Gyms for specific target groups?

News reached me today of a gym in Canada that is only opening to women needing to lose 50lbs or more.
The consumer choice element of this idea is clear: there are a number of women out there that feel intimidated by regular gyms and that removing the sources of that intimidation, whether muscle-headed men or skinny women, will help them to join the gym, keep attending, and lose the weight they want to. People who do not want this choice can always choose other "normal" gyms if they don't like this idea, or indeed are male or not significantly overweight.
From a business point of view this interests me as an example of product splicing to a small but (hopefully) loyal niche market and customer base. By providing exactly the product that this small group want and nothing else, the operators hope to carve out a profitable niche.
All seems well, perhaps, until you throw in some specifics of the gym industry for consideration...

• People leave gyms all the time. World class retention rates in the industry are in the 80 to 90% range. The majority are more like 60%. Below about 40% and you have a serious problem likely to end up in closure or bankruptcy, or both.
• Many "target groups" don't want to feel like a target group. Sure, they'll tell you in market research that they want a women only gym, or a seniors gym, or a women with more than 50lbs to lose gym. Reality can be very different.
• Limited sales. However much we might not like it, the gym industry is a sales industry, and because people leave all the time, new members have to be added. When running a gym chain, we had some "women only" gyms in the portfolio. One colleague expressed the problem perfectly: "the pond we are fishing in has only one quarter of the fish of other ponds. Women only already limits it to 50%, and then 50% of women want to train in a mixed gym." Applying this to the Canada situation and adding in the overweight criterion, I predict this gym will struggle for sales...after a potentially successful pre-launch and early start.
• Lack of role models. A lot of overweight people want to see skinnier people in their gyms. It gives them hope that they too can lose the weight ("if they can be lean, so can I" mentality). They also want some subconscious confirmation that their gym delivers results. If everyone is overweight, this effect can be missing.
• Challenge. People want to be challenged to do more. And they also probably need it. Not everyone can afford a personal trainer, and the motivational impact of the fellow class member with more weight on their BodyPump bar should not be ignored.
• Lack of results. Unfortunately, the majority of people do not reach their fitness goals. A gym targeted at the more weight-challenged will likely suffer even more from the visible lack of progress that a large majority of the members will likely make. This, in the end, will probably lead to even more attrition and put this particular gym at the lower end of acceptable retention rates.
• Long term loyalty. Let's take a best case example; a lady joins with 100lbs to lose. Over a length of time they successfully shift 50lbs of this. What then? Kicked out for not being overweight enough? Of course not...so now you have members with less than 50lbs to lose, but no new members. Oops, now we have a problem. The reality of a gym is that you need to deal with every member individually but have some principles and consistency in the treatment.

A more fundamental issue...

My personal belief and experience, after many years of trying to shed excess weight while visiting my gym at least 3 times a week, is that losing weight is perhaps 10% about exercise at most, and 90% about diet. The very concept of a gym being the answer to weight issues, is in direct contradiction of this observation. Some studies have even demonstrated that exercise increases the amount people eat by more than the calories burned in the gym. Not that I subscribe to the strict calories in vs calories out theory of weight loss - but there is an element of calorific values that is relevant. 

Some gyms do a great job of educating their members on nutrition, but it is still down to the individual to control what goes into their mouths for every minute of every day - and their success is much less dependent on the 3 hours per week they may spend at the gym.

I hope that this gym educates and instructs their members on nutrition, that they do have weight-loss success, loyal members and a great business model. But since I have experience in the gym industry, I'm not holding my breath. And I'm not going to advise clients to follow their lead and open copycat or similar niche gyms.