Sharing: Trend or a Fad? It May Change Our Industry

By Will Phillips

When several trends overlap and re-enforce like waves, they create an even stronger trend or wave.

The first trend is the long-lasting impact of the recent recession, which has had enough impact on consumer's buying habits to merit articles about the "new consumer" in a number of major business magazines and journals. The profligate spending, which contributed in part to our real estate and stock market bubbles leading up to the 2008 recession is gone. The new consumer is cost conscious, conservative, and looking for specific benefits from every purchase.

The second trend is our emerging capacity to share almost anything largely as a result of the Internet. Lisa Gansky gave a TEDx presentation in January 2011 and asked what percentage of time the average person uses their car. A few guessed, but no one was prepared for her data. "Across the U.S., Canada, and Western Europe, it's 8%, which means that over 90% of the time this thing that costs us a lot of money is just sitting around." One result of the cautious consumer and Internet sharing is the phenomena of shared cars—epitomized by Zipcars. They have a fleet valued at over $90 million, and Zipcars has yet to return a profit. It may never!

Zipcars are being challenged by new forms of ride sharing—RelayRides, Zimride, Spride, and Getaround. These platforms do not own or maintain cars; they simply enable the sharing of cars already owned. The average person using one of these services makes $250 a month renting their car. Some offset their entire car payment. The leading one, RelayRides is backed by August Capital and Google Ventures. In Germany, Daimler has created its Car2Go service similar to Zipcars, except it doesn't require a reservation or a two-way trip, like free bicycle programs, drive it where you like, and drop it off. And in Australia, there is GoCars.

A Frost & Sullivan study from 2010 estimates the car sharing market is soon to be in the billions. This all makes ultimate sense with the increasing conservative spending of the new consumer and the automobile becoming more of a commodity than a personal statement.

Both Best Buy and Lowe's are contemplating how consumer sharing may impact their retail businesses. The sharing concept has moved into the hotel world with airbnb.com, which is one of the hottest sharing nets. It is the place where you can rent other people's floors, rooms, homes, and yachts. Airbnb.com claims that if you add up all their listings in New York City, their ten times larger than any hotel and they have something on almost every single block in the city. Currently, Airbnb is growing at 45% month to month.

Sharing cars, beds and meals allows consumers to go direct and remove the cost of the middleman. Gobble.com enables you to purchase meals prepared and delivered by others in your neighbourhood. And NeighborGoods.net is where homeowners can share almost anything in their house.

Access trumps ownership saves money and reduces clutter.

Gartner Group estimates that peer-to-peer financial lending will reach $5 billion in about two years. Others estimate the consumer peer-to-peer rental markets will be a $26 billion sector and that the total sharing economy is close to a $110 billion.

What Does This Mean For The Health Club Business?

Sharing may well solve retention. Many clubs have explored different systems for keeping a membership active when a member decides to cancel. In one club when members still had a contractual obligation left on their membership commitment, they were encouraged to sell it to another person. In another club, they would list the number of members that had left the club and promoted the transfer of these memberships to new members with no joining fee.

One of the larger operators in Europe is successfully using a true-shared membership. Once the membership is purchased, anyone may use the access card as long as the account is current. Imagine a group of students living together and sharing a single health club membership dramatically reduces their cost. If someone finds that the card is gone because one of their buddy's is using it, it inspires them to purchase another membership. More significantly, as the students graduate and leave their apartment, the membership card may still stay active with the new people moving in. It is conceivable that such a card would never be cancelled.

This increases the usage in your club, but isn't that what our business is all about-meeting customers' needs? It appears that low cost, $10 a month in the U.S or $25 a month internationally, still has the same rate of attrition that higher priced clubs have. Thus, low costs may make it attractive to join, but not to stay. The shared membership card does both.

The Future

Consider an online way that allows a member to seamlessly and quickly transfer their card to another person. There is no need for you to be involved in the replacement sale. Now consider a membership that can be jointly purchased by a number of people online with the cost of the membership split among their different accounts. With the membership being paid for from five accounts, there is less likelihood of it being cancelled. And if one fails to pay, the balance is dispersed to others credit cards. This could be an interesting motivation tool to keep all who share the membership more committed as exercisers with no effort on your part except to design a next generation business model.

Can you get out of the box?

We all talk of wanting to be out of the box. Getting out of the box, meaning doing things that are new, different, untried, and being on the frontier. It's like doing a first ascent in mountaineering. No one knows if the new route will go or not and no one has any idea of what that route actually looks like. But for the last 170 years, human beings have continued to make first of scents in the mountains, in technology, and in their business models. In mountaineering, we call those who consistently knock off challenging first ascents "hard men." In the business world, we call them entrepreneurs—those who are willing to absorb risk, while exploring new adventures and creating new opportunities. These two emerging trends of consumer caution and sharing are changing the way people drive, where they sleep and how they eat and spend their money. Maybe you should get out of the box and consider shared memberships.

Resources:

The Shared World: Fast Company, May 2011. From which much of this material comes from.

What's Mine Is Yours. The Rise of Collaborative Consumption: This could be as big as the Industrial Revolution in the way we think about ownership—by Rachel Botsman

The Mesh by Lisa Gansky

TEDx Presentation: http://www.ted.com/talks/lisa_gansky_the_future_of_business_is_the_mesh.html

This article is brought to you by REX Round Tables. Will Phillips is the founder CEO of REX Roundtables which operates health club Roundtables for the single clubs, multi clubs and chains world wide. See www.REXRoundtables.com for more information on REX Round Tables contact Justin at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .