I'll let the numbers illustrate the story. Pilates, the flagship of kinder/gentler exercise, has skyrocketed 445% since 2000. Usage of the knee-friendly elliptical trainer has grown by 247% since 1998, while yoga/tai chi is up 134%. 'Back-friendly' recumbent cycling has grown by 58% during the same period. Exercising with lighter hand weights has advanced 27% in the past five years. And treadmill exercise, once thought to have 'maxed out,' was utilized by an amazing 45.6 million participants in 2003.
On the other side of the fitness coin, more difficult forms of exercise haven't fared as well. Since 1998, aerobics is down by 22%; rowing is off by 13%; stairclimbing has fallen 23%; and cross-country ski machine exercise has plunged by 31%. If you factor in population growth, the losses are even more dramatic.
Driving this trend have been the “express workouts,” which embody the virtues of both easy and convenient exercise. Curves for Women, the progenitor of this concept, is the fastest-growing franchise in American history. With phenomenal, yet unceremonious, growth, this studio chain has mushroomed to over 8,000 franchises worldwide, becoming a mecca for unathletic, often overweight, and sometimes older women, many of whom have never before joined a health club. With a relatively inexpensive, bare-bones environment-30-minute, no-frills, low-stress, circuit training to music-Curves has effectively removed all excuses for not exercising, and made fitness available to all women.
Fanning the kinder/gentler fitness flame is the notorious specter of our obesity epidemic. The new IHRSA/ASD Obesity/Weight Control Report offers graphic, visceral images of a dangerously overweight population. According to the report, some 3.8 million Americans now carry more than 300 pounds, with the average adult woman weighing in at a staggering 163! Approximately 400,000 Americans, mostly men, fall into the supermassive 400-plus pound category.
The immediate future of fitness depends on the industry's ability to recruit from among the Uninitiated Believers, an army of 129 million overweight, deconditioned people. Many of these people are, at this very moment, attempting to muster the courage to walk through your doors. In 2005, health clubs would do well to embrace express workouts, weight-loss programs, and capital expenditures for kinder/gentler equipment and classes.
Gregg Hamman, chairman and CEO, The Nautilus Group, Inc.
Equipment Tailored to Consumers
With few exceptions, the $5-billion fitness equipment industry stopped searching for major innovations about a decade ago. Given the growing number, and sophistication, of equipment users, that's no longer a tenable situation.
Today's consumer is savvy about technology, performance, fashion, and style, and has high expectations with respect to their homes, clothing, automobiles, appliances, etc. Should they expect anything less from their fitness equipment? Of course not!
As a result, we're seeing-and will continue to see-a shift towards sleeker, smarter, more reliable equipment that works hard to help people achieve results quickly and safely. At Nautilus, we're devoting more resources to building equipment that adapts to the human body, rather than forcing people to adapt to it, and are testing every item for durability and safety well beyond standard specifications. Last year, we doubled our product-development budget, and will increase it again this year.
Much of our thinking is based on a major market study we conducted in 2003 that showed that the commercial and home fitness markets are complementary-not competitive. Our research found that active people use the two venues to supplement one another. We expect that fact to prompt a change in manufacturers' overall marketing message. At Nautilus, we're developing a “cascade” approach to our business: Innovations will be introduced, first, at the commercial level, where people will be able to see, feel, touch, use, and understand the equipment. We'll then promote the innovation to consumers, through marketing and advertising, to drive them into clubs.
This approach will attract more people to clubs, and grow the number who make a personal commitment to look and feel better. When that happens, everyone wins!
Helen Durkin, director of public policy, IHRSA
Working with Big Brother
The years of operating under the government's radar are over for the club industry.
Given the size and growing importance of our industry, particularly within the context of the nation's obesity crisis, we're coming to the attention of government at every level. That can be good when the government is considering ways to encourage exercise...not as good when it's telling us how to run our business.
From a public-policy perspective, 2004 and 2005 can be characterized as the years of more-more regulation, more laws, more scrutiny, but, also, more opportunity for the club industry.
Last year, IHRSA tracked 478 pieces of state legislation that would have a direct impact on the industry. The greatest number of them sought to regulate club business practices; the most onerous bills were ones that would prohibit any kind of automatic renewal/continuation-of-service provisions in contracts. State legislatures also became increasingly interested in mandating the use of automatic external defibrillators (AEDs), but most were willing to entertain the concerns expressed by IHRSA and provide additional liability protection for clubs. There were also some attempts to impose a sales tax on club dues, which IHRSA was able to defuse. Finally, on a positive note, a number of states began to seriously consider passing legislation to incentivize exercise.
Federal regulation created both opportunities and headaches for clubs in 2004. On the plus side of the record, the Centers for Medicare and Medicaid Services announced a significant policy change that could, conceivably, facilitate coverage of a wide variety of treatments for obesity, including some offered by clubs; this is especially significant because, when Medicare and Medicaid make such a move, insurance companies generally follow suit. However, on the negative side, the do-not-call regulations promulgated by the FTC and FCC, and subsequently upheld by the Supreme Court, proved to be a year-long pain for clubs, which were forced to substantially curtail their sales calls to referrals.
This year, the opportunities and threats that the industry confronts remain virtually the same-with one notable exception. We believe that the push to tax membership dues will be significantly weaker in 2005 than it has been for the past three years.
