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BoldBrushStroke

Death of the Big Box Gym

Posted on October 13, 2020November 3, 2020 by Arnold Lau

Based on my experience and evaluation of the market conditions, I think the Big Box gym concept is doomed. Already weakened by changing tastes of the younger generation, the COVID outbreak imposes operating parameters which make it virtually impossible to generate enough revenue to cover costs. In a highly competitive industry, the addition of the digital gym offerings only act to reduce thin margins. Aside from a group of dedicated fitness buffs who want to be at the gym, bulk of the gym memberships are sold by slick salespeople to people on a new resolution to get fit or lose weight, but their enthusiasm fades in months. These factors come together to transform bricks and mortar gyms like Amazon transformed the retail industry.

The most glaring issue with bricks and mortar gyms right now is that the numbers just don’t add up. We made a decision to shut down our gym, which had a lease that luckily ended just as the COVID lock downs began, because in a business model that required membership of 3000+ members to make a profit limiting people in the gym to 25% of capacity is a showstopper. People say that things will get back to normal after a vaccine is in place for COVID. Even if there is an effective vaccine, most gyms are not prepared to last 3 months of bleeding, let alone a year to two years of bleeding. If bricks and mortar gyms profitability were a math problem, it would be unsolvable.

Putting aside the impossible numbers of a COVID world, the tastes of the new generation of potential gym clients have introduced a whole slew of competitors from niche gyms to digital gyms. Without these competitors, we were already under pressure from other gyms offering cut rate memberships, free months. We were like the farmers endlessly growing crops to get more revenue and meanwhile driving themselves into the poor house. The gyms in our local market saw many members taking a membership to take advantage of a deal and then moving to another gym to get a new deal. The consumers made out well and the gyms are all bleeding red.

I feel fortunate to cut my losses and move on to new ventures. There is no point in throwing good money after a lost cause. Its a brave new world for the fitness industry.

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