Surviving the Fitness Revival

With social distancing measures around the world relaxing, many of us might be considering a return to the gym or fitness classes... or are we? Some say it takes 21 days to form a habit (a study suggested anywhere from 18-254^[1]), so how many of us may decide to make a permanent change?  

Talking to friends and family, many have found joy in outdoor exercise such as swimming (where allowed!), walking, running, or conducting DIY boot-camps in local parks newly accessible during the work day due to work-from-home policies. Others raided sporting goods retailers for home exercise bikes and yoga-mats. Stimulating instructor-led rides and exercise classes to suit any taste are increasingly available via the internet. In fact, the coronavirus has given many online fitness and video platforms a boost, as out-of-work personal trainers and group fitness instructors have embraced the medium.
 
In order to understand pre-existing fitness trends, we looked at the 2019 IHRSA Global Report.  This publication highlights data collected in annual surveys conducted by the Boston-based International Health, Racquet & Sportsclub Association.

According to their surveys, US fitness club memberships, which includes gyms as well as fitness studios, have been growing by 4% on average since 2014. That is well above US population growth of about 0.55%, suggesting there is something to the ‘health and wellness revolution’ often talked about.
 
If you noticed that an increasing number of your contacts have joined the likes of SoulCycle, Barry’s Bootcamp, F45 Training or Zumba (admit it!), in the last five years then you are not alone. The growth of fitness studios has been a major trend.  In the US, membership is estimated at 33 million, up from 11 million in 2014. This represents a record high of 50% of the 64 million total US club memberships.

Another trend in the US has been the growth of membership of low-cost gyms from 6 million to 15 million members over 2014-2019^[2]. Industry disruptors have succeeded in attracting infrequent gym users with an inexpensive but well equipped ‘no-judgment zone’ format that eschews the fitness-freak or muscle-head culture some gyms can develop.
  
These polarising trends have led to declining membership and rising financial pressure on mid-market traditional gyms such as Gold’s Gym (as popularised by Arnold Schwarzenegger), 24 Hour Fitness, and many independently run gyms.
  
With that backdrop in mind, how might social distancing measures and potential changes in consumer behaviour alter trends and create winners and losers?
  
The most obvious is that fitness studios are likely to see a negative impact. These class-based exercises tend to be conducted in relatively crowded indoor environments, so at least until a vaccine is widely available, social distancing measures are likely to have a significant negative effect on capacity and therefore economics. Compounding this are further challenges presented by new-found alternative workout options and home-based exercise. To top it off, consumers are likely to tighten their belts in response to the recessionary economic environment, and studio classes are typically more expensive forms of exercise. On the positive side, consumers may be keen to reconnect socially, with this element of group exercise one of its major selling points.

We think the impact on mid-market gyms will also be negative, adding further pressure to an already challenged segment. Here social distancing is less of an issue, though peak time capacities may fall. However, people have found alternatives, and cost consciousness will likely drive cancellations of memberships.
   
Perhaps the least impacted may be the low-cost gym segment. These gyms may experience membership losses due to changed habits, but should be expected to gain from consumers seeking cheaper workout options. They will likely also take advantage of the opportunity to market aggressively to those of us (likely the majority) who over the last few months have been a little guilty in thinking a walk in the park now and then makes up for easy access to the refrigerator, pantry and wine rack!
 

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