The makeup of the American population is changing dramatically. In combination with other factors, this means the populous will look and act much differently 20 years from now. Over this period, we will see the millennial generation—roughly 80 million people born between 1980 and 1999—become the dominant consumer force in society while at the same time their parents, the baby boomers, begin to shuffle off to retirement. We will see a much more diverse society, one where by 2040 there will be no majority ethnic or racial cohort, a vastly different cultural milieu than the predominantly white environment of the past. Other social norms are changing rapidly also, for example, marriage equality is the law of the land, but fewer people choose to marry and those that do, make that choice much later in life. And running through it all is the continual and dramatic impact that technology is having on how we work, communicate, interact and recreate.
Private clubs are social organizations and, as such, they need to pay attention and be responsive to changing demographics and evolving societal preferences. Although clubs are deeply rooted in history and tradition, they have an obligation to provide a relevant membership experience if they are going to backfill the relentless attrition that occurs in their ranks every year. Since the dynamics of this process is that the club must replace what is likely to be an older longstanding member with someone much younger, an up-to-date offering is essential. The trick of course is to devise an individual culture and community that makes your club unique, yet attractive to the up and comers.
As we think about the makeup and programs of the club of the future, we must also consider the political climate in which they will exist. The recent presidential election in the U.S. as well as events like Brexit and seismic political shifts in France indicate there will be a lull in certain areas of globalization as key countries’ policies shift to look inward to address domestic issues.
This environment should be good for clubs, if as anticipated, the government moves to reduce burdensome regulations and lowers the corporate and personal tax rates. There are already signs that this is spurring organic economic growth. While changing demographics, and shifting values are extremely influential on club life, the fact that the Gross Domestic Product (GDP) of the United States averaged 1.6 percent annually for nearly a decade has had a negative impact on membership demand. GDP expansion of 3 percent, nearly double the rate the economy experienced since 2006, and a more positive business climate is likely to spawn more members than we’ve seen in a long time.
From a demographic perspective, it will be all about the baby boomers and the millennials, the story of fading and rising. Millennials hit their mid-30s this year, finally reaching the cusp of the prime joining years. As we read in the macro perspective, they are the second most diverse generation in American history. They’ve matured in the digital age, which is part of the reason they are so influenced by referrals and endorsements. They also have expectations for extreme timeliness in service, a natural outgrowth of having only to press a few buttons on a screen to complete transactions that used to take days or even weeks in the past.
Boomers won’t fade quietly. They remain in the sweet spot for clubs because that is where the money is. For many, the kids are finally off the payroll—and those that aren’t may soon get there thanks to a faster growing economy—and asset values are at all-time highs. Thus, the southern and westward migration is back on, which should be a boon for clubs in the Sunbelt. They also have the potential to impact city dining and athletic clubs, as many of them are eschewing the large house in the suburbs where they raised the kids to now join them in revitalized urban centers. Finally, boomers are focused on their health. All those new fitness centers at clubs that were thought to be tools for attracting young people are often bursting at the seams from an older generation looking to catch up on healthy living.
The preferences of these two dominant population groups and the impact of technology will be a powerful economic force in the years ahead, signalling an opportunity for clubs, if they respond.
Consumer Choice and Club Culture
There will be four dominant trends in consumer choice that clubs will need to pay attention to in the decade ahead. We capture them in these titles: Third Place, Brandstrong, Health and Wellness and Ease of Use. These are the prism through which the member of the future will view the world and, by extension, the clubs they want to join and use. Club leaders would do well to evaluate their club for its positioning and performance in these critical areas.
Third Place
People have an overwhelming amount of experiences available to them and this will do nothing but increase in the years ahead. This includes the relationships they have in the real world and the communities and entertainment options available through rapidly evolving technology. In conjunction with hyperactive personal and professional schedules, this will drive them to seek the balance provided by the “third place.” As identified in the influential book, The Great Good Place by Ray Oldenburg, home is everyone’s first place and work, increasingly not a place, but a 24/7 activity consuming the bulk of the day, is second. The third place is a personal refuge. It has that settle-in spirit found in cafes, coffee shops and bookstores, and, of course, clubs.
The private club has a unique opportunity to prosper in this evolving world as it offers so many of the elements crucial to a third place. They are comfortable and convenient for their members, with an open invitation to stop by and hang out. It is a place where everyone knows your name and it is easy to strike up a conversation because of the familiarity and shared values among members. And they have excellent and varied food and drink opportunities so essential to stimulating interactions. While the regularity of membership is a plus, the community of the third place is regularly refreshed by welcoming in and getting to know the new members.
Club leaders should act on this opportunity by providing facilities and programs that build a sense of community among their memberships. Creating places for recreation, enjoyment and interaction through a broad set of athletic and social activities. Many of today’s clubs miss this opportunity by focusing on transaction-oriented spaces and not enough of them for drop-in gathering. This should be countered with multiple opportunities to relax and enjoy others—a great bar and lounge, card and multi-purpose rooms, fire pits or a set of Adirondack chairs out on the porch, or your own Starbucks-styled coffee shop/wi-fi lounge. Focusing on making your club the third place in your members’ lives will drive success in the new age.
Brandstrong
The consumer of the future will increasingly gravitate to well-known and respected brands. Increasingly, they want to connect with the emotional story behind the product or experience. This is what’s driving the growth of today’s “craft society,” one of micro-brews and small-batch bourbons, organic foods and farm to table sourcing—customized and consumer-centered choices. It’s the reason behind that long essay that shows up on your beverage cup at Chipotle or your red holiday cup at Starbucks. This is why there’s a vision and values statement on the wall at Whole Foods.
When you look at the logos of today’s great brands, there is an immediate association with their products and values. They stir emotions, like the cool sophistication of an Apple device, the advanced engineering of a Mercedes and BMW’s ultimate driving machine, the personalized connectivity and community awareness provided by Facebook’s platform. In the club world, we have parallels like Union League of Philadelphia, Merion Golf Club and Baltusrol Golf Club. All very special clubs that serve as shining examples of how to be good stewards of your history and traditions while offering a very contemporary and high-quality experience.
Among millennials, endorsements are increasingly valuable and important when selecting which products to purchase and organizations to support. Clubs are again extremely well positioned to leverage this opportunity. They all have inspiring stories to share, such as why they were founded and what they intend to do. Your club may not be a national brand like some of those mentioned above, but it undoubtedly has a history and a story. Tell it and nurture it. People are compelled to action by their environment and culture, not because you force them to behave a certain way. By making your history a vibrant part of the present experience, members will act in ways that honor it. Celebrate your origins and important anniversaries, write a club history, and create curated displays of your art and artifacts. The Union League of Philadelphia, while grounded in the motto, “Love of Country Leads,” also has the best restaurant in the city, a summer pop-up restaurant at the beach and a golf course. That’s wrapping a very modern experience in a memorable past.
Health and Wellness
While golf drove the country club experience for many years, it is highly likely fitness and wellness will drive them in the future. The combination of aging baby boomers and rising millennials means fitness is right in the sweet spot for development and use. In addition, there is a much greater awareness and interest in fitness to not only extend life, but also assure that those extra years are as enjoyable as possible. In short, baby boomers are in catch-up mode on fitness, while for millennials, it is a way of life.
A decade or so ago, fitness facilities were largely found only at city athletic clubs. Today, some two-thirds of country clubs have a center, and most of those with one are in the process of expanding it to meet demand. Club leaders often misread the availability of fitness in their community as a competitive situation they can’t overcome, when in fact, the situation is just the opposite. The big takeaway on fitness is that it is a social experience. We are not solving for a lack of facilities in the community, we are responding instead to demands of our members who see the club as a safe, secure and convenient setting for an activity of such great importance. Additionally, clubs can leverage the social connections of their membership to attract and maintain users. Most people who resign from a commercial fitness center quit for lack of establishing a social connection. Private clubs have a distinct advantage in this regard. Their members have been through a joining process and are well known to one another. The basic social relationship that already exists is then enhanced by the ability to share another activity with other members they may have known for a long time as well as meet others for the first time.
From this platform of basic fitness, clubs will grow their offerings to include wellness activities. This will include more classes and programs, including mind and body focus. In fact, that’s what membership all comes back to, doesn’t it? People derive significant health benefits from strong personal relationships found in memberships. Supporting this with a host of clubs-within-the-club and active programming rounds out the health and wellness component of the experience.
Ease of Use
Technology has changed the way we work, make purchases, communicate and consume entertainment. The truly disruptive companies make it easier to do something we’ve always done—hail a cab, make a call, buy a product. People talk to their artificial intelligence device of choice—Alexa, Google Home, etc.—to order basic supplies, or assist them with basic home functions. We all fully anticipate that in a few years we’ll press a few buttons on our mobile device only to have a package arrive on our doorstep via drone within hours. You can already order your drink from Starbucks on the way to the shop and find it steaming on the counter when you walk in.
Most private clubs remain woefully behind other hospitality operations in using technology to serve their customers. The club of the future will embrace technology so they can offer a frictionless experience for their members. For example, beacon technology can make staff aware a member is on property or walking off the 18th green. It prepares staff to greet them with a smile and a menu. Using near field communications staffers can pass along names of arriving guest to the next station the member is likely to visit. Tablet ordering can speed up the dining process and Cork Guru can let members see what wines are in their locker when they aren’t even at the club. The whole process for making a dinner or court reservation or securing a tee times needs an overhaul at most clubs, as does bill paying. All those tools and more are available, but leaders have yet to embrace them for fear of changing traditions.
We are only in the infancy of how technology will improve the member experience, from how frequently and effectively we communicate with them to how we track their use and experience. As we move ahead on that front, clubs should also take the opportunity to review their rules and policies to see that they fit their culture—or the culture they are trying to create. There remain too many nagging fees and other roadblocks that prevent members from having the best possible member experience. The focus should shift from the punitive rules-based model, i.e., “don’t do these things,” to an environment where behavior is natural fit to the culture you’ve so carefully defined.
The Club of the Future
The ability of your club to succeed in this changing environment rests with the leadership. It starts by focusing on strategy and direction, not operations. Take time to be aware of the key trends impacting the club and consumer preferences and model your club experience to meet up with these desires. We fully expect the club of the future is larger, with more members, more facilities and lots to do. It will not happen by accident. Take a walk-through of your club now and identify how it could become a better third place. Is your brand—your reason for existing—clear? How will it contribute today to the health and wellness of the membership? Is it easy to use? These are your starting points for building the club of the future.
Club Trends Winter 2017