The Gym & Class Markets Have Fundamentally Changed…Forever
I haven’t been to the gym since about February 2020 and I don’t intend to go back any time soon. Many of you are the same and for gyms to suffer a year of lost revenues is terminal. The bigger longterm problem is that population behaviour has shifted.
3,500 Americans were surveyed by The New Consumer and Coefficient Capital. 76% of respondents had tried working out at home during the pandemic and, scarily, 66% loved it. It gets worse. For millennials, the percentage is even higher: 82% tried working out at home and 81% prefer it.
Because of what I do here on this blog I already have some home equipment. Yet, I have invested more in free weights, a VASA Erg (to minimise or replace pool time) and accessories like bands. My partner has consumed a vast number of online classes as their existing, private classes successfully switched online. I don’t normally do that sort of class but have been using Apple Fitness+ quite a lot over the last few weeks. I’m still contemplating a treadmill but even though my pain cave is quite nice and fairly big it genuinely has to accommodate ‘other job’ and ‘other job’ has a lot of space-consuming stuff.
The neighbours have just constructed an entirely new garden studio, ostensibly for ‘work’. But I don’t see much work going on down there. Their latest arrival was a Peloton Bike+and their teenage kids have friends round to work out together. Which is great. Very wholesome & hearty.
Peloton shares have surged as you guys, 3.6 million of you, are all doing similar things to my neighbours.
Note: Peloton has 3.6m users
Even my slightly conservative, local tri club has made many changes to adapt to the new normal and I’m sure would never have considered group Zwift workouts or Zwift races a year ago. Now they do it every week.
What happened to those 1980s games arcades?
SEGA, Sony et al changed our behaviours as everyone started to ‘compete’ at home. Eventually, the internet allowed us to compete with friends online.
Sadly for the gyms that online competition for their wares is already there and extremely well-funded. Ask Zwift. They have great ambitions, although could perhaps be moving toward them a little faster.
As you can see from Zwift and others, the online gamification of sport has all the technical, financial and market conditions in place to thrive. And it will. Some might fail but the industry as a whole won’t.
If you had to invest in recently listed shares of either David Lloyd (UK gym chain) or Zwift…where would you put your money?
(Actually, if David Lloyd own the land they build on maybe I’d put it there but you get my point)
The gyms that I think will survive will tend to be those that are high-end social clubs or Golds Gym type establishments that major on non-fitness class type activities (weights!)
My partner’s dance classes are a prime example of a new opportunity. The Argentinian instructor (yes, really) is periodically able to go home to Argentia and still give the same, new & rather lucrative online classes without the expense of hiring out the local hall. In March 2020, I doubted that enough people would make the online move with the instructor...I was wrong. The Argentinian, the Londoner and the ‘Other Instructor’ are all doing quite well in their new online exercise class businesses, or so it seems.
In the UK we saw Joe Wicks and Lucy Wyndham reach stratospheric numbers of people. OK, Saint Joe was doing it for charity and for the mental health of the Nation’s kids but the point remains that if he could have only charged a dollar per class he would already be a multi-millionaire. The economics of successful online classes can make you very rich, very quick. This alluring pot of gold is going to attract many others to try to make their fortunes and/or fill their egos to overflowing.
So there is clearly an online market for individual exercise service providers.
We’ve also seen indoor bike trainers sell out in the first wave of the pandemic, supply couldn’t keep up with demand and even before Christmas 2020, you will have seen VERY FEW discounted bike trainers. Simply because there was no need to discount things that would sell at full price.
Exactly the same scenario is going to play out over the next 3 months until the weather in the Northern Hemisphere changes.