Tech giants pose a threat to the traditional fitness business - through their customer obsession & data ecosystems
The question every operator should ask themselves is: What are those tech companies like Apple and Amazon doing right? Often, the answer would be: they are obsessed with their customers. They put the customers first, collect, analyze and act on huge amounts of data, and they offer whole ecosystems of products making it very convenient for end users.
For example, by providing product ecosystems (like Apple Watch – Apple Music – Apple Fitness+), the tech giants basically make it unnecessary – and often very inconvenient - for a consumer to switch to a different product. Once you have an iPhone, you usually also have a Mac, and then come the iPad, AirPods, Watch, etc. The integration between the products is so seamless that it just makes no sense to switch – and paying a premium for this kind of experience goes with it.
Tech giants are shifting the playing field for the fitness industry
The playing field is shifting along with changing consumer preferences and more choices available from (fit)tech companies.
We don’t yet know if tech offerings would become substitutes or complementary products for gyms. If operators make an effort to integrate the tech aspects by, for example, installing equipment compatible with Apple GymKit – that would mean a better and more seamless customer journey for their members, and higher chances for the operators to become a part of the new “fitness world order”.
Content is king again - and context is queen!
Big tech companies – or fittech companies like Peloton – have high brand recognition, high paying power and access to the best instructors and content production opportunities to create highly engaging content. Remember, they’ve been practicing user engagement for years and know how to retain users once they are part of the system.
So I believe once gyms try enter the fight against big tech, they will inevitably lose. They should try not to compete in the fields where they have no resources and no expertise, but instead forge smart partnerships with existing content producers and platforms offering live-streaming infrastructure – like Urban Sports Club.
But the real question to start with is not content differentiation. The real question is: Which value are we creating now – and how could we increase this value in the future, given the shifting consumer preferences and the changing landscape? If live-streaming classes with favorite local instructors are the answer – go for it. But if you are a low-budget gym and your value lies in providing all the equipment a client with bodybuilding aspirations might have, then your content strategy would look very different.
Local brands might become more attractive in view of COVID-19
I believe that being a local fitness brand could have a very positive effect on customer loyalty. The world is becoming increasingly insecure and providing a recognized “safe haven” for your local audiences might be one of the answers. It’s for a reason that a local social network like Nebenan.de is thriving – people strive to create a safety net in their immediate surroundings, often unconsciously, and gyms could be part of the solution.
Proximity and knowing the people behind the business – be it gym owners or trainers – creates trust, and trust is what drives customer loyalty. If I were a gym owner, I would definitely experiment with different types of content and pricing strategies to find out what is it that my members value most – and where they have the highest willingness-to-pay.
We'll see tech companies also moving into physical fitness spaces
Large technology companies have started offering digital fitness services and products like the Amazon bracelet to measure emotions through voice. I can definitely imagine them moving into the physical space as well, although the initial reasons behind it would be far from direct cash flow generation. Acquiring a gym or creating a new one from scratch would serve as a marketing showcase and in-person touch point to gain more customer trust.
Amazon has already opened brick-and-mortar bookstores and almost 30 Amazon Go stores in the USA with no lines and no checkout – this is the future which we are looking at, which is already here, just unevenly distributed.
Another possible scenario for Amazon would be partnering with a big gym chain to create future fitness gym-in-gym concepts. Here, gyms would be confronted with the question who owns the value chain and customer data. I guess the answer is somehow obvious.
The full version of this article appeared in the interview with the Spanish publication CMD Sport.
Background:
Natalia Karbasova is Founder of FitTech Summit and CEO of FitTech Company. Previously, Natalia has been with Hubert Burda Media, one of Europe’s largest media companies, for 9 years. She worked as personal assistant to the company owner, Dr. Hubert Burda, looking into global digital trends, and launched a number of entrepreneurship initiatives and startup events as part of Burda’s digital strategy.
Natalia has an M.A. in International Media Studies and has completed online courses in Economics, Negotiation and Entrepreneurship at Harvard Business School. She has been into track-and-field athletics for 8 years and is a certified fitness coach.