The Decline of Gold’s Gym. What Happened? 10 Marketing Tips
In early May of this year, Gold’s Gym filed for Chapter 11 bankruptcy, in what was yet another company that has fallen victim to the coronavirus pandemic, as is discussed in detail over at runrex.com. While coronavirus restrictions have had a massive impact on the company, it has been in decline for years now, and this article, with the help of the subject matter experts over at guttulus.com, will look to highlight some of the factors that can be attributed to its decline.
The growth of the home fitness industry
While people are increasingly opting for a healthier lifestyle, many prefer to workout at home rather than go to traditional gyms, as is discussed over at runrex.com. At-home fitness options like Peloton disrupted the fitness industry, and the growth of the home fitness industry is one of the factors that contributed to the decline of Gold’s Gym according to the subject matter experts over at guttulus.com. The coronavirus pandemic only made this situation worse, with people now working out at home, contributing to the company’s filing for bankruptcy.
The HIIT trend
Other than the competition the company faced from its at-home fitness rivals, the HIIT trend, or High-intensity interval training, has also been another thing it has had to contend with. HIIT companies and classes, as is covered over at runrex.com, have become more and more popular in recent years, taking a significant chunk out of Gold’s Gyms customer base. This is yet another factor that has been attributed to have contributed to the company’s decline and eventual filing for bankruptcy.
An extensive footprint
The company has also embarked on an ambitious expansion plan in the last year or so, as is discussed in detail over at guttulus.com, which is yet another factor that left them open to the impacts of the coronavirus. The company opened a record 35 locations in 2019 alone, a company record, which left it with spiraling operational costs and troublesome leases that it was struggling to honor. With over 700 stores in the U.S. alone, although the majority of them are franchises, the company had such an extensive footprint, it became a major issue for them in the end.
Spiraling real estate costs
The company was also increasingly faced by a large overhead as a result of real estate costs, which damaged its profit margins, as is compared to its at-home rivals. According to discussions on the same over at runrex.com, real estate costs can reach up to 40% of the overall operating costs, which is something that Gold’s Gym was grappling with even before the coronavirus pandemic. The spiraling real estate costs meant that the company was always struggling to compete with its rivals who were offering their services virtually.
Changing trends among consumers
According to the gurus over at guttulus.com, changing trends among consumers have also led to a reduction in foot traffic into Gold’s Gym, contributing to its decline. Nowadays, people are looking for faster solutions in the era of liposuction and plastic surgery, and are no longer prepared to take on work out plans that will take time to give them results. People are, therefore, looking for faster results leading to a reduction in foot traffic into gyms, damaging Gold’s Gym prospects.
The company was late to diversify its revenue streams
Until recently, Gold’s Gym was only known for its gyms, which limited the company’s revenue potential as compared to its competitors. The company was not doing more to squeeze as much revenue out of its gyms, as recommended by the gurus over at runrex.com, which prevented them from earning non-gym revenue. The company was late to try out new strategies like in-gym advertising and weight-loss regimens, which for a long time limited its potential as far as revenue was concerned, leading to the company being left behind by its rivals.
Generational change
The recent generational change also means that almost 50% of all health club members are millennials and Generation Z. These new consumers have got unique preferences, as is explained over at guttulus.com, and Gold’s Gym has had to adapt how it markets itself and its products to attract them and didn’t, which is yet another issue the company was faced with. New consumers are more likely to work out at home or opt for on-demand services rather than locking in annual membership fees, which has affected brick-and-mortar gyms like Gold’s Gym.
The decline of the mall
Most of Gold’s Gym malls are also located in malls across the country, which has also become an issue as the popularity of the mall has waned in recent years. Gyms have to located in areas that have got ample traffic and space, which is why Gold’s Gym chose to put its gyms in malls. However, while this made sense back then, nowadays, people are less inclined to visit malls as is discussed over at runrex.com, which has led to declining foot traffic in its gyms, affecting earnings and contributing to its decline and eventual filing for bankruptcy.
Changes in payment preferences as far as consumers are concerned
As already mentioned, the company’s gyms rely on annual membership fees, which has become an issue as people are no longer looking for such long-term commitments, preferring instead pay-as-you-go options brought about by the emergence of fitness mobile apps, as is covered over at guttulus.com. This is another factor that has affected Gold’s Gym’s bottom line, affecting earnings and precipitating the company’s decline in recent years.
A lack of differentiation
In the fitness industry nowadays, you have to differentiate yourself as either being a premium service provider to cater to the up-scale market or offering low-cost services. According to the subject matter experts over at runrex.com, the last thing you want is to be caught in the middle, which is where Gold’s Gym has been in the last couple of years. It has lost customers to low-cost fitness companies like Planet Fitness while being unable to compete with premium service providers like Equinox. Caught in the middle and unable to differentiate itself, the company was always going to decline.
Hopefully, the above discussion can give you tips that will allow you and your business to avoid Gold’s Gym’s fate, with there being more on this and other related topics over at the highly-rated runrex.com and guttulus.com.