s story in mind, I believe there is a complicated stew of factors hounding CrossFit gyms:
- CrossFit boxes continue to pop up everywhere.
- CrossFit boxes in general are beginning to see a retraction in membership and business.
- The natural instinct is to blame this retraction on market saturation.
In order to examine whether market saturation is indeed the reason for the retraction in business, I believe it’s necessary to first examine market saturation in general. I believe many CrossFit gym owners think market saturation occurs when they run out of potential new customers because of a glut of other boxes in a given geographic area.
If, for example, there was once one CrossFit box in Flint, Michigan, and now there are twelve, the market must be saturated because now you have twelve boxes competing for the same finite number of customers. We often hear gym owners say, “We were the first box in Any Town. Now there are five boxes within one square mile of me.” And then add to that, “And they are undercutting by offering $35.00 monthly unlimited memberships!”
The problem with this analysis is it leaves out a number of variables that may impact your business. Population in general, age of population, and disposable income per capita, to name a few. The number of CrossFit boxes per square mile is an arbitrary variable that may or may not have any impact whatsoever on your ability to attract new customers.
Market Saturation Defined
The business definition of market saturation is as follows:
When the amount of product provided in a market has been maximized in the current state of the marketplace. At the point of saturation, further growth can only be achieved through product improvements, market share gains or a rise in overall consumer demand.1
Market saturation in CrossFit can occur when every potential customer in a given market belongs to a CrossFit gym. Once everyone in your town belongs to a box, the market is now saturated. Then the only way you can grow your business is to either take customers from other gyms or hope the population grows.
There is market saturation in the refrigerator business. There is market saturation in the car business (everybody has one — or two, or three). But let’s take a look at the reality of market saturation in the CrossFit business.
In my geographic area — greater Cincinnati, Ohio — there are 2.1 million people. A conservative estimate of CrossFit gym in the area would be thirty. That’s a 900% growth from the original three boxes that existed in 2008. But even if all thirty boxes each had 150 members, that’s 4,500 CrossFitters in a pool of 2.1 million people. That is.002% of the market.
Let’s take another example. The island of Oahu is home to 37 boxes. Honolulu County has roughly one million residents. There are, give or take, twenty boxes available in the greater Honolulu County area for these one million people. At a conservative 150 members per box, you get 3,000 active CrossFitters, which represents a mere .003% market penetration.
While these numbers are rough, it’s worthwhile to note our fears of saturation are unfounded. So for the sake of this article, let’s agree the market is not saturated.
History Repeats Itself
But just because the market may not be saturated, does not mean boxes are not struggling. There are reports of falloff in new memberships from boxes large and small. There is a retraction that seems to be taking place. In 2008, CrossFit was an “If you build it, they will come” proposition. This is not the case in 2015.
Things, all things, constantly change. If you look at any business that either failed or started failing, you find one thing in common — failure to adapt to change. Failure to innovate.
- Motorola was an industry leader first in car radios, then two-way radios, then mobile technology. They were responsible for launching the world’s first mobile phones. They were cutting edge up until 2003 when they failed to recognize smartphones were the next wave. As a result, they lost a significant market share.
- Blockbuster led the planet in video and DVD rentals but failed to adapt when streaming media came along. Netflix, movies on demand, and RedBox stepped in line ahead of Blockbuster and no amount of catch-up work could save them.
- Kodak invested in digital photo-imaging technology, but failed to pursue it because they were concerned it would impact film sales. They were right. They are now belly-up.
But then, look at Apple. A company that unveils one new innovation per year before we even know we need it. The iPad is now ubiquitous, but before it was launched, no one had a clue they needed or wanted a tablet-style computer.
Innovation Is Key
What does this mean for you, the affiliate owner? You must be aware that your product is not CrossFit. Your product is health, wellness, and fitness. Once you realize that, you will open up your potential customer base to include many more people.
If all you offer is CrossFit, you are going to experience the retraction in sales and then, possibly, face closing your doors. CrossFit as a means of attracting customers may run out of steam. Fitness, health, and wellness never will.
This does not mean simply add a Sunday yoga class, nor does it mean adding a pro-shop to your box, although both of those are fine ideas by themselves. But that’s catch-up work, not innovation. Don’t think so much about how you can capitalize by adding this product or that service. You must innovate. How can you stay ahead of the curve when it comes to providing fitness to your customer base?
Perhaps it’s about understanding there is a major unexplored field of strength and conditioning practices that have yet to meld with the average CrossFit gym. Put another way: is your gym a CrossFit gym or a training facility? Do you offer CrossFit classes at nine, ten, and eleven o’clock, then close and lock the doors and don’t come back until your 4:30pm class? Or is there something going on all day — personal training, weightlifting, someone doing Z1 work, and someone working on skills?
If a client comes to you and asks how she can deal with lateral elbow pain, do you know? Are you conversant in the physiology of elbow pain, as well as the possible causes, treatments, and scaling options? Or did you simply get your L1 and open up a gym, hoping no one would ever get hurt or need care?
Is your CrossFit gym your hobby, your passion, or your livelihood? If it’s not the latter, it’s probably going to close.
Practical Solutions for Innovating Through the Retraction
- Offer open gym hours every day. Do this all day, if feasible, to allow for the growing population of people training CrossFit-style strength and conditioning, i.e. OPEX, Invictus, weightlifting, and more. This is the future of the successful CrossFit box-turned-training facility.
- Partner with personal trainers in your area. Let them use your facilities to train their clients. You have the equipment. They have the bodies. They pay you a percentage of their income. It’s tantamount to free money. They also bring foot traffic.
- Get out of the strip mall. The associated constraints make it impossible to grow past a finite number of members and complaints from neighboring businesses about bars dropping and loud music will crush your ability to compete.
- Find a balance between pretty and shitty. Spending too much time on decorations takes effort away from training and fitness. Stenciling your logo on every platform is cool and your Wodify flat screens on the wall are nice and all, but it’s just window dressing. Russell’s had great windows, too, but they closed. Conversely, if your equipment sucks, people will leave. There is a balance.
- You cannot offer a one-size-fits-all program. If all you offer is the WOD, you are alienating people who want personal training or individualized programming, as well as those who want to train powerlifting, bodybuilding, and so on. You must have the knowledge to program for individuals. This means a lot of work, study, research, and practical experience. Learn how to train people, not just give them a WOD.
Small businesses go under every day. The success rate for small businesses is miniscule. But there is no reason why your CrossFit gym should not continue on a long-term path to profitable growth. If that’s what you’re currently experiencing, then I applaud you. If you’re suffering, it is not too late to reinvent yourself.
But don’t wait until you’re past the tipping point. Dig in now, innovate, and succeed.
1. Investopedia; “Market Saturation.”
Photos 1 and 3 courtesy of Shutterstock.
Photos 2 and 5 courtesy of CrossFit Impulse.
Photo 4 courtesy of CrossFit Empirical.
Originally published at breakingmuscle.com.