Merchant Innovation

ClassPass CEO On Getting The Fitness Industry Back Into Fighting Shape

Navigating the pandemic-altered landscape has been difficult for fitness operators forced to close their physical locations and translate in-person services into digital offerings.

But CEO Fritz Lanman of ClassPass, a platform for online and in-person fitness classes, told Karen Webster that digital offerings have partly filled a hole — albeit not completely — for consumers unable to get to their gyms.

“What we are hearing from our customers is that they're dying to go back to studios,” Lanman said. “The majority are getting bookings through the digital classes, which has been great for just keeping customers engaged and keeping partners’ revenue flowing to them.”

He said digitized classes have served as a stopgap measure during pandemic-related shutdowns, but that home workouts don’t fully replicate the in-studio experience. There’s less personal feedback from instructors, less feeling of community and a set of genuine space and expense limitations that keep customers from recreating their entire workout routines at home.

That’s why Lanman said he believes that working out at the gym isn’t going away. He said that consumers still like the immersive and varied exercise experiences that in-person gyms are uniquely able to offer.

But a comeback isn’t going to happen overnight, nor is it something that’s proceeding at an even pace all over the world.

“What we're seeing is there are some customers — maybe younger folks who have less of a risk or perceived risk — are willing to go work out,” he said. “But the majority of the industry is going to just sit tight until there's a treatment or a vaccine.”

He noted that some markets like New Zealand, where COVID-19 has been very successfully contained, are seeing gyms reopen and a resumption of ClassPass’ normal subscription-billing operations. But in markets like the United States and United Kingdom — where ClassPass does more business — COVID-19 rates remain high, and resuming more normal operations hasn’t yet been possible.

Creating A New Workout Environment

Fitness in many ways, Lanman noted, is often a matter of building a routine that powers a positive cycle. It’s a lesson he learned the hard ways in his years of transitioning into being an entrepreneur and away from being a college athlete, finding himself rapidly gaining weight on a consistent diet of airplane food, short sleep and little exercise.

“I started using ClassPass because this group fitness category seemed interesting,” he said. “After sports, running felt like a punishment, and I found just weightlifting so boring. So it wasn't until I started doing group fitness that I found a workout that felt more like a team sport, almost more fun. And if I had worked out, I would eat clean, I wouldn't drink as much wine. So, ClassPass has helped me get into that kind of positive reinforcement loop, and I lost 70 pounds.”

The pain customers have experienced in losing their ability to work out in their gym, he noted, has been the pain of having those routines disrupted negatively. And while they’ve repeatedly heard from customers that they very much want to get back to the gym, these are health-conscious consumers as a whole, he noted, and they aren’t going to go back until they really feel safe doing it.

Which for ClassPass, makes the objective clear — work with its partners to help them adopt more stringent measures on safety and sanitation and to disclose that information to the company’s customer base. From within the app, he noted, a customer contemplating visiting a new location for the first time can check to see which safety measures the studios are taking regarding cleaning, or whether there is temperature checking, infrared scan use or social distancing rules in place.

Beyond working with providers, ClassPass has also expanded its work on providers’ behalf with government entities to attempt to help bring relief into the industry. On the U.S. federal level, help has been slower to arrive for the fitness sector than it has been in other industries.

“It's been pretty tough to make headway there,” Lanman said. “The fitness industry hasn't gotten the same amount of love because it's just not as big as the restaurant industry.”

But the sector has seen success on the state and local levels, particularly when it comes to making space for industry input on reopening policies and procedures.

But perhaps just as crucial as what workout facilities are adding and rebuilding is what they’re working hard to maintain for customers: the ability to use gyms or fitness boutiques as the cornerstone of varied fitness routines customized to each user’s needs and goals.

What’s Next

The fitness world, he noted, is changing in ways that might sound familiar to anyone who has spent any amount of time observing shifting retail in recent years. Big box gyms, he noted, while likely to be “fine” in the long run aren’t where fitness is growing as an increasing number of consumers are, like Lanman once was, far more interested in the group workout offering.

“The group fitness category is growing a lot faster and has been for the last 15 to 20 years. And things like recessions or pandemics, they can tend to be moments of acceleration of trends that already exist,” he noted.

And that acceleration, he noted, is growing from a tendency among fitness consumers to look for some permutation of workouts from different sources and types. What that balance is and will be is difficult to pin down mostly because it varies so much by consumer. Some in a post-pandemic world will continue to want to split their workout lives between physical locations and digitally delivered content.

“When you have this much capital and this much innovation pointed at solving this big of a problem with such huge financial incentives behind it, I'm pretty optimistic that we'll get there regardless of what the government does,” he said. “I think we’ll see the private markets figure it out by the end of the year.”

And the gyms seem to be hanging on so far. Less than 1 percent of ClassPass’ partners have closed their doors for good.

Of course, there’s a chance that some gyms that fell into hibernation mode this spring will simply fail to wake up. But Lanman said there’s enough investor interest in both big gyms and smaller fitness boutiques that there will be a fitness industry on the pandemic’s other side.

He said it won’t be the same market as the one that shut down earlier this year — but hopefully, it’ll be a more robust and digitally enhanced one.

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