No, digital isn’t “killing” the fitness industry
You’ve probably heard the expression that “a rising tide lifts all boats.” It’s a bit of a cliche or a trope, no doubt — and sometimes when applied in business, it can make you groan.
But it’s actually really important as a concept to understand how and why so many people are thinking incorrectly about disruption.
Let’s start by admitting something obvious, just so people don’t get mad and go nuts in the comments: disruption is real. It’s happening. Let me give you two quick examples on that:
- 88% of the 1955 Fortune 500 doesn’t exist anymore: Yes, 1955 is a long time ago. But that still shows how titans of the early Baby Boom didn’t keep up.
- S&P 500 valuations: 10 years ago, the five most valuable companies on the 500 were Exxon, GE, Microsoft, Gazprom, and CitiGroup. Today it’s Apple, Alphabet (Google), Amazon, Microsoft, and Facebook. (Kudos to Microsoft!) That’s 10 years and a near complete flip of the most valuable companies on Earth.
So yes, disruption is here and it’s real and it’s happening in a lot of industries.
But … the way we think about it is often wrong.
Let me give you an example from the music industry. Many people believe — including a lot of music executives — that pure digital hurt their industry or shifted their business models and they couldn’t compete anymore. That’s actually not true. From 2000 to 2010, which is when this music industry disruption would have been primarily taking place, the amount of music purchased and the number of live music events attended around the world tripled.
So these conventional markers of music industry success were actually rising about 300% across the decade where music execs were freaking out about pure digital killing them. What gives?
What gives is that technology obviously releases some of the constraints of brick and mortar, which means a larger audience can be served in new ways. If you find a cool new artist on Spotify, you’re still probably going to attend a concert of his if one is nearby. It’s a giant shift in customer experience, but it doesn’t mean “digital” kills “traditional.” It means they work together.
Now let’s turn to fitness and wellness.
Some health club industry leaders will claim that nothing can replace human interactions, so clubs and trainers can’t be threatened by these new business models. I’d have to disagree. It is true that there is no replacement for human beings, but technology is enabling business models to do things in ways that humans on their own can not at scale.
Many of the most successful brands will blend human interaction with technology tools to create even higher levels of service — and trainers can support hundreds of clients with a combination of digital and physical delivery.
Therefore, very forward thinking bricks and mortar club brands are always evaluating the customer experience and considering how things like networked fitness, mobile technology and other digital tools can be integrated into their business models while other new purely digital startups and brands will jump into the space. One of the core tenets of digital is that cost of entry is much lower. Always remember that.
You’re now seeing all this reflected in the numbers. There are about 165M health club users globally (i.e. traditional brick and mortar), and that’s going to shift from pure brick and mortar to omni-channel — which is what you’ve seen in other retail spaces. By 2018, there should be 135M global wearables users. The wellness app market is growing massively too — Under Armour is reporting about 1 million new app users every eight days.
By 2020, you’re going to see a global wellness community of over 1B on traditional brick-and-mortar health clubs, wearables, and apps. Each aspect of the ecosystem is going to inform the others. It’s not that MyFitnessPal or a newer, cooler FitBit is going to “kill” the traditional health club industry. It’s going to be a partnership where each side informs the other.
That’s what we often get wrong about disruption. Amazon didn’t kill traditional commerce; it helped shift it. Uber hasn’t killed yellow cabs, but it’s made them think differently about their business models. When we view disruption in terms of “X will destroy Y,” we create fear-based, short-term thinking in traditional executives — and that’s bad for everyone.
The fitness industry is about living your best life and being your best self — with a few people making some money along that arc. There are disruptive technologies reshaping how the industry thinks about and presents itself, yes, but ultimately these technologies will help to create a massive global ecosystem rooted in an omni-channel approach to delivery.
Bryan O’Rourke is an entrepreneur, consultant, speaker, author, executive and investor, who has successfully advised and driven global brands for over 30 years. He has presented as a keynote speaker at industry and corporate conferences on four continents. You can hire him to speak at your next event or facilitate your organization’s strategic meetings. He is widely published and quoted in periodicals like Inc. Magazine, the Wall Street Journal and the New York Times and is CSO of a well known Houston based health club chain. Bryan is presenting at the IHRSA EU Congress in Seville Spain October 17–20 2016, and at the IHRSA ChinaFit Management Forum event in Changsha November 15–18 2016. He and his partners are launching Vedere Ventures, a boutique private equity firm investing in and advising various health and fitness business models around the globe. To learn more visit bryankorourke.com or follow him @bryankorourke .