Jun 07 2012
Americans are in the middle of a fitness craze. This movement is seeping into popular culture, as brightly colored yoga mats and fitness clothes fly off the shelves at retail stores, TV shows about weight loss grow more popular and spinning classes are fill up fast. More Americans are heading to the gym than ever before as they desperately desire washboard abs and chiseled biceps. In the midst of this growing enthusiasm, the fitness industries are becoming the biggest beneficiaries. Despite extremely low disposable income growth in the five years to 2012 (an average of 0.1% per year), the fitness sector is expected to grow at an average annual rate of 2.3% over the same time period. Together, revenue from fitness clubs, pilates and yoga studios, boxing gyms and clubs, personal trainers, fitness DVD production and online sporting apparel sales is expected to total $45.2 billion in 2012.
The fitness industries share two external drivers that are crucial to comprehending revenue shifts. First, The Bureau of Labor Statistics’ Time Use Survey measures the amount of time consumers spend on leisure and sports, which indicates the amount of time consumers can spend on fitness. In 2012, Americans spend an estimated average of 5.2 hours per day on leisure and sports. This time varies by age, gender, number of children and employment status. For instance when unemployment was climbing in 2009, time spent on leisure and sports rose to an average 5.3 hours per day. The second shared driver, per capita disposable income, indicates Americans’ ability to spend on nonessential items, as measured by the Bureau of Economic Analysis. In 2012, IBISWorld expects per capita disposable income to reach $32,954.
The volatile economic environment in the five years to 2012 has not impacted these drivers favorably. The Great Recession following the financial crisis shattered the nearly two decades of disposable income growth; disposable income dipped a remarkable 3.2% in 2009. In addition, thousands of Americans lost their jobs during 2008 and 2009, which at first caused an increase in the amount of time spent on leisure and sports. However, finding jobs became a priority that took time away from sporting activities. In addition, the economy began to pick up again in 2010, decreasing the time spent on leisure and sports as consumers headed back to work. Despite the negative influence of the sector’s main drivers, all six industries mentioned above experienced positive average revenue growth over the five years to 2012. So what then was driving growth?
The exponential increase in health consciousness among consumers provides a starting point to understanding the recent growth in fitness industries. Reports of high obesity incidence and links to heart disease have driven many Americans toward healthier diets and increased exercise. While this trend began well before 2007, it has continued through the period at a steady rate. Public campaigns to curb obesity, such as Michelle Obama’s “Let’s Move” campaign, have helped increase general awareness of the benefits of physical exercise in specific demographic segments and in the traditional market of gym members. According to government association the Centers for Disease Control and Prevention, the percentage of adults being advised to exercise increased about 10.0% between 2000 and 2010. In 2010, 32.4% of adults who saw a physician or other health professional were advised to begin or continue to exercise.
As Americans have become more aware of their need to be healthy, fitness clubs have experienced a rapid increase in membership (IBISWorld industry report 71394). Health club memberships rose from 36.3 million in 2002 to 42.8 million in 2011. In addition, because disposable income has been volatile for many Americans, this increase in health consciousness has prompted more Americans to purchase fitness DVDs (IBISWorld industry report OD5356). Health club memberships can be expensive, so for those who still wanted to remain active and have some instruction, fitness DVDs are an excellent alternative. Many baby boomers are focusing on becoming healthier, especially as they age, and are purchasing more exercise DVDs because they are more convenient than traveling to a gym.
While health consciousness among Americans has been encouraging people to spend time and money on fitness, the perceived social status that comes with the display of leading a healthy and fit lifestyle has also prompted higher demand for fitness industries. High-end gym memberships and personal training often require wads of cash, and participating in such activities displays a level of wealth similar to owning a large diamond ring or a luxury vehicle. Also, consumers need to have the time to spend hours at an expensive gym or visit to a personal trainer, and having this free time is another sign of wealth. In the five years to 2012, there has been a rise of aspirational shoppers which are middle-income earners who display high-end taste. This trend is significant in the Generation Y population, which is also one of the highest health conscious demographics. With high-end taste and a desire to be healthy and fit, it is no surprise that Generation Y consumers have expanded their demand for high-end gyms and personal trainers. IBISWorld estimates the Personal Trainers industry revenue rose 1.4% in 2012.
Along with high-end activities, consumers can show off their fit social status by the clothes they wear and equipment they use. Old t-shirts and worn out basketball shorts do not always cut it at the gym anymore. Spandex pants and moisture wicking tank tops are wildly popular among females sporting expensive brands like Lululemon, Nike and Athleta. Males on the other hand are sporting their wealth by wearing Under Armour and using sportbands that track the user’s pace and calories burned while exercising. With the expanded interest in athletic clothes, industries such as online sporting apparel sales are thriving. In the five years to 2012, the Online Sporting Apparel Sales industry is expected to grow at an average annual rate of 7.6% to $4.8 billion.
Strong is the new skinny
In years prior to the current period, many women viewed exercise and fitness as a way to get or remain skinny. However in the past five years there’s been a cultural shift where skinny is no longer the primary objective for female exercise. With more women in the workforce, many of whom have demanding jobs, and women balancing family with career, exercise has become an outlet for stress as well as a way to gain energy and strength.
Pilates and Yoga Studios (IBISWorld industry report OD4185) have prospered because of this new kind of focus on exercise and the industry’s revenue is expected to rise be an average of 7.7% per year to $6.9 billion from 2007 to 2012. Exercise routines that enable females to relax but gain lean muscle at the same time have attracted women to yoga and pilates. Other specialized exercise practices, such as boot camps and spinning classes, have attracted females as they wish to gain muscle and be in a more competitive atmosphere than yoga studios. With this new trend, IBISWorld expects more females to try boxing or other nontraditional forms of exercise. Already in 2010 and 2011, revenue for Boxing Gyms and Clubs (IBISWorld report OD4848) grew by 3.6% and 2.2%, respectively, and is expected to total $643.5 million in 2012. Boxing has primary been a male sport but as females diversify the way they do exercise, boxing gyms are forecast to attract more females.
As the fitness sector has steadily gained revenue over the past few years, IBISWorld expects it to expand even further in the next five-year period. Consumers are expected to increase their health consciousness from 2012 to 2017 resulting in more Americans desiring to exercise. Exercise has already become a priority in many Americans lives rather than a leisure activity. Therefore, even as the amount of time spent on leisure drops with improvement in the employment rate, consumers will still make time for daily exercise. Also as fitness remains a social symbol, niche fitness clubs and expensive classes will thrive where the exclusivity of such services creates status. Lastly, as strong is the new skinny among females, more women will want to work out. As a result, classes and work out routines that promote strength and lean muscle will be heavily demanded. This also creates room for innovation among fitness instructors, as they create work outs specifically catered to different women’s body types.