Jul 24 2020
The Gym, Health and Fitness Clubs industry (IBISWorld report 71394) has experienced an adverse impact from the coronavirus pandemic as state governments have ordered nonessential businesses to temporarily close to prevent the spread of the virus. As a result, IBISWorld estimates that industry revenue will decline 10.1% in 2020 alone. Due to these closures, many small-scale gyms have had to exit the industry altogether as incurring expenses with no revenue streams leave them with no choice. Large fitness chains, such as Gold's Gym International Inc., have filed for bankruptcy over the course of the pandemic and others have reported drastic revenue declines, such as Planet Fitness Inc. Other examples include 24 Hour Fitness, a fitness center chain, which is also on the verge of bankruptcy and Soul Cycle now selling their bikes to compete with Peloton.
Some state governments have permitted gyms to reopen at limited capacity with strict protocols. Some of these protocols include limiting capacity to 50.0% or less, constant disinfection of all equipment, and keeping a physical distance between people. Still, gym members remain uncertain if they should return to their normal workout routine at the gym. Locker rooms and sharing equipment are two factors discouraging some gym-goers, causing a spike in membership cancellations and freezing. Furthermore, according to Healthline Media, warm air combined with excessive breathing and air flow from exercising can cause virus droplets to spread at a faster pace. Conversely, exercising in an outdoor setting reduces the risk of exposure since the virus particles can disperse.
Consumers are anticipated to turn to less expensive options, such as in-home workouts and virtual fitness offerings, as per capita disposable income is estimated to decline in 2020. In fact, streamed and on-demand workout business models have increased in demand during the pandemic at the expense of the traditional brick-and-mortar fitness clubs. Lululemon, an athleisure and activewear company, just announced its acquisition of Mirror, a home fitness startup that consists of a mirror-like screen that streams workout classes, for $500.0 million in July 2020. Demand for Mirror has accelerated during the coronavirus pandemic as well as other home fitness products like Peloton. Even though some industry operators started to create an online presence in order to retain their members, most have been competing with free online workout classes. Alo Moves of Alo Yoga, which offers online fitness classes, has seen a three-digit increase in engagement in their platform as well as their YouTube channel where they share free classes.
Streaming memberships are less expensive than gyms and consumers can easily find free workouts online. As a result, demand is not anticipated to rebound as strongly as other industries once the coronavirus has been contained. The shift toward in-home workouts and online streaming has made an impact in the overall fitness industry that will stay for the long-run and can already be seen in the aforementioned performance of its major players. Gyms and studios that have been able to shift toward streaming and online workouts will be able diminish the impact of the coronavirus since the reopening of fitness facilities at full capacity still remains out of sight.