This is the Coronavirus Case Studies series. Every post in this series will talk about how the coronavirus pandemic of 2020 will affect different businesses for years to come. We’re all still processing this massive, life-changing event. This week, we talk about how coronavirus will affect the fitness industry.
What is the Fitness Industry?
The fitness industry can be thought of as two industries in one. You have the public fitness industry which consists of gyms and fitness clubs. Then you have the private fitness industry which is made up of selling gym equipment and at-home training (be it through one-on-one consults, videos, or high-tech gadgets).
Overall, the fitness industry had a wonderful 10 year run all throughout the 2010s. There was a consistent year-over-year growth that ranged between 3 and 4%. Fitness overall was becoming a larger and larger part of popular culture.
The reasons for the industry’s success in the United States are myriad: health insurance is extremely expensive, wearable devices were becoming popular, and training by video session became viable. At the same time, budget gyms were catching on everywhere from the densely populated urban areas to the outer reaches of the suburbs.
The 2020s were supposed to be very good for the health and fitness industry, with one source citing an expected 10.6% growth rate between 2018 and 2023.
Now, of course, all bets are off. The coronavirus pandemic led to the closure of many gyms because of stay-at-home orders. This didn’t go over well with many gym owners, since their main source of revenue dried up with little to no warning.
Coronavirus Split the Fitness Industry in Two
The public and private fitness industries could pretty easily be lumped together before the coronavirus. That’s just not the case anymore, though.
Like I mentioned a moment ago, gyms struggled when the pandemic initially hit and many still are. In fact, Planet Fitness saw a 14.5% drop in revenue from Q1 2020 from Q4 2019. That’s pretty remarkable when you consider that January and February 2020 were basically safe in the US and you had the obligatory New Year’s Resolutions crowd in January too. That massive drop in revenue came from one bad month. We’re still waiting on more up-to-date figures too.
Some gyms are open now, but with social distancing guidelines and a general concern for public health, many people don’t think that going out is worth the hassle anymore. I don’t blame them.
Meanwhile, as the Gold’s Gyms, Planet Fitnesses, and YMCA’s of the world faced extinction-level events, companies like Tonal and Hydrow – sellers of home gym equipment – saw their revenues triple. Apps like FightCamp, iFit, Echelon, and Tempo saw 30-50% jumps in time that their users spent working out.
These two types of companies, as you can imagine, are experiencing the pandemic in dramatically different ways.
Fitting Fitness Into the Home
With many people working from home, furloughed, laid off, stressed out, and bored, it appears that interest in exercise overall has gone up. It could be that we’re only seeing more traffic on exercise apps without an actual increase in exercise done in the world, but I don’t think that’s the case. Many people track their workouts even when going to the gym, so I speculate that the increase in exercise being performed right now is real.
With a more exercise-prone population with nowhere to go, it only makes sense that they would find a way to fit fitness into the home. There was already a shift underway from public fitness to private fitness, it just seems that the coronavirus accelerated this shift.
So what does home fitness look like in 2020? In the 1980s, you might have watched rooms of people in leg warmers do jumping jacks on VHS. Now you livestream workout sessions, Zoom call coaches or instructors, and listen to fitness playlists on Spotify. All of this is done while using home exercise equipment made by companies like Peloton.
The Long-Term Outlook for the Fitness Industry
With so many people buying equipment for their home, it seems logical that gyms are going to long-term reduction in revenue lasting several years and perhaps decades. This is because many people will cancel their memberships outright with no intention to renew them. After all, they’ve been working out in the privacy of their own home for a long time!
The fitness industry, in the long run and from a 30,000 foot view, is going to do well. In fact, I would rather be in the fitness industry right now than most others. That said, though, I would not want to own a gym or fitness center. They will likely struggle for a long time. Many people will be laid off and many gyms will close.
Many personal trainers and dietitians will find themselves newly able to work from home, providing consults remotely. Gym equipment and training programs will continue to see a long-term increase in revenue. The fitness industry as a whole will likely improve since people with more time will be more likely to work out. People will likely have more time because of a more home-based economy.
For the fitness industry as a whole, this is a time of revolution and transformation. Restaurants, hotels, and even airlines will have a brutal marathon to run in the 2020s. For the fitness industry, it will be more like a 10K.
What do you think the future holds for the fitness industry? Do you think this article is spot-on or off-base?
Let me know in the comments below. I’d love to hear what you have to say so we can process this together.
