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Is The Physical Gym Business Model Broken?

Is The Physical Gym Business Model Broken?

May 26, 2021 at 09:00AM
by PYMNTS

The gym as we know it is not built for customer success – something that most consumers will readily attest to, given how few times they went to the gym after joining it. The data backs this up. In 2019 (the last “normal” year of gym attendance), more than 62.5 million gym members visited the gym 104 days per year, while only about 18 percent of members went to the gym consistently. Out of those who actively used their gym membership, 49.9 percent went to the gym at least twice a week, while 24.2 percent made it to the gym at least once a week.

A reality born out by figures tends to cast some aspersion of the oft-cited benefits of actually going to the gym — particularly the social ones of interacting with other exercise enthusiasts. That’s something difficult to do when few of the people who sign on for gym memberships go to workout, and an even smaller segment does so with any regularity.  

And gyms, Moawia Eldeeb, co-founder and CEO of connected fitness firm Tempo, told PYMNTS, aren’t unaware of this issue — he contends the entire business model is built on consumers who become estranged nearly immediately after signing up. It’s a designed-in feature of the business model that preserves profitability. Most gyms count on that they will only ever have to serve a fraction of those customers. Then add to that the pandemic, which shut physical gyms and forced consumers online to find ways to keep up or start their exercise routines.

Tapping Digital Sources

Connected tech, he noted, offers an opportunity to keep the consumer engaged in a program by offering up something more bespoke to consumer needs. However, a potential downside to connected fitness opportunities is that they are usually limited to a single expensive piece of gym equipment.  

Not that Tempo’s experience is inexpensive — like Peloton, Tonal and Nordic Trac, its connected workout equipment will set a buyer back more than $2,000. Tempo’s smart-screen system links to full gyms and offers personal training services at $50 a month. And its focus, he noted, is a little different from the rest of the connected-tech crowd. 

“The question we designed around was how do you scale personal training so that every single human being can have a trainer? We realized that what we had to do was find a way to make it possible to scale human beings via AI and computer vision,” Eldeeb explained. 

The focus on personal training grew from Eldeeb’s direct experience of working in gyms that matched personal trainers and customers as a way to keep customers engaged — that engagement tends to keep consumers working on their fitness goals as well.  

And leveraging connected tech, he noted, makes personal trainers able to do more and reach more people. That tech can build a better consumer workout program via computer visioning technology that can “see” a user form well enough to evaluate it and offer tailored feedback.  

“If you look at the past models, people who had a trainer showed up to a gym. So what we’re saying is we’ll give you a trainer on your own time at home,” he said. The feedback helps the consumer correct form for better results.  

A feedback loop, he noted that is all-important, especially in an arena like fitness where it can be hard to tell if one is making progress. Connected tech of the sort Tempo and other players in the space offer goes beyond heart-rate monitoring to track how much the user is lifting and how well they complete the exercise. It also gives the user a way to see all that data when finished with the workout. He noted that gets users extremely excited and feeling good about themselves, which makes them want to come back. 

Which is why, he said, though much of the physical world will return, gyms as we knew them might not. Even when the consumer feels safe going back to the gym, he expects many consumers will continue to workout from home — because of technology’s ability to deliver an experience tailored to their needs.   

“Now as gyms are reopening, what’s amazing is people are not running back,” he said. “It’s not like they saw a huge success with gyms before and that’s why the future of this space is going to continue to grow.”