With a turnover of 27.6 bil­lion dol­lars in 2016, the US fit­ness indus­try is clear­ly the largest mar­ket glob­al­ly, earn­ing as much as the UK (6.1 bil­lion), Ger­many (5.5 bil­lion), Japan (5.1 bil­lion), France (2.7 bil­lion), Cana­da (2.5 bil­lion), Aus­tralia (2.5 bil­lion) and Italy (2.45 bil­lion) com­bined. So clear­ly, there is much to be learned from the fit­ness entre­pre­neurs of the land of the free. Espe­cial­ly when it comes to new busi­ness mod­els and new con­cepts.

In the last five years there was much buzz about “bou­tique fit­ness”, an up-and-com­ing busi­ness con­cept — and rumor has it that it will turn work­ing out into the new going out.  But what exact­ly is bou­tique fit­ness and what can we learn from this trend?

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What is bou­tique fit­ness?

Bou­tique fit­ness stu­dios are small gyms of usu­al­ly between 100 – 300m², which spe­cial­ize in cer­tain fit­ness areas. For instance, they offer box­ing class­es, cycling, func­tion­al train­ing or bal­let. This spe­cial­iza­tion allows them to design their stu­dios in min­i­mal­ist ways and to invest only in the equip­ment their cus­tomers tru­ly need. At first glance they often resem­ble exclu­sive clubs, lofts and even art gal­leries more than actu­al fit­ness stu­dios. As they focus on cus­tomer expe­ri­ence, they dif­fer from old­er fit­ness mod­els. They empha­size the social aspects of exer­cis­ing, while also offer­ing high qual­i­ty work­outs.

Sounds expen­sive? It is. Skirt­ing tra­di­tion­al con­tracts, bou­tique fit­ness clubs are usu­al­ly pay-per-hour. But this comes with a pre­mi­um price tag. For one group ses­sion they gen­er­al­ly charge between $20 – 35 per per­son. Yet, peo­ple are more than will­ing to pay for an hour of train­ing, accom­pa­nied by hip hop or elec­tro beats, espe­cial­ly if they are led by top-notch coach­es.

Accord­ing to Forbes, some of the cus­tomers of the exclu­sive fit­ness stu­dios work out up to 15 times a month, spend­ing around $142 in total — way more than the $70 they would pay in an aver­age gym. Bou­tique fit­ness there­fore has evolved into a lucra­tive busi­ness mod­el that promis­es high rev­enues to entre­pre­neurs. Soul­Cy­cle, one of the most strik­ing bou­tique fit­ness chains, gen­er­at­ed a prof­it of over $25 mil­lion before their ini­tial pub­lic offer­ing in 2015. And they are not the only ones turn­ing a prof­it. Oth­ers have long caught on to the idea and com­pa­nies like The Bar Method or Cross­Fit rank among the most promi­nent com­peti­tors in the bou­tique fit­ness busi­ness, with some of them gen­er­at­ing $4 bil­lion in annu­al rev­enue.

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Data-dri­ven work­outs are the future

But bou­tique fit­ness is grow­ing increas­ing­ly com­pet­i­tive with more and more play­ers enter­ing the mar­ket. This also puts pres­sure on busi­ness­es to stay inno­v­a­tive. Alex Fell, the cofounder of War­rior Fit­ness Boot Camp, a suc­cess­ful bou­tique fit­ness stu­dio that focus­es on func­tion­al train­ing, sees the future in going dig­i­tal.

Tech is key, accord­ing to him, and not only when it comes to book­ing class­es, com­mu­ni­ty build­ing and adver­tis­ing. The indus­try is head­ed towards data-dri­ven work­outs that make progress quan­tifi­able. There­fore it’s not only about cre­at­ing “lifestyle com­pa­nies”. It’s also about enabling clients to track their own progress and achieve­ments through per­son­al­ized feed­back.

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So what can we learn from bou­tique fit­ness?

Fit­ness in the dig­i­tal age is not mere­ly about get­ting peo­ple to sign a con­tract to a fit­ness club. It’s most­ly about fos­ter­ing long-term engage­ment. That way, busi­ness con­cepts that rely on pay-per-hour mod­els can be more lucra­tive than tra­di­tion­al gyms.

Most of all, cus­tomer expe­ri­ence is essen­tial. Cre­at­ing spaces that facil­i­tate com­mu­ni­ty build­ing and accom­mo­date the lifestyles of clients, while also offer­ing high qual­i­ty work­outs, is cru­cial to retain­ing them. There­fore new tech­nolo­gies and data-dri­ven work­outs are increas­ing­ly gain­ing impor­tance and are now key com­pet­i­tive advan­tages.