To open, or not to open, that is the question. Like the rest of the economy—and the country at large—gym owners are weighing the pros and cons of returning to business as usual. If only it were that simple.

What’s happening: Fighting battles on multiple fronts, brick-and-mortar fitness operators have been catapulted into the future.

Why it matters: While reopening dominates the conversation (and headlines), it doesn’t begin to scratch the surface of what’s next. From sanitizing studios to social distancing measures and the risk of a second wave, not to mention the surge of at-home exercisers, a return to “business as usual” is a false reality.

The big picture: Even after gyms and studios reopen, second- and third-order effects still have to play out. As a result, COVID’s cascading impact will reshape the industry beyond what meets the eye.

Level Set

Is it safe for gyms to reopen? Can local authorities stand in the way? Does anybody even want to go?

Sidestepping the shouting match, let’s jump ahead to the inevitable — some gyms, somewhere, are open. Maybe gyms everywhere are back in business. Now, look around: are gym-goers lining up, credit card in hand, ready to re-up their membership?

According to a Washington Post poll, 78% of Americans oppose reopening gyms.
50% of US gym-goers surveyed by RunRepeat said they won’t return upon reopening.
As US unemployment tops 36M+, spending on premium health clubs and studios could take a hit.

Price and personal preference aside, let’s pretend demand is sky-high. From the jump, demand still could get cut in half. Why? Social distancing.

A light at the end of the tunnel, a few leading operators have released their reopening protocols. But upon closer examination, it’s beyond complicated. Masks, temperature checks, reduced capacity, intense cleaning… the list goes on; this is the new normal.

There is no pandemic playbook, so everyone’s on high alert. Life Time Fitness, has a 400-page manual to consult. Equinox also rolled out a laundry list of requirements. Likewise, studios like SoulCycle will go to lengths to reduce the risk of infection. Even then, despite the tireless effort of owners, instructors, and staff, there’s still a risk.

The inevitable rebuttal is that the community, amenities, and post-workout vibes make rolling the dice worthwhile. But when gym-goers realize what they’re actually getting—a heavily policed, stripped-down exercise experience—they might put those dice back in their pocket, take out their phone, and fire up a fitness app.

Second-Order Thinking

This pandemic is temporary. Its impact is permanent.

In recent weeks, we’ve had countless Zoom sessions with founders, executives, and investors across the fitness industry. Despite the current reality and an uncertain future, folks still want to debate the semantics of at-home versus in-person workouts, or streaming versus on-demand content. All of which misses the point.

Second-order effects refer to the downstream consequences of an initial event or decision. Said differently, nth-order effects are the consequences of consequences. Whereas first-order thinking is focused on the immediate problem, second-order thinking asks: “And then what?”

“Failing to consider second- and third-order consequences is the cause of a lot of painfully bad decisions, and it is especially deadly when the first inferior option confirms your own biases. Never seize on the first available option, no matter how good it seems, before you’ve asked questions and explored.” — Ray Dalio

And then what?

Yes, gyms and studios will reopen. Without fail, some people will go back. But what comes next is more telling.

Open-ish. Worse than socially-distanced exercise, some 40% of small businesses won’t reopen at all. Restructuring is one thing — Gold’s Gym has entered bankruptcy as 24 Hour Fitness and Town Sports mull similar fates. But, many mom-and-pop operations will also be forced out of business — half-full classes don’t pay the bills.

The lasting impact of remote work further complicates matters. As companies large and small decide to work from home indefinitely, gyms in urban centers could see foot traffic decline. If city living or venturing out in public lose their appeal, even temporarily, the local boutique fitness scene could prove to be oversaturated, leading to more closures in the months ahead.

Omnichannel. Like retail before it, omnichannel fitness will become a buzzword. In theory, building a digital offering on top of physical locations makes sense. Effectively pulling it off is another story.

Let’s start with the recent pivot to video. From Zoom and Instagram Live to standing up a proprietary app, the industry was forced online. Trouble is, this process should have started years ago. The opposite of a lifeline or a Band-Aid, digital should already be a viable revenue stream. Instead, a pandemic forced traditional brick-and-mortars to the starting line of a race that has long-been underway without them.

WOFH gold rush. Just because the race already started doesn’t mean catching up or competing is impossible. But it does make it a lot harder.

A next-order effect of COVID, founders and investors have pounced on the workout-from-home (WOFH) opportunity. While gyms and studios try to figure out content, startups backed by millions in funding are focused on building hardware and algorithms for more effective, personalized, and convenient workouts.

Likewise, concepts like Silofit and NEOU are reimagining the gym while physical-first brands like Equinox try to enter the home. In that way, omnichannel fitness will come to fruition. But optimizing for out-of-studio first may prove more successful than the inverse.

Looking further ahead, it’s entirely possible that instructors and trainers begin to unbundle from gyms and studios. Armed with new digital tools and a disproportionate amount of the value, instructors will monetize their own audience.

Takeaway

The list of potential ramifications is endless. And attempting to predict the future is futile. So, to some extent, we have to let the cards fall. But passively standing by isn’t an option either.

To be sure, COVID didn’t invent new behaviors as much as it accelerated existing trends. Pulled into the future, imagine it’s 2030. Through that lens, operators will be well-served by using this moment to move beyond short-sided, first-order thinking to ask, “and then what?”