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Interview: James Balfour

Not content with expanding its dynamic brand of fitness across London, boutique operator 1Rebel also has its eyes set on expansion into Australia. Its co-founder talks to Kate Cracknell

By Kate Cracknell, Health Club Management | Published in Health Club Management 2018 issue 11
James Balfour, co-founder, 1Rebel
James Balfour, co-founder, 1Rebel
When someone comes to a 1Rebel club for the first time and finds chilled, eucalyptus-infused towels in a fridge, that experience is wonderful. but by the 100th visit, there’s a demand for new experiences

The term ‘millennial’ is more about an attitude than a demographic,” says James Balfour, co-founder of boutique fitness operator 1Rebel. “When a business says it’s targeting millennials, actually what it’s saying is it’s taking part in the experience economy. This is a group of people who will buy experiences over things, so you have to work very, very hard to make sure you constantly have a story to tell.”

He continues: “When someone comes to a 1Rebel club for the first time and finds chilled, eucalyptus-infused towels in a fridge, that experience is wonderful. It still is on the second and third visits – but by the 100th visit, there’s a demand for new experiences. That’s why we host live music events and free Prosecco Fridays, why we take customers on adventures and challenges. This is a sensitive and demanding audience and you need to respond to that.

“You also have to continually work and re-invest to stay relevant. We see 1Rebel as more of a retailer than a big box membership club, and if you think about bars and nightclubs in London, they typically have a five-year life span before they have to spend money on re-inventing the experience.

“Anyone looking into the boutique market thinking it’s going to cost them X needs to double that figure. If you’re in the Experience Economy, it isn’t enough just to give your club a new lick of paint and new flooring every 10 years. Your business will need continuous reinvestment to stay relevant, particularly as new entrants come into the market.”

Building an amphitheatre
1Rebel has certainly put its money where its mouth is in terms of creating experiences, not least at its latest club – the fifth 1Rebel, which opened at the end of June in the Nova building in Victoria.
While 1Rebel’s first four clubs offer two of its three class formats – cycling concept Ride, bootcamp-based Reshape, and boxing-focused Rumble – Victoria is a standalone Ride studio and is, says Balfour, “the largest cycling studio in London, if not the world, with 83 Technogym bikes”.

He continues: “At 6,500sq ft, 1Rebel Victoria is a good size: our five clubs range from 4,500sq ft to 8,500sq ft. However, the space in Victoria lent itself to the creation of an amazing cycling studio, so we opted to make it our first single discipline club – and I believe what we’ve created has set a new bar for the sector.

“The building has amazing ceiling heights, so we were able to put horseshoe balconies into the studio; the riders above look down on the activity below. We hadn’t seen it done anywhere before and it was a big risk. We weren’t sure how it would work with Ride choreography – would people like being up on a balcony, looking down on the instructor? Right up to the last minute of the huge £2m fit-out project, we weren’t sure if we were going to do it. But we did and it works brilliantly, creating the sense of a cycling amphitheatre.

“We also have a 3D sound and AV system that’s currently only used in one other place in the world: the Sydney Opera House. We have laser shows, smoke machines, a huge LED screen, a sensory shower system that creates incredible special effects and lighting, and a remote-controlled scissor lift that raises and lowers the instructor platform throughout the class. It really is an incredible experience.

“Crucially, we also have amazing instructors who bring the whole thing to life. We don’t want to rely on tech to motivate riders in our clubs, we believe the words that are spoken to you in class are as important as anything else. With our best instructors, the performance is akin to that of a rock star onstage at Glastonbury.”

And just a few months in, the formula is already working well, says Balfour. “We currently run around 25 Ride classes a week at 1Rebel Victoria – we always start lower and build up the timetable in response to occupancy – and our peak classes are already full. I believe this will be our most profitable club.”

Adapting the model
With a £6.6m investment from venture capital fund Codex Capital under its belt, 1Rebel now has its sights on taking similarly powerful experiences to even more locations in London – and beyond. “We’ve certainly got to a point where the model is right for rollout,” confirms Balfour.

Having opened three new clubs in London in 2018 – Southbank in February, Bayswater in March and Victoria in June – to join its original two in the City of London, 1Rebel already has three sites in the pipeline for 2019. More are not ruled out.

“All three of these locations will be single discipline, this time either Reshape or Rumble,” says Balfour. “The only reason we haven’t expanded Rumble so far – it’s only available at our Broadgate club at the moment – is because you need space for, say, 40 swinging punchbags, unencumbered in view and not restricted by head height.

“All sites are not created equal, especially in London with its lack of new builds: you’ll generally have issues with things like ceiling height, access, pillars and so on. We look at each individual site and decide what will work best, both in that location and in that specific building.”

He continues: “We also want ground floor retail frontage in iconic locations for 1Rebel, with great landlords. This further limits our real estate options, but we aren’t willing to compromise because it will compromise our brand.

“Luckily Studio C102, the architect we use across all our clubs, is great at adapting to the space and the location of each club – not only in terms of the offering, but also the design, the colours and the materials we use. For example, 1Rebel Southbank takes its inspiration from the Tate Modern, while 1Rebel Victoria takes its inspiration from the theatres that surround it – the whole design of the club is very dramatic. It’s quickly gained the nickname of ‘The Spaceship’ thanks to its modern design: its reflective reception desk, galvanised steel staircase, wall of light and exposed white lacquered brickwork.”

Heading Down Under
But it isn’t only London expansion that 1Rebel has up its sleeve. It has also appointed a CEO and management team in Australia and plans to open its first club in either Sydney or Melbourne in the first half of 2019.

“There’s lots of opportunity in Australia and we know people too, from the days when Australia was the jewel of the Fitness First crown,” says Balfour. “I have to wheel the old man [Mike Balfour, founder of Fitness First and James’ father] out occasionally!

“We’ve used our network in Australia to put a great team in place – a team we implicitly trust to execute the plan. For me, it’s arrogance to think international expansion is possible without this.”

He continues: “I know some of our competitors are looking at places like Manchester, but we believe there’s a lot to go for in London, so our focus for the next couple of years will be London – and Australia!

“That sounds ridiculous I know, but the reason we like Australia is that, behind America, it’s the biggest market – and the Americans are already very good at boutiques. The market in the US is quite saturated too, plus, actually, they do things a bit differently. I think they’re best left alone.”

He adds: “Incidentally, that difference in approach is also why I don’t think the American boutiques – the likes of SoulCycle – will come to London, in spite of lots of talk about it. I don’t think the way they do things translates: their classes are more akin to a therapy session, which I think Brits are a bit too pessimistic to deal with! Their model isn’t quite right for London either: in New York they’ll have maybe two showers; in Victoria, we have 15 women’s showers alone.

“I think it’s best we leave them to it, and hopefully they’ll leave us to it as well.”

Expansion plans
Balfour hopes to be up to 15 clubs in London and eight or more in Australia within the next five years, but he’s quick to admit it hasn’t all been plain sailing.

“I’m not ashamed to say there were challenges in our first year of operation,” he says. “We were among the first boutique operators in London, so we had to educate a market and we made mistakes. We also had to really work out what our price should be, our cost base, what we needed to do in terms of delivering the experience. We lost money in our first year.

“But the thing I’m very proud of is that we learnt from our mistakes and we’re now in a very happy place. Our first two clubs – St Mary Axe and Broadgate – will each make in excess of £800,000 EBITDA this year, and the third and fourth clubs have broken even within four months.”

Any other stats he’d like to share, I ask? “We have over 80,000 registered customers,” he says, “and 50,000 social media followers. I believe that’s the highest of any fitness brand in the UK.”

He continues: “We spend essentially nothing on actual advertising or marketing. Everything is done in-house through social media, with Instagram by far our most powerful channel.

“We try to make our social media posts both fun and relevant – relevant to our customers, but also culturally relevant. That could mean a play on a Love Island quote or something like we did when Donald Trump said: ‘Grab them by the pussy’. Our message at that point was: ‘Pussy Grabs Back’.

“These things resonate with a customer base that’s essentially rebellious at heart. We take a few risks, but it’s authentic to our brand, it opts for entertainment over sales messages – that’s key on social media – and it appeals to the tone of voice of our customers.”

PT versus boutiques
Looking to the broader market, what are Balfour’s views? If 1Rebel were starting from scratch now, would he still take the leap into the London market?

“Yes, I would. You have to believe in what you’re doing, and I also believe that – even as the market gets more crowded – people will always seek out great experiences.

“Where I think people are getting it wrong is that they’re trying to do boutiques on a shoestring. The most important thing is, of course, having the best instructors, but if one studio has the best instructors but only two showers, while another has a fantastic ancillary experience: multiple showers, cold towels, that beautiful vanity unit… I think in the long-term that’s the one that’s going to be more sustainable.

“We’ve already seen quite a few boutique brands fail in London, and I think we’ll see more competitors fall out of the market over the coming years – and then maybe some consolidation too. In maybe five years’ time, I’d expect there to be perhaps two or three dominant operators.

“I wouldn’t be surprised to see the bigger big boxes making acquisitions and running them as separate businesses too, in the same way Equinox has bought into SoulCycle and Rumble but let them continue as individual businesses.

“I don’t see the big box operators having any real success in operating their own boutiques though: you just need to operate in a totally different mindset.”

He continues: “I also think – for big box gyms and the market in general – one of the biggest, most rapid declines will be in personal training, as people are now starting to favour boutiques.

“I’ve always felt uncomfortable with the idea that membership of a full-service club might cost £60 a month, but a personal trainer will watch you do press-ups for an hour and also charge £60. One of those two numbers is wrong and I think the boutique industry will expose that.

“Even if you pay the top whack at 1Rebel – £20 for a one-off class – you’ll find you’ll get the results of personal training but in a much more fun environment. I genuinely believe personal training is at risk as boutiques continue to grow.”

Balfour says 1Rebel has a clear understanding of its members
Balfour says 1Rebel has a clear understanding of its members
Balfour says the club experience must be reinvented regularly
Balfour says the club experience must be reinvented regularly
1Rebel clubs each offer one or two of three class formats: Ride, Reshape and Rumble
1Rebel clubs each offer one or two of three class formats: Ride, Reshape and Rumble
1Rebel clubs each offer one or two of three class formats: Ride, Reshape and Rumble
1Rebel clubs each offer one or two of three class formats: Ride, Reshape and Rumble
1Rebel clubs each offer one or two of three class formats: Ride, Reshape and Rumble / PHOTO: GARETH GARDNER
1Rebel clubs each offer one or two of three class formats: Ride, Reshape and Rumble / PHOTO: GARETH GARDNER
Rumble, the brand’s boxing fitness class, is currently only available at Broadgate, where the studio houses 40 swinging punching bags
Rumble, the brand’s boxing fitness class, is currently only available at Broadgate, where the studio houses 40 swinging punching bags
We have over 80,000 
registered customers &
50,000 social media followers.
We have over 80,000 registered customers & 50,000 social media followers.
Balfour plans to open eight clubs in Australia
Balfour plans to open eight clubs in Australia
Cycling concept Ride is popular, with 25 classes a week taking place at the new Victoria club
Cycling concept Ride is popular, with 25 classes a week taking place at the new Victoria club
Balfour says a successful boutique should have amazing instructors, but also an amazing ancillary experience
Balfour says a successful boutique should have amazing instructors, but also an amazing ancillary experience
Balfour says a successful boutique should have amazing instructors, but also an amazing ancillary experience
Balfour says a successful boutique should have amazing instructors, but also an amazing ancillary experience
http://www.leisureopportunities.com/images/imagesX/635869_216283.jpg
Boutique operator 1Rebel is planning an expansion into the Australian market. Co-founder James Balfour tells us all about it
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