Gyms have really whipped themselves into shape when it comes to perception in recent years of what a fitness center can be.
They’re the new darling of anchor tenants at some malls, a way of life in many parts of the world and they’re increasingly becoming retailers as business models mature and diversify over time. Retail outposts found within gym chains and boutique fitness centers are no longer last-resort pit stops to nab a forgotten bottle of water or sweat rag. Gyms are pushing forth with far more diverse businesses, bolstered by consumers’ lack of time and society’s acceptance of leggings as perfectly valid for public consumption.
“[With] the shift in terms of culturally how people spend their money today, health and wellness has become the new status symbol,” said Equinox vice president of retail Annie Walters. “It’s not so much about what Gucci or Chanel bag you’re carrying.”
Instead, the executive said, by way of example, it’s now about what up-and-coming fitness brand one is wearing, and Walters would know as she sits atop an interesting perch, having joined the luxury fitness chain about six months ago from Saks Fifth Avenue. Before her decade there, she also clocked time at Bergdorf Goodman and Neiman Marcus and has seen the shift in the industry.
She’s been putting her skills to use, helping Equinox retail — ranging anywhere from 250 square feet to more than 1,000 square feet — with a major reshaping that’s called for elevated assortments, increased casual brands into the assortment, personalized shopping experiences and playing up a fashionable point of view. It’s about helping guests with their wardrobes rather than a space for what Walters dubbed “forgettables” — those water bottles, towels or other quick-hit items often left at home or the office necessary for a workout. With most of the New York-headquartered company’s retail business hovering around 55 to 60 percent women’s, Walters thinks there’s plenty of room for the business to grow with men’s.
She’s not the only one hailing from traditional retail and lending her expertise to the burgeoning gym retail segment.
Laurie Sasser, a consultant for the six-studio Los Angeles area boutique chain Hot 8 Yoga, handles the retail partnerships for Hot 8 and also works on behalf of other fitness studios in need of some help building out their stores. In Sasser’s past life, she worked in the couture space at Neiman Marcus Beverly Hills.
“The same clients who are walking into Neimans down the street and buying a $1,000 dress or a look from me, they’re walking into hot yoga studios, a book club or another lifestyle community,” Sasser said. “That’s what’s different nowadays versus 10 years ago. People are spending much less time in department stores and they are buying in their smaller lifestyle communities. Hot 8 Yoga might be the only place people walk into where they’re seeing product. Many people don’t even go to department stores now. They order online. But if they’re going to yoga anyways, all of a sudden that becomes the new format for brand exposure.”
Hot 8 is small relative to some chains with six locations, but its owner is thinking big and is set to launch an online shop this year that will work in tandem with the physical studios and Instagram. The company’s also seen growth in the past year with expansion into wellness products such as protein powders, topical creams, beauty or anything else consumers with discretionary income are buying.
“Any lifestyle community is a luxury community,” Sasser said. “If someone is able to spend $200 a month on a membership, maybe they spend on four or five pairs of yoga pants a month. All of a sudden you are in an elevated, luxury community.”
The Bar Method’s also seen success with the addition of the nutrition category, said the San Francisco firm’s chief executive officer Jay DeCoons. That’s meant experimenting with companies such as Daily Harvest, a frozen meal delivery service focused on unprocessed, unrefined options. The ceo pointed out companies in the fitness space whose retail is accounting for 15 to 20 percent of overall sales is doing well. The Bar Method, he said, is still under 10 percent and hasn’t maxed out the potential to grow retail’s share of the revenue pie.
“The ath-leisure trend is real and sustainable in my mind,” DeCoons said, adding he’s seeing more and more members wanting shorter classes under an hour as fitness routines continue to be the norm within their day, calling for garments to do double duty across day parts.
“I even look at the trends around the work at home — the WeWorks of the world. It’s a lot less formal and structured, and I don’t think it’s going to go back,” DeCoons said.
As that continues to be the norm, shoppers are becoming less interested in pieces with emblazoned logos. Instead, they’re demanding more curated, seasonal collections, DeCoons said.
“It’s not about smacking The Bar Method on a cheap product,” he said. “They want quality and they’re willing to pay for quality.”
Los Angeles-based YogaWorks Inc., which went public in August, followed by an acquisition streak of smaller studios, has taken its retail strategy a step further acting as a purveyor of sorts for new brands across categories throughout its 66 studios.
“We definitely feel that there is an interest in retail spaces for something other than just convenience,” said Megan Watumull, YogaWorks director of retail.
YogaWorks, as part of its retail strategy, cycles in pop-up shops featuring local artists, running the gamut from jewelry to journals.
“It’s really an opportunity for somebody who is local or hyper-local to present their product to consumers who are interested in furthering their yogi lifestyle,” Watumull said. “For us, it gives the student a chance to have a one-on-one experience with maybe a designer or a jewelry maker. It gives that person that face-to-face exposure. It’s not just a product on a shelf.”
While retail at YogaWorks is exposing its members to new brands, New York-based Peloton launched into retail at the end of 2013 to introduce its own brand to the uninitiated. The company fancies itself a fitness, technology and media hybrid. It’s a mouthful and Peloton needed a physical outpost to show what that is, via its boutiquelike showrooms where apparel and accessories are paired with the actual workout equipment.
“By having the apparel there and having a really unique type offering, it was a way to attract people who may have normally just passed by the store,” said Peloton chief revenue officer Tim Shannehan. “It’s still an attraction for people coming in who may not know much about Peloton and are looking for fitness apparel, but the majority of buyers looking at apparel are Peloton bike users. They have an affiliation with the brand.”
Peloton’s under way with an aggressive expansion plan for its showrooms, with at least 20 set to open over the course of the next 12 to 18 months in markets such as Ohio, along with existing, heavily populated places such as Los Angeles and New York. These are spaces that ideally are around 1,500 to 2,000 square feet. The company also in the past year began dabbling with a 300-square-foot, micro-store box located in six malls.
“We have a very rapid and passionate member community and our members are craving apparel and products that allow them to express their excitement for the brand so the boutique has exploded this year in a great way and our offering has evolved,” Shannehan said.
That’s meant a core apparel line of sports bras, shirts and other basics, fortified with seasonal offerings of Peloton-branded gear sometimes done in collaboration with brands or instructors who have strong followings of their own.
Brands are keeping tabs of all this change and responding accordingly.
Gyms and studios are the largest and fastest-growing category of retail buyers attending Emerald Expositions’ Active Collective trade show, according to the show’s buyer relations manager, Rachel Nobles.
“Our specialty gym boutique and resort business is on fire,” said Shape brand director Sheena Mahtani. “That’s a space that people are now actually going into and purchasing, whereas before it might have been an afterthought and ‘I might forget a sports bra’ or ‘I might forget my tank.’ Now it’s actually a retail destination.”
For Shape, which is distributed in boutiques all the way up to larger players such as Peloton and Equinox, the specialty business in the last year went from roughly 20 partners to around 100. The performance-based brand was launched by the fitness magazine of the same name via a licensing deal with Apparel Bridge LLC.
“People go there for things they don’t find typically in department stores,” Mahtani said. “It’s curated.”
Ubiquity breeds awareness, which breeds education and the ath-leisure consumer’s gotten smarter about materials and pricing.
“In the past, whenever it was a new, unique fashionable brand, it commanded a little bit of a higher price point,” Mahtani said. “The consumer now is so savvy and they know when it’s a good quality piece and what they should be paying for it. That’s one thing a lot of the gyms, boutiques and spas across the board are really honing in on is that price value. I don’t think the consumers are more price-sensitive or looking for a deal. It’s more along the lines of they’re shopping in the traditional way and knowing whether those updates are worth the price. People are going to shop around. People know what things cost these days. Activewear’s so saturated it’s a little bit easier to do that.”
That’s made style and exclusivity that much more important in brands’ collections in a shift largely mirroring where workouts are going generally, said Onzie Inc. president and owner Kimberly Swarth.
“It parallels that spirit of what’s really happening in these gyms and studios because the workouts are getting more creative, from kettle ball to barre classes to yoga and spin classes that feel like a club,” Swarth said.
Swarth’s eight-year-old, Venice, Calif.-based business is sold in some 2,000 yoga studios and workout facilities around the world in addition to majors such as Nordstrom and Neiman Marcus. The label’s made a name for itself with its bright colorways and cheery patterns, ranging from peacock and leopard to patchwork graphic prints all made in Los Angeles. It’s merchandise from brands such as Onzie and other fashion-forward players that will help move the needle for what gym retail looks like in the future. Standards will evolve, but this new breed of retailer would do well to remember why it’s seeing success in the first place, which is the community of fitness devotees, Swarth said.
“What needs to be heard is the brand authenticity that needs to speak in this category. It’s different than what brands can speak in denim or ready-to-wear,” she said. “There really is this thread of authenticity that needs to come forward with not only the performance of the product, but what’s behind the brand.”
Beyond Yoga chief executive and cofounder Michelle Wahler was recently at a conference for one of the apparel company’s fitness partners. It was a gathering of the studio’s franchisees and if there are challenges at retail, Wahler heard little of them while at the conference.
“It was amazing how many of the people who just bought franchises were doing so well and they were blowing out their retail,” the ceo said. “I keep hearing the retail market is tough, but talking to these people, they all had been in business for a year or two, it was just a really positive environment to be in.”
Studios notching retail growth are now turning to brands such as Culver City, Calif.-based Beyond Yoga — currently distributed in more than 2,000 doors — to help them in a few ways. Wahler noted she’s seeing greater interest in brands able to offer the “third-layer” piece of an outfit that can be thrown on over workout garb to take the wearer from studio to street. The ceo also said smaller studios now work closely with her sales teams, looking to them for guidance on curating the right mix for individual doors that take into account factors such as the local customer and what nearby competitors may be selling.
“The people who have been in it for a while are more savvy, but there’s a lot of newcomers,” Wahler said.
Other companies, she added, now have corporate buyers who are putting together collections to help streamline the buying process for individual franchisees if they’re in need of some help.
Immediates, as in the broader apparel industry, continue to gain importance within ath-leisure. Brands who are nimble will have the leg up.
“Retail is changing and consumers are changing so quickly these days, it’s really hard to keep abreast of where they’re going,” said Australia-based Lorna Jane chief operations officer Anna Fowler. “Where we feel the industry is moving toward and where we’re seeing great success is customers are wanting to buy two months out to immediately.”
Product being bought and paid for six months out still happens but less and less so, Fowler said.
“If you think about smaller boutiques, they have a smaller portion of the customer base, but that customer is repeatedly coming back. They’re looking at not buying debt; they’re looking at buying more regularly and obviously showing new styles more frequently.”
Lorna Jane sees the bulk of its wholesale business coming from gyms and boutique studios with strong growth in markets, such as the U.S., China and Canada. The company’s producing anywhere from 70 to 100 styles each month with the option for buyers to do long lead buys or just-in-time via a Lorna Jane web site.
“The world of dot-com is about changing products; it’s not about having the same products all the time,” Fowler said.
Online ordering, data analytics, diversifying assortments and more sophisticated merchandising are all flying across the gym retail landscape, and most in the thick of it would agree, the runway for further refinement is long. Anyone who scoffed at the idea of ath-leisure being a fad may want to adjust their perspective. Just ask companies such as the online luxury activewear boutique Carbon38, which just received a $15 million investment from Foot Locker, or the venture-backed active e-tailer Bandier and its recently launched private label sold exclusively through Net-a-porter. The avenues for growth throughout the segment are diverse as strategies continue to be sharpened.
“It’s just starting. This is the natural progression of a market that’s been here for so many years,” Hot 8 Yoga’s Sasser said. “You’ve had so many brands interested in the activewear and ath-leisure space so there was an influx of brands wanting to get in. That’s where we’re at now. In a couple of years, people will not only have their stylist for when they’re going to the awards ceremony, but they’ll have their yoga stylist. They’ll have their Pilates stylists. That is the way the industry is going just based on history. It always gets more complex. There’s always need for further refinement.”