What are the Highlights of the Fitness Sector and what Changes are expected in Health- and Sports Club Business in the Upcoming Years?

What are the Highlights of the Fitness Sector and what Changes are expected in Health- and Sports Club Business in the Upcoming Years?

Health and Sports Associations report that over the last 40 years the involvement rate of citizens into activities of health and sports clubs is continuously increasing, year after year beating the records of the overall number of members of the health and sports club associations. Fitness industry shows consistent growth in the course of the last 40 years.

Population involvement rate

Such activity of ordinary citizens is due to many factors, among which are the following:

  1. Demographics – the young population is more prone to invest in supporting their health compared to older generations
  2. Healthcare – the prices for medical treatment turn out to be inaccessible for a high number of citizens; hence, the population takes more care to support healthy well-being as long as possible
  3. Technology – modern technological innovations have made sports more attractive with all tracking devices and online support of fitness clubs;
  4. Popularity – over the course of last decades the fitness clubs and healthcare facilities have become much more accessible, and now decent health and sports clubs are available even in distant locations.

Generation of millennials is reported to invest 27{3fbfd6f1e6b19884051837dbbbebf333964dd5fac151615ffbd47b80e5ecc87a} more in sports club membership, compared to the previous generations at the same age. Visitors aged 35-54 form the majority of fitness and healthcare clubs.

Exercise and Fitness

The rate of involvement is expected to increase, since the young population of millennials will be getting older, entering the middle age group, who are statistically the most numerous members of sports clubs, and with time their children will follow the example of parents.

The Fitness Industry has to Adjust

The growing number of sports clubs members also promotes improvements in the whole sector – prices, accessibility, implementation of new technologies, professional preparation of coaches. The level of competition in the field is increasing, thus promoting the higher value of services at lower prices provided in better locations. Also, the development of technology, mobile devices, and applications introduces another threat to the fitness industry, as a share of people who prefer online training is raising. The latest factor turns out to be one of those reducing the popularity of ordinary sports clubs; thus, regular fitness clubs have to compete with online activities, expanding and providing a broader range of activities at attractive prices.

Demography of Fitness Club Visitors

Middle age group of 35-55 years old is traditionally the most active members of fitness clubs. The average age of fitness club member is 39 years old. Second are young people aged 18-34, and over the last decade, the number of members below 18 has also almost doubled. At the same time, health club members evenly split between men and women.

Fitness Exercise Training

Healthy Living Trends

Activities of mass media and healthcare organizations have done their excellent job in the promotion of fitness industry through raising awareness on links between overall well-being and sports activities. The population is also well aware of preventative health measures and the causes of many conditions, such as heart diseases, diabetes and obesity.

The Number of Health Clubs Members is Expected to Rise

Number of fitness and health clubs worldwide

Current statistics show that less than 20{3fbfd6f1e6b19884051837dbbbebf333964dd5fac151615ffbd47b80e5ecc87a} of the population are members of health and fitness clubs, investing an average of 1{3fbfd6f1e6b19884051837dbbbebf333964dd5fac151615ffbd47b80e5ecc87a} of their income into sports activities. This number is expected to grow, as the generation of millennials is showing much more significant interest compared to their parents. The statistical data show that the current generation of millennials is spending 27{3fbfd6f1e6b19884051837dbbbebf333964dd5fac151615ffbd47b80e5ecc87a} more money on fitness clubs compared to the previous generations.

High-Value Low Price Gyms Vs. Boutique Fitness Studios

One of the general tendencies of the fitness industry is the consolidation of its facilities. Around 50{3fbfd6f1e6b19884051837dbbbebf333964dd5fac151615ffbd47b80e5ecc87a} of all members belong to small independent clubs and are not a part of big chain fitness giants. Thus, high-value low price gyms at the most convenient location form around half of the market of the fitness industry.

Clubs need to provide broader activities and facilities, covering all price segments in order to remain attractive and relevant to customers. Thus, an average fitness club needs to offer many activities, such as yoga, pilates, Zumba, boxing, regular gym workout, supported by additional services, such as massage, swimming, fitplans, and personal trainers. At the same time, to involve a higher number of consumers, special attention must be paid to High-Value Low Price segment (HVLP), which is reported to be the fastest growing segment of the fitness industry. The improvement of services in this type of fitness clubs has launched a tendency of attracting more clients, who primarily used to attend mid-priced clubs. Thus, mid-priced clubs turn out to be the most vulnerable chain of the industry. Their focus currently lies on improving the quality of provided services and adjusting the prices.

Boutique Fitness Centers

At the same time, Boutique fitness industry also shows its consistent growth. The concepts of this type of fitness studios have greatly expanded in recent years. Now Boutique Studios include Yoga, Crossfit, High-Intensity Interval Training (HIIT), indoor cycling, pilates, kickboxing, and other types of activities. These studios are mainly located in big cities. They provide training with personal trainers, and each of the classes may cost similar to a monthly attendance of a regular gym in a Low Price Studio.

The number of search inquiries for yoga and running is showing its consistent growth in browsers since 2007.

Consolidation will also most probably happen to Boutique Studios in the nearest years, and the rise of new facilities, such as ClassPass, has to be expected. ClassPass is a service, which offers attendance of fitness classes and activities in the partner studios in your neighborhood, charging a monthly service membership fee. Such services not only allow a better choice to the consumers, given the sufficient amount of partner clubs in the system but also help Fitness and Wellness centers to fill their low-peak times by distributing the information on discounts among the customers.

General Tendencies of the Fitness Industry

• Strong Competition
Competition in the sector is increasing, especially in the HVLP sector. The same tendency is valid for Boutique Studios.

• High Attrition Rates
Historically, a significant number of clients cancel Sports Clubs membership after a short while. This tendency is also intensified with the development of fitness apps and personal machines and gadgets for training. The clubs need to attract new members, to replace the 30{3fbfd6f1e6b19884051837dbbbebf333964dd5fac151615ffbd47b80e5ecc87a} of yearly cancellation rate (attrition rate).

• Increasing Wages
The growth of wages in the field could negatively affect the margins.

• Ineffective Downtime hours
One of the biggest challenges of the industry is utilisation of the gym facilities in low-peak hours.

• Technology Promoting At-home Training
Modern gadgets, application, Video classes, training machines steal a share of Sports Club membership, and this tendency is intensifying each year.

In conclusion, most of the factors indicate that the industry will keep on growing. Increased competition will promote high standards of provided services. The rise of wages can affect club margins, and such factors as off-peak hours and increased popularity of off-club workouts will stimulate clubs to offer attractive pricing plans and encourage their further development.

Author: Alexej Pikovsky

Passionate about investing in private and public companies and a successful track record across different industries and geographies. German Academic Foundation Scholar and Research Affiliate at the Centre for Global Finance and Technology at Imperial College London. Addicted to reading and sharing industry deep dives. Enjoy!