The Future of the Gym Is Hybrid (Just Like the Office)
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The Future of the Gym Is Hybrid (Just Like the Office)

Fitness studios are combining virtual and in-person classes.

By Nicole Ngyuen
Mon, Aug 30, 2021 11:17amGrey Clock 4 min

Every morning, Daniela Costanzo wakes up at 5, drinks a cup of coffee, feeds her two dogs, then heads to DFit, the Montclair, N.J.-based workout studio she’s owned for the past decade.

Last Wednesday was no different, except for one relatively new pre-class ritual Ms. Costanzo added to her routine during the pandemic. Before the early risers arrived for her first class, she powered on her laptop and started a Zoom meeting.

Two virtual clients popped on-screen, while eight students made their way into the studio. At 7:15 a.m., the crew started its full-body workout all together: a series of heart-pumping shoulder presses, squats, rows, lunges and core work.

In the Before Times, gyms and studios such as DFit were destinations—spaces with nice equipment, freshly laundered towels and, critically, no distractions from partners, kids or pets. Meanwhile, people who couldn’t get out used apps and connected platforms, such as Peloton, designed for home use. The pandemic forced the former to take a page from the latter, and many studios and gyms decided to continue providing home workouts, even after Covid restrictions lifted.

“I’m committed to it 100%,” Ms. Costanzo said. One reason, she says, is that going virtual is cost-effective. A Zoom business license costs about $20 a month. DFit currently offers six virtual classes a week, alongside indoor and outdoor workouts.

For now, the virtual classes are more of a necessity as the threat of the Delta variant looms large. While the studio is seeing more new clients looking to lose their pandemic pounds, attendance still isn’t at pre-Covid levels. Teaching over Zoom is also a drain on instructors, who typically draw energy from loud music and packed classes. Tracks have to be quiet, so students can hear the instructors.

“It feels like I taught four classes when it was just one. That’s how much energy it takes,” Ms. Costanzo said.

At the start of the pandemic, DFit instructors streamed live workouts free on Instagram. Some garnered over 100 participants—much more than a typical studio class. “For such a bad, uncertain time, the energy we felt through Instagram was phenomenal,” Ms. Costanzo said.

A week later, the studio began hosting Zoom classes for paying customers.

Clients can reserve classes through DFit’s online portal, which is operated by booking software Mindbody. About 12 hours before the class, a DFit employee manually emails each participant a Zoom link. Clients are charged normal prices—up to $25 a pop or unlimited access for up to $255 a month.

Ms. Costanzo’s regulars love the flexibility. “Right now, we’re in the heat of vacation season. But I have people joining us from Hawaii and from Germany.” One longtime client moved out of state to Philadelphia. “We’re thrilled we still have her as a client,” Ms. Costanzo said.

A Mindbody survey from February found that 65% of respondents intended to complete workouts both in person and at home in a post-Covid world. And in a survey from July, 86% of respondents who do virtual workouts said they continued to do them as much or more, even as studios are reopening.

Sunil Rajasekar, president of Mindbody, said that convenience is the push behind this consumer shift. “The experience is not the same as an in-person class, but it is way better than not taking the class at all,” he said. “It is also a great way for wellness businesses to expand their reach.”

During the height of the pandemic, Peloton and other at-home workout solutions soared, while gym operators struggled to survive. The International Health, Racquet & Sportsclub Association estimates one in four gyms permanently closed in 2020. Nationwide fitness chains Flywheel and YogaWorks permanently closed all studios that year.

“The chaos of the pandemic forced us to innovate,” said Joey Gonzalez, chief executive of Barry’s Bootcamp, which has 70 locations around the world, offering combination strength-and-cardio workouts.

Before 2020, Mr. Gonzalez wasn’t considering digital fitness for the company. The studios tout perks that can’t be offered in an app: workout rooms drenched in a nightclubby red glow, high-end treadmills with shock-absorbing belts, salon-grade products in its locker rooms and a recovery smoothie bar.

But Barry’s did eventually transition to Zoom workouts during the pandemic, featuring instructors streaming from their living rooms, dealing with audio and Wi-Fi issues like the rest of us.

“One of the most surprising things for us was people were coming to us from places where Barry’s doesn’t exist, like Dublin and Hong Kong,” Mr. Gonzalez said.

To reduce its dependence on Zoom, the company recruited an external agency to create its own Barry’s-ified live video-enabled workout experience, with trainers in a dedicated studio. Earlier this month, it launched Barry’s X, which streams via an app, website or the Forme smart mirror. Live streams cost between $12 and $20 a piece, or can be accessed through a monthly membership, which also includes a library of prerecorded workouts.

There’s some indication that the at-home boom is starting to bust. Peloton recently lowered the price of its original bike by 20%, in anticipation of slowing growth. And at the end of July, Barry’s studios were at 86% of pre-Covid attendance. But Mr. Gonzalez acknowledges that the Delta variant is hampering a full in-person comeback.

Equinox, the luxury gym chain, launched an on-demand fitness mobile app in March 2020, right as the global quarantine began. The app, called Equinox+, includes workouts from SoulCycle, Solidcore and other Equinox subbrands. A subscription costs $40 a month, but for Equinox members, who often pay upward of $200 a month, access to the app is included as a perk.

According to the company, those who visit a club and use the Equinox+ app are the most active members, working out one or two more times a week than those using the club or app alone. What’s funny is that some people even use the Equinox+ app inside Equinox clubs.

So it seems our desk-sharing, partially work-from-home future won’t be the only hybrid model in our lives. Some might refer to the new exercise paradigm as the hybrid gym. Others might say it’s “gym as a service.” I’m just hoping no one will call it “GaaS.”

Reprinted by permission of WSJ. Magazine. Copyright 2021 Dow Jones & Company. Inc. All Rights Reserved Worldwide. Original date of publication: August 29, 2021.


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Competitive pressure and creativity have made Chinese-designed and -built electric cars formidable competitors

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China rocked the auto world twice this year. First, its electric vehicles stunned Western rivals at the Shanghai auto show with their quality, features and price. Then came reports that in the first quarter of 2023 it dethroned Japan as the world’s largest auto exporter.

How is China in contention to lead the world’s most lucrative and prestigious consumer goods market, one long dominated by American, European, Japanese and South Korean nameplates? The answer is a unique combination of industrial policy, protectionism and homegrown competitive dynamism. Western policy makers and business leaders are better prepared for the first two than the third.

Start with industrial policy—the use of government resources to help favoured sectors. China has practiced industrial policy for decades. While it’s finding increased favour even in the U.S., the concept remains controversial. Governments have a poor record of identifying winning technologies and often end up subsidising inferior and wasteful capacity, including in China.

But in the case of EVs, Chinese industrial policy had a couple of things going for it. First, governments around the world saw climate change as an enduring threat that would require decade-long interventions to transition away from fossil fuels. China bet correctly that in transportation, the transition would favour electric vehicles.

In 2009, China started handing out generous subsidies to buyers of EVs. Public procurement of taxis and buses was targeted to electric vehicles, rechargers were subsidised, and provincial governments stumped up capital for lithium mining and refining for EV batteries. In 2020 NIO, at the time an aspiring challenger to Tesla, avoided bankruptcy thanks to a government-led bailout.

While industrial policy guaranteed a demand for EVs, protectionism ensured those EVs would be made in China, by Chinese companies. To qualify for subsidies, cars had to be domestically made, although foreign brands did qualify. They also had to have batteries made by Chinese companies, giving Chinese national champions like Contemporary Amperex Technology and BYD an advantage over then-market leaders from Japan and South Korea.

To sell in China, foreign automakers had to abide by conditions intended to upgrade the local industry’s skills. State-owned Guangzhou Automobile Group developed the manufacturing know-how necessary to become a player in EVs thanks to joint ventures with Toyota and Honda, said Gregor Sebastian, an analyst at Germany’s Mercator Institute for China Studies.

Despite all that government support, sales of EVs remained weak until 2019, when China let Tesla open a wholly owned factory in Shanghai. “It took this catalyst…to boost interest and increase the level of competitiveness of the local Chinese makers,” said Tu Le, managing director of Sino Auto Insights, a research service specialising in the Chinese auto industry.

Back in 2011 Pony Ma, the founder of Tencent, explained what set Chinese capitalism apart from its American counterpart. “In America, when you bring an idea to market you usually have several months before competition pops up, allowing you to capture significant market share,” he said, according to Fast Company, a technology magazine. “In China, you can have hundreds of competitors within the first hours of going live. Ideas are not important in China—execution is.”

Thanks to that competition and focus on execution, the EV industry went from a niche industrial-policy project to a sprawling ecosystem of predominantly private companies. Much of this happened below the Western radar while China was cut off from the world because of Covid-19 restrictions.

When Western auto executives flew in for April’s Shanghai auto show, “they saw a sea of green plates, a sea of Chinese brands,” said Le, referring to the green license plates assigned to clean-energy vehicles in China. “They hear the sounds of the door closing, sit inside and look at the quality of the materials, the fabric or the plastic on the console, that’s the other holy s— moment—they’ve caught up to us.”

Manufacturers of gasoline cars are product-oriented, whereas EV manufacturers, like tech companies, are user-oriented, Le said. Chinese EVs feature at least two, often three, display screens, one suitable for watching movies from the back seat, multiple lidars (laser-based sensors) for driver assistance, and even a microphone for karaoke (quickly copied by Tesla). Meanwhile, Chinese suppliers such as CATL have gone from laggard to leader.

Chinese dominance of EVs isn’t preordained. The low barriers to entry exploited by Chinese brands also open the door to future non-Chinese competitors. Nor does China’s success in EVs necessarily translate to other sectors where industrial policy matters less and creativity, privacy and deeply woven technological capability—such as software, cloud computing and semiconductors—matter more.

Still, the threat to Western auto market share posed by Chinese EVs is one for which Western policy makers have no obvious answer. “You can shut off your own market and to a certain extent that will shield production for your domestic needs,” said Sebastian. “The question really is, what are you going to do for the global south, countries that are still very happily trading with China?”

Western companies themselves are likely to respond by deepening their presence in China—not to sell cars, but for proximity to the most sophisticated customers and suppliers. Jörg Wuttke, the past president of the European Union Chamber of Commerce in China, calls China a “fitness centre.” Even as conditions there become steadily more difficult, Western multinationals “have to be there. It keeps you fit.”


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