Boutique Gyms Part I: What They Are And Why They Are Gaining Steam

It’s no secret, boutique fitness studios have been exploding on the fitness scene for several years. Participation in boutiques doubled in one year from 21% in 2013 to 42% in 2014 according to research from IHRSA. And boutique chains have been adding new studios at a rate of 450% per year since 2010 according to the fitness-focused investment firm Piper Jaffray.

A boutique fitness studio is generally viewed as a small gym (800 - 3500 square feet) that focuses on group exercise and specialises in one or two fitness areas. One of the most remarkable aspects of boutiques is their premium price tag. The popular group cycling studio, Soul Cycle, charges roughly $32 per one-hour group class, and other boutiques average $20 or more per class.

So what is the appeal? Will this rapid growth continue? And what does this mean for traditional health clubs that have dominated the exercise scene for decades?

Why do exercisers love boutiques?

What makes a person fork over $30 a class depends upon the individual. But nearly every participant will tell you it’s all about the experience with boutiques.

Imagine going to a class that specialises in your favorite type of exercise, or blends a couple of types of exercises that you love into one. You’re surrounded by energetic people in a social atmosphere where people know you. The space itself is attractive and upscale. The class is led by an amazing instructor. They’re playing motivating music, and for an hour, you’re pushed to your limits in a unique blend of fun, intensity, and camaraderie (and maybe a little group pain). 

The boutique experience is intimate. it’s trendy, fun, intense, and you come out feeling like you performed at your peak with a little bit of euphoria you can carry with you for the rest of your day.

Will the growth continue?

While boutiques are growing because of the differentiated experience they offer, something else often goes unmentioned. Research shows the vast majority of people are willing to drive three miles or less (or travel 10 minutes or less) to a gym to work out. Proximity remains one of the biggest drivers of where people work out. The small footprint of boutiques enables them to pop up just about anywhere, which is precisely what they’ve done.

This means that until there is practically “a gym on every corner,” there remains plenty of opportunity for the boutique market to expand. Is there an endpoint to this rapid growth? Absolutely. Eventually the market will get saturated, competition will drive the average price per class down, the economics won’t look quite as good to operators, and facility build-outs will plateau. But the majority of signs point to growth for the foreseeable future.

Do traditional health clubs need to worry?

Lower priced clubs have less to worry about, as they fulfill a very different function along the fitness spectrum. However, gyms that appeal to boutiques’ target segment – exercisers who are willing to spend much more money on experience and environment – need to pay attention.

Boutiques appeal to committed exercisers and fitness fanatics. Unlike exercisers who join after a New Year’s resolution and taper off within a few months, boutique customers exercise multiple times per week and stick with it. And, research shows a big portion of them currently have multiple gym memberships.

This is a phenomenon that’s unlikely to last at today’s levels. One of these types of facilities is going to lose a meaningful chunk of those multi-membership customers. How many other products or services can you think of that fail to meet all of the needs of their single most important customer – the one who spends more and happens to be the most committed to that product or service over the long haul? There aren’t many because somebody usually adapts, creates a better product or service, and ultimately wins. 

The question is… who will adapt?

Will boutiques crack the code and find a way to show avid exercisers they can get a complete workout without visiting multiple competing locations? Will traditional clubs alter their model and create compelling experiences to inspire members in new ways? Or will a completely new model emerge that takes both by surprise?

In Part II, we’ll examine what fitness facilities can do to create their own dynamic exercise experiences.