The transformation of the fitness industry
This article is part of our special report on Business Transformation, on how the pandemic has changed the way the world does business.
Like restaurants, retailers and other businesses that normally take place in crowded places open to the public, Europe’s health and fitness industry is scrambling to recover and get its business back on track – right from the start. that he will have determined what his activity will look like.
Orders from public health authorities to repeatedly shut down health and fitness clubs have had a profound effect on the industry. The Deloitte consulting firm estimates that clubs in Europe have lost 15.4% of their members, or more than 10 million people, even when the closures have been relatively brief. Industry revenues fell twice as much, by nearly 33%, as customers froze accounts or requested refunds.
As the pandemic drags on, club leaders are trying to fully understand how much Covid-19 has fundamentally transformed their industry, which generated $ 96.7 billion of worldwide turnover in 2019.
“For a long time now, I have thought that too many health club executives around the world assume they have the full attention of the exercising consumer,” said Ray Algar, business advisor and global analyst at the fitness industry at Oxygen Consulting in Brighton, England. “That the gym sits at the top of an exercise industry hierarchy.”
“The gym may have already had this temporary monopoly, but it’s over, and the pandemic has demonstrated that consumers can locate and enjoy many gym substitutes with capacity,” he said. . “What the pandemic has done has made these gym substitutes more visible. This therefore represents an important inflection point, as this global industry has never been challenged to demonstrate its right to serve and support the incumbent consumer.
Stefan Ludwig, a partner at Deloitte and head of the Sports Business Group, said the lockdowns had indeed “had a significant impact on both consumer behavior and operator offers.”
A report from ClubIntel, a marketing research and consultancy firm, found that closed clubs have led many people to lose the habit of exercising regularly and have caused others to try alternatives, such as like biking, joining a walking club, signing up for video lessons (dancing and boxing are popular options) or buying an interactive device like a Peloton or a Mirror.
Many customers, according to the report, have chosen remote options offered by vendors other than a fitness club. To retain or recover the pre-pandemic clientele, clubs must increase these types of options and create a business model with various offers such as video on demand and streaming. Many have already started.
ClubIntel, found this 27% of 2,000 people who took an online survey said their fitness clubs offer digital fitness during Covid shutdowns; which rose to 58% after the clubs reopened.
“Many physical operators have quickly adapted their digital offerings, and this remains the key to their success,” said Ludwig.
Clients seem open to distance training. MindBody, a fitness software company, said that 7 percent of customers surveyed in 2019 used live workouts; during the pandemic, the figure exceeded 80%. While three-quarters of those clients said they plan to return to a club when they can, many added that they will continue virtual training as well.
“While digital offerings are here to stay, they are unlikely to replace traditional brick-and-mortar services,” Ludwig said. “Operators are well advised to incorporate a full digital experience into their offerings while maintaining their on-site facilities. “
Tracking Covid-19 transmission rates, reconfiguring clubs and creating coronavirus protocols are important steps in restoring confidence that gyms are safe environments and persuading clients to return to gyms. “The efforts of the industry, especially in Europe, have led to an encouraging member return rate,” said Mr. Algar.
PureGym, Europe’s second-largest gym brand with around 500 gyms in the UK, Denmark and Switzerland, recently said it had 1.6 million members at the end of June 2021, or around 94% of its June 2019 level.
To be competitive, however, fitness clubs cannot build on what has worked in the past. Clubs need to learn to bundle different options that are offered in different ways, such as live, streaming, and on-demand, rather than continuing to see the industry as a zero-sum game that pits the gym against Peloton or Apple Fitness +. , Mr. Algar mentioned.
European operators will find that a diverse approach is easier to take as governments in many countries have waived corporate taxes and provided subsidies to cover salaries and overheads to mitigate the closure of physical clubs, Mr Ludwig said. Only 1.4% of clubs in Europe have closed since March 2020, compared to around 25% in the United States.
Similar support for US industry has been offered. The Gym Mitigation and Survival Act would provide grants of up to $ 25 million to gym owners. But the bill, which has 157 co-sponsors, including 27 Republicans, has not left the House small business committee.
Bankruptcies are also less frequent in Europe than in the United States. Two American chains, 24 Hour Fitness USA and Gold’s Gym International, filed for creditor protection in spring 2020. 24 Hour Fitness closed more than 100 clubs, while Gold’s closed 30 before being acquired by RSG Group, owners of McFit, Germany’s largest operator of fitness clubs. .
Helen Durkin, executive vice president of public policy for the International Health, Racquet and Sportsclub Association, said it was difficult for fitness clubs to predict how the pandemic was radically transforming the industry, “but the need to be omnichannel has been talked about for a while, and some have planned it.
Ms Durkin said Covid has accelerated innovation, pushing business owners to open more studios – that is, smaller locations dedicated to a single discipline, like yoga or Pilates – or to offer drop-in classes for which clients pay per session rather than monthly. “The industry is looking at different pricing models,” she said.
Some data shows that older members of fitness clubs were faster to return to gyms and clubs. “When the gyms were all closed, I would work out at home using light dumbbells, resistance bands and YouTube videos, and go for long walks,” said Gavin Hughes of London, who is in his 50s. “It wasn’t as good as the gym though.”
He returned to a gym, but not the expensive gym he once belonged to in the Financial District. He uses a cheaper one near his home in the East End, which allows him to go more often and afford a personal trainer.
Mr Algar said higher vaccination rates among baby boomers and the use of exercise to treat certain age-related health conditions may explain why older clients have returned to brick clubs. and mortar faster than the younger ones. But that too foreshadows a fundamental change facing clubs.
“Seniors are underrepresented in the global health and fitness club industry, and that’s something that needs to change,” Mr. Algar said. “Over the next 10 years, there could be at least 1.4 billion adults over 60, up 30% from now, with no growth among adults under 34.
“Many seniors have the financial resources and a compelling reason to harness exercise to help them enjoy the wonder of a healthier, longer life,” he said. as for young people.