Streaming Video is Taking the Fitness World By Storm

Brick-and-mortar gyms are sweating how fast live-streamed workouts are catching on. Fitness buffs are taking direction from top-notch fitness instructors…from their living rooms via live online classes.

Gym owners worry that customers will start ditching memberships in favor of these at-home online classes. The 36,540 fitness clubs in the U.S. attracted 57 million members in 2016, according to the International Health, Racquet & Sportsclub Association, an industry trade group. Globally, health and fitness clubs pulled in $83 billion in 2016.

Fitness videos are nothing new. But those old Jane Fonda VHS tapes were prerecorded, as are many of today’s popular online workouts. The new crop of live broadcasts can be streamed to phones, tablets or TVs and have become appointment viewing for gym rats. The live aspect lures eyeballs with an extra dose of excitement and urgency.

Credit startup Peloton for sparking the phenomenon. The company, founded in 2012, has raised more than $400 million in venture capital and ushered in the streaming revolution about two years ago. It sells a $1,995 indoor bike that includes an attached tablet to watch live spin classes. Peloton charges $39 per month for access to its workouts and now boasts one million members. It recently launched a treadmill, too.

Another fitness app, Zwift, lets bicyclists go on virtual rides with friends from their basements for $15 per month. Bikes are hooked up to indoor trainers that wirelessly connect to a screen that displays a virtual road. The trainer adjusts to conditions, such as making it harder to pedal uphill, and translates the rider’s pedal strokes to the rider on the screen. Users can go for a solo joy ride or race others in real-time on courses in areas such as London, Richmond, Va. or even in made-up worlds.

Facebook, Instagram, YouTube and Twitter are also increasingly popular destinations for livestreamed workouts. The social media sites make it easy for anyone to broadcast themselves to the masses and are especially popular with younger digital natives.

The trend is putting pressure on traditional fitness equipment sellers. “We’re not a hardware company,” Peloton’s CEO said in January. “Those companies are yester-year.” In response, equipment sellers will have to adjust. NordicTrack now sells treadmills with large video screens that play prerecorded workouts. Its tagline: “A true club membership in the comfort of your home.”

Gyms are racing to jump on the bandwagon. Gold’s Gym has an app with prerecorded audio workouts to use at the gym or at home, for example, and 24 Hour Fitness launched an app in January that includes personalized video workouts. “In the fitness industry, competition is at an all-time high already with explosive growth of new entrants to the fitness market,” according to Brad Weber, CEO of FitCloudConnect, a streaming video platform catering to gyms.

Jumping into livestreaming can cost traditional health clubs an arm and a leg. Gyms must invest in software and video production, an especially tough prospect for cash-strapped independent gyms. Reliable, fast Wi-Fi is also a must-have because users often want to stream workouts at the club. Weber argues that “existing fitness clubs do not have the time, money or technical expertise to respond to the Peloton threat with a streaming offering.” Buyers of FitCloudConnect’s software can bet on the livestreamed or recorded workouts increasing membership retention, or they can charge extra for access to trainer classes.

Look for more gyms to partner with streaming fitness outfits and mobile apps, either working closer with fitness-tracking apps, such as Strava or MyFitnessPal, or adopting equipment that includes livestreaming capability. “There are thousands of Peloton bikes in hotels, residential developments, college campuses, professional sports team gyms, social and country clubs, and other ‘commercial’ environments,” says Tim Shannehan, Peloton’s chief revenue officer. Shannehan says the consumer market will always be the primary focus, but that the company “sees loads of opportunity” in commercial settings.

Even if gyms can stem defections, they still risk losing high-priced fitness class customers. Head to a gym these days, and you may catch someone consulting with smartphone exercise apps to tell them the next exercise. That’s a lost opportunity for a class run by the gym itself. And if clubs adopt streaming fitness equipment in their gym, they could be introducing members to a viable alternative.

What comes after live streaming? Companies are already working on virtual- and augmented-reality workouts. BoxVR lets VR-wearing users spar with animated targets flying around. Black Box VR has users grab cable pulleys to go through a stamina-tracking video game. The market will gain traction as headsets become lighter, cheaper and more powerful.

Your Memorial Day Weekend Road Trip Just Got More Expensive

If you’re hitting the road this holiday weekend, buckle up for the highest gas prices in several years. AAA’s website reports that the national average price of regular unleaded gas has climbed to $2.96, the highest level since late 2014. (Of course, some parts of the country are already paying quite a bit more. The national average encompasses a wide range of prices.) A year ago, the price at the pump averaged a much more wallet-friendly $2.37 per gallon, according to AAA.

And prices probably aren’t done climbing. Last month, I warned that the national average was likely to reach $3 this spring. That likely will hit Memorial Day weekend. Crude oil prices continue edging up, but such increases generally don’t reach the pump until a week or two later.

Drivers in the West have it worst, according to AAA. In California, regular-grade gas averages a whopping $3.72 per gallon, the highest in the country. Seven Western states are averaging more than $3. The Northeast isn’t faring much better; five states there are paying $3 or more, as are three Great Lakes states (Michigan, Indiana and Illinois).

Prices are far lower in the South. Mississippi drivers enjoy the cheapest gas—an average of $2.64 per gallon. Neighboring states are similarly low.

But there is some good news: The price gains may be nearly over. Jeff Lenard, vice president of strategic industry initiatives at NACS, a trade association that represents convenience stores, says that prices tend to rise in late winter and peak around now. Whether that happens this year depends on what crude oil prices do. I believe that the rally in oil prices is almost over. If so, gasoline prices should peak soon and maybe even retreat slightly.

“Daily Drumbeat”

Even so, gas prices are certain to remain higher than they’ve been the last few years. The national average price actually dropped below $2 per gallon in early 2016 and has mostly remained closer to $2 than $3 since. Consumers no doubt enjoyed paying less at the pump. Many folks have been buying pickup trucks and SUVs instead of cars, partly because they aren’t worrying about fuel economy. And in general, spending less on a fill-up leaves money for other purchases.

A recent NACS survey shows that consumers don’t plan to cut back on driving this holiday weekend just because gas prices are up. But many respondents do plan to eat out less or cut back other spending. Gas prices aren’t necessarily the culprit, but Lenard notes that consumers “just don’t feel as good” when gas goes up. And lately, there’s been a “daily drumbeat” of news about higher gas prices: Something motorists are reminded of every time they pass their local station.

For convenience stores that sell gas, this is particularly concerning when it comes to the roughly 25% of customers who pay cash. Lenard says that those shoppers tend to allocate a fixed amount to spend at the convenience store, whether on gasoline or snacks or drinks. If filling up takes more of that cash, sales of everything else suffer. Convenience stores make only a nickel of profit per gallon of gas they sell; they’d rather you buy a sandwich or a soda than a gallon of regular.

With the overall economy doing well and summer arriving, consumer spending will likely continue at a brisk clip, despite higher fuel costs. But merchants everywhere are no doubt rooting for pump prices to level off before their customers start feeling real pain.

What Businesses Should Do With Artificial Intelligence

Artificial intelligence (AI) improves prediction. AI is computer software that learns, finding complex patterns in massive amounts of data. Improving predictions is obviously very useful for most businesses, with a wide range of applications. For example, AI is helping industries from manufacturing to air travel predict when key equipment or airplane parts will fail, reducing downtime. A servicer of printers and copiers can determine when they will run out of toner, based on how many and what types of print jobs are done. The machines will automatically order more just-in-time toner, preventing waste from replacing toner cartridges too early. Google Translator AI “predicts” (recognizes) equivalent speech in different languages. In all of these examples, the AI gets better as it takes in more data, or “learns.”

But businesses can throw a lot of money at AI simply because it’s the “in” thing. So, owners must improve the odds of success.

First, figure out what problem you want AI to solve. What mission critical information are you dying to know? The problem may not require a solution as complex as AI. Basic snags could simply require statistical analysis, such as linear regression. Another key question to ask yourself: Has AI ever been used before for that application? If not, then being the first may be a tad costly. Run small experiments to determine usefulness before committing to a massive project.

Second, do you have good data to work with? Remember the GIGO principle: If the data are old, unstructured or disjointed, then you’re not going to get good results, period. And you need a lot of data—AI is only useful when it has much to work with because its whole purpose is identifying complex patterns in large data sets. Thousands of data points are a minimum, and millions are best. Also, your data needs to be labelled so a machine can understand what it is. Provide the context that is creating the data from the start so that the AI doesn’t make a boneheaded mistake, such as treating Christmas-time sales as the normal monthly level.

Third, AI learns or evolves with experience in real world operations. It will be wrong at first. So, does the application allow room for growth, or is it so important that it has to be right the first time? AI cannot be perfected solely based on in-house training data.

Fourth, AI requires development—there is no AI “plug and play.” It is unlikely that a company has the expertise to do this in-house. So, finding the right contractor that has the specific knowledge for a particular problem is important. Trusting the contractor is key: AI programs are not very good at explaining how they got their results, so you’ll have to take the contractor’s word for it. Have your experts examine vendors’ results and evaluate both their accuracy and usefulness. Today’s main AI platforms are IBM’s Watson, Amazon Machine Learning (part of Amazon Web Services), Microsoft’s Cortana Intelligence Suite, and Google Cloud Platform. (A website listing a plethora of specialized AI vendors follows below.)

Finally, don’t relegate AI to the IT department. AI will boost worker productivity, but it can also shed light on what lines of business strategy to choose, so CEOs should be fully informed.

Some AI vendors worth a look:

https://appliedai.com/vendors/1

Applications:

Health care: https://www.techemergence.com/machine-learning-healthcare-applications/

Finance: https://www.techemergence.com/machine-learning-in-finance/

Advertising and marketing: https://www.techemergence.com/artificial-intelligence-in-marketing-and-advertising-5-examples-of-real-traction/

The Housing Market Will Get Even Tighter This Year

More folks are eager to buy this year, but the supply of homes for sale just isn’t big enough. Competition for listings figures to be fierce for the rest of 2018. Still, some signs of relief are starting to appear.

The market is still plagued by too few homes for sale – the legacy of the construction bust that followed the bursting of the bubble a decade ago. Fewer homeowners are inclined to sell when they know finding a new place could be tough. The supply of homes is constrained because residential construction has been weak for years. As inventory levels of new homes fell in most markets, homeowners who wanted to trade up became concerned that they wouldn’t be able to find what they wanted if they sold their home. Instead, many stood pat and invested in home improvements. New listings of existing homes fell, making it more difficult for first-time home buyers to find something. Continue reading “The Housing Market Will Get Even Tighter This Year”

What Car Shoppers Need To Know This Year

If you’re in the market for a new ride or might be later in 2018: You’ll find better deals on popular SUVs and crossovers…new or used…if you wait a bit. Manufacturers continue to ramp up SUV and crossover production, so that supply of these popular vehicles may soon outstrip demand. Also, while vehicle sales are off to a good start so far this year, they’re likely to slow later, forcing automakers to rely more on discounting and other buyer incentives. These should approach $5,000 per vehicle, on average.

Given the popularity of SUVs and crossovers, manufacturers are offering more models than ever before, including luxury models. Car-based crossover SUVs are especially prized for their blend of size and practicality. Plus they’re relatively fuel-efficient, so the return of $3 gas won’t ding their popularity. As a result, manufacturers are cutting back on their car models. The Chevy Impala is likely to be cut, and Ford has already announced that it will abandon most of its car models in the next few years to focus on SUV/crossover/pickup truck production. (The Ford F-150 pickup truck is the best-selling model of any vehicle.) Even sedan perennial best sellers Toyota Camry, Honda Accord and Nissan Altima have required incentives to bolster demand. This means that there are likely to be some good deals on car models as the shift occurs, especially full-size and mid-size sedans. Demand for compact cars has ticked up recently as the cost-conscious buyer segment finds fewer low-cost options.

Interest rates are rising, with the rate of the average new car loan expected to jump from 5.0% to 5.5% by the end of the year. However, this is likely to increase the average monthly payment by only $7 over the life of a five-year loan.

For those interested in electric vehicles, hybrids with plug-in capability (called PHEVs) will be the most in demand, according to Jessica Caldwell, executive director of industry analysis at Edmunds. These vehicles have the most flexibility and range, currently. The Toyota Prius Prime, Chevy Volt, Honda Clarity and Ford Fusion Energi are examples. Caldwell expects electrics will account for 4.4% of total sales in 2018. Tax credits of up to $7,500 per vehicle, depending on the size of the battery, make these attractive. But buyers should be aware that the government program may be ending for GM and Tesla electric vehicles this year, unless Congress extends it.

You might want to consider a late-model used car instead of buying new. Jonathan Smoke, chief economist at Cox Automotive, points to record lease returns expected in 2018 and 2019, including more SUVs and crossovers than had previously been the case, so there will be more of these popular vehicles to choose from.

Also consider buying used from rental fleets: Former rental vehicles typically cost 5% to 15% less than the same model sold by used-car dealerships.

Car subscription services are getting attention. Participants can reserve vehicles for shorter periods of time than in leases, allowing members to try many different types and models. However, these plans are still quite pricey.

Will You Have to Pay Sales Taxes on Your Online Purchases?

A pending case before the Supreme Court has many consumers wondering: Am I going to start paying more in taxes to shop online? But you already do, to a certain extent. Amazon, Walmart, Target, Costco, Sears and others have already agreed to collect state sales taxes on online orders. After fighting tax collection efforts for years, Amazon is bowing to the necessity of having a physical presence in every state in the form of distribution centers if it wants to honor its delivery guarantees. That in turn means complying with each state’s sales tax laws.

However, Amazon only collects taxes on its third-party sellers for two states, Washington and Pennsylvania. And many other sellers that do not have a physical distribution network, such as Overstock.com, do not collect either. Such e-commerce businesses have not been required to collect sales taxes since the 1992 Supreme Court case, Quill v. North Dakota, which held that only those businesses with a physical operation in a state had to collect sales taxes from customers in that state. This issue is being revisited in the current Supreme Court case, South Dakota v. Wayfair, which the Court will decide sometime this summer. Continue reading “Will You Have to Pay Sales Taxes on Your Online Purchases?”