The fitness industry will survive the pandemic, but it will look very different
For Fast Company’s Shape of Tomorrow series, we’re asking business leaders to share their inside perspective on how the COVID-19 era is transforming their industries. Here’s what’s been lost—and what could be gained—in the new world order.
Joey Gonzalez is the CEO of Barry’s, which specializes in high intensity interval training and has nearly 70 studios across the U.S. and abroad. He is also an instructor.
COVID has been a humbling experience. The first thing we did was launch free Instagram workouts, which kept our community engaged. Then we launched a digital platform, which we built in 14 days using the Zoom platform. We had a moderator who filled in to give a front-desk experience and to shout-out people in the classes to help our instructors.
We’re investing heavily in digital and it will be a permanent part of our business going forward. We’re going to stop using Zoom and there will be a fully integrated social component, so you can see which classes your friends are taking. Our instructors will be able to call people out and help with their form: We don’t just want to stream; we want to be able to teach.
We have nine functioning studios today across the U.S., and we’ve had to navigate reopening in different locations with different rules and regulations. If you took class in Boston, you’d see plastic shields in between every treadmill. In D.C., we’re only allowed to have 10 people in the red room.
We also launched Barry’s outdoors, which is pretty much what it sounds like. The majority of them offer 50-minute weightlifting classes. In New York, mayor Bill de Blasio allowed gyms to reopen at limited capacity, but blocked all boutique fitness studios from reopening. So we launched a concept called Open Gym in New York, where people can book time [in a Barry’s studio] to work out with audio-guided workouts we provide through QR codes. Everything is wiped down afterwards.
The pandemic has been a disaster for our industry. A lot of brands are getting ready to announce that they are closing in the U.S.”
Joey Gonzalez, Barry’s
In March, we had a workforce of over 1,400 employees. Today, we have 400 or 500, if you include part-time employees. We brought a lot of part-time desk and facility staff back to help us run outdoor classes. One of things that makes me most proud about our company is that we didn’t just push a button and send a termination email to our employees. Every single person received a phone call about the status of their employment. I have been heartbroken.
The pandemic has been a disaster for our industry. A lot of fairly significant brands are getting ready to announce that they are closing in the U.S. A lot of businesses are at the mercy of landlords, so it depends on what kind of deals can be structured during the months it will take us to get through this.
Businesses that have developed or are working on developing an at-home structure can do well: What better time to announce the new at-home bike you have been developing? The other type of business that can do well is one that has fostered a big community and good customer relationships. That’s where I’d put Barry’s. We didn’t have the infrastructure when this hit, but we did have some of the best instructors in the world.
William Lynch is the President of Peloton Interactive, which sells connected bikes and treadmills and has an app that allows users to stream prerecorded and live classes.
We’ve always believed that if you were to provide higher quality fitness instruction, with better equipment, at a better value, in a better place like home, people would gravitate toward that experience. We’ve learned that that premise is true. Prior to COVID, we were seeing a mass movement toward fitness in the home—we were growing at triple digits—but this [crisis] proved it.
We had to close our studio where we film classes, and set up equipment in instructors’ homes, so they can stream live. In the spring and summer, we added something called “threshold deliveries,” where we got the bike in a safe manner to the consumer’s doorstep and wiped it down. We also invested in hazard pay for our workers in order to keep deliveries up and repurposed our retail teams, who couldn’t work in stores, to take customer calls due to the high volume.
We realized that during the pandemic, a lot of families like to work out together. We launched new content verticals like “family fun,” where families can stretch on the floor together. We also launched dance cardio as an upbeat and fun way to get a workout and barre classes due to customer demand.
Our research [suggests] that even post-COVID, most people are not going back to the gym. At least 60% of Americans do not intend to renew their gym membership. And I think that’s less about the pandemic and more about the fact that you can deliver a better experience in the home. Last quarter, we saw our membership numbers explode. It’s been well above triple digit growth since the start of the pandemic. We’ve had to scramble to build more bikes and more treadmills. And we’ve been selling a lot more digital memberships.
We believe this is a permanent shift. People have seen that they can get a great workout from their home, and they can still interact with a community through the leaderboard. You can see a lot of fitness companies starting at-home programs, everyone is trying it. There will still be a place for smaller, independent studios and gyms but not at the level we saw before. Some of them will have to close.
Tracy Anderson is the creator of the Tracy Anderson method and CEO of Tracy Anderson, a fitness company with studios in five cities, and an online workout streaming service.
There has been an undeniable increase in interest in working out from home because gyms are really germy. Luckily, we reach most of our customers through streaming, and have developed a really authentic [online] experience.
The pandemic did change how we connect to some of our clients. We closed our studios in New York City, the Hamptons, Los Angeles, Madrid, and London, which was a very easy decision to make. I wasn’t afraid of loss of income: We just accepted it and moved on.
I love connecting with people in person. I believe that every connection is powerful. I believe that the closer you are, the stronger the energy vibrates. So I can’t really imagine a time where I would ever close every physical studio permanently. But I had no interest in opening a bunch of daytime nightclubs, where instructors are just bouncing around with people. It’s hard for those [kinds of fitness] companies to convey that experience through streaming.
At the beginning of the pandemic, my business partner said we should scale back with pay cuts. I told him, “Give me two weeks and I will work something out to make it up financially.”
I had no interest in opening a bunch of daytime nightclubs, where instructors are just bouncing around with people. It’s hard for those companies to convey that experience through streaming.”
I put a stage outside in Florida where I was quarantining. I contacted this company that normally builds stages for concerts, but wasn’t building as much because no concerts are going on. I was like . . . can I get a stage?
We set up three cameras. I recorded my regular classes that get streamed every week to subscribers and then I created a special live class. I haven’t taught live in a long time. So I offered these special two-hour live classes designed for our very committed clients, people that never let me down. That type of client will show up to the studio (pre-COVID) to spend two and a half hours in 90-degree heat with 70% humidity to sweat and move with me.
We charged $50 dollars [a person] for it, which is a bargain because no one could ever get me training them for two and a half hours for $50 in my career, and did one every other week. That made a big financial difference for us. We didn’t have to let anyone go and we didn’t have to adjust anyone’s income.
The schedule was throwing off my family time, though, because we were filming on the weekend. So we’re doing less of them and I might pass the ball to one of my other trainers. I might do one during the week.
Josh McCarter is the CEO of Mindbody, a booking and business management platform for fitness studios, salons, and spas in the U.S. and abroad.
We provide the business management system that a spa, salon, or studio uses. They run all of their operations with it. They manage their classes and appointments. They transact with customers.
We started seeing businesses shut down in China, Hong Kong, Singapore, and Australia, and [then] France and Italy, before we saw it in the U.S., so that gave us some insights into how we could help our customers and our industry pivot. We had previously identified virtual [streamed or on-demand classes] as an opportunity for us to expand into. When COVID hit, we shifted our focus to it and moved up the launch from August to earlier in the year.
We’ve been helping studios that are not fully digital to get on our virtual platform because the preponderance of the industry is based on physical location. When they had the pivot to go virtual, the first thing that most [studios] tried was Instagram live, Facebook live, or even Zoom. But these systems are really disconnected from [the studios’] core operating systems. Our digital platform enables studios to integrate their online classes with our management systems, so that people can book and pay for digital classes. This lets studios offer hybrid memberships where people can sign up for both virtual and in-person classes as things open up. We think the future of the industry is studios being able to offer both.
North of 90,000 videos have now been uploaded by our customers. And we’ve seen a huge uptick in consumer demand. Through our research [we found] that about 90% of consumers say they’re going to go back to their prior workout habits and regimen, but about 46% of those are saying that they’re going to tack on a virtual aspect. So we say [to studios], if you’re not focused on this hybrid model, you’re probably going to start losing some of your clients.
People are thinking more and more about their health and their wellness—the pandemic has emphasized that it’s important. We’ve seen in some of these markets that have reopened, like Hong Kong and Singapore, that bookings for classes are even higher now than what they were in 2019. I think that that’s going to be kind of a lasting change that comes out of COVID, a heightened focus on people’s health.
David Long is the CEO of Orangetheory, a fitness franchise with more than a thousand locations in the US and 23 countries.
The pandemic was a really challenging time for us, we had to furlough a lot of people and we’re still working to build back up. Fortunately, we were able to get some PPP money, which helped us survive the tough period at the beginning of the pandemic.
I would say 80% of our studios are back open in some way. A lot of studios that couldn’t open their physical locations started doing outdoor programming, and our customers loved the variety. We want to make sure that as studios reopen, they’re delivering a valuable experience and what people are looking for, so that they can come to the studio two or three times a week. We’re still opening a double-digit number of locations [this year]. Even in July, we opened some. We recently opened one in Denmark.
We introduced [an on-demand] daily workout globally in March [through our website] that people could do from home. In November, we’re launching a digital club: It’s really personalized and hopefully will give our customers a roadmap of what to do and how to do it to get the best results. We want to take a customized approach, so we’ll integrate heart rate monitoring like we do in the studio.
Members can already monitor their heart rate when they go for a bike ride or a jog when they’re outside of the studio [through Orangetheory monitors]. The number of people using [those monitors and synced with the Orangetheory app] has skyrocketed. We’re working on building our products around that for the most part. But we also know that our big differentiator is the live authentic coaching, so we want that to be part of the experience too. So we are adding a digital [club], OT Anywhere. But for it to succeed it needs to be customized. Holding people accountable is important.