The New Fitness Normal

In March 2020, the pandemic hit, and the fitness and sports industries experienced an accelerated transformation that was slowly underway. 

On the fitness side, during this time, consumers and fitness enthusiasts have learned ways to remain active and continue to enjoy a group class experience by joining virtual wellness classes that were either pre-recorded or live from the comfort of their home.

Although the virtual approach worked for fitness, live sports, on the other hand, took a hard hit. COVID-19 ceased all main competitions for the time being. The solution? Many people found a new way to stay connected with their passion for sports by joining e-sports or participating in competitive video gaming.

What is unclear at the moment is not the ongoing transformation of both industries, but only how deep the two sectors will be reshaped in the medium and long term.

Until March 2020, brick--and-mortar fitness studios represented the biggest driver of growth in the estimated $94 billion fitness industry, and home-based workout programs were considered just a growing trend.  

The pandemic caused shutdowns, which led to an increase of stay-at-home orders of weights and machines. Many fitness operators had to shut down and figure out a way to navigate this new normal. Some were able to shift some of their business online, but the majority were not prepared. Most business owners were not ready to connect with their members online. The main reason is that their core business was still primarily based on having a physical facility filled with equipment and on-site training.

Many chains immediately filed for Chapter 11 bankruptcy to restructure their debt, re-size their footprints, and renegotiate overly burdensome leases while pursuing the additional financing necessary to fund post-pandemic re-openings.

According to Financial Advisory firm Eisner Amper: Gold’s Gym and 24-Hour Fitness cite COVID-19 as the reason for their filings. Tony Ueber, CEO of 24-Hour Fitness, stated: “If it were not for COVID-19 and its devastating effects, (24-Hour Fitness) would not be filing for Chapter 11.” Furthermore, 24-Hour Fitness plans to close approximately 100 locations permanently and re-open the remaining 70% of its studios in June. Gold’s Gym plans to permanently close approximately 50% of its locations (not including franchises) and hopes to re-open the remaining 50% in August. The bankruptcy filing does not impact 600 franchise-owned locations. 

On the flip side, personal fitness equipment and technology sales have grown at record levels, together with subscriptions to online classes and streaming fitness services. Business Insiders recently presented a case study on Peloton highlighting a few key growth facts: 

• Peloton reported a 66% increase in sales in the most recent quarter as consumers stuck in lockdown flocked to by its high tech at-home workout equipment.
• It ended the quarter with over 866,100 connected fitness subscribers in total – those with either purchased bike or the treadmill – a 94% increase from this time last year. 
• Analysts say that even if gyms do re-open, the company is still well-positioned for the future as new social distancing norms may continue to keep consumers at home.

According to different sources well-reported and summarized from Fitt Insiders:

• Mirror has seen a fivefold increase in exercise frequency and an “uptick” in sales.
• Tonal’s sales have tripled in recent weeks. Usage is the highest in company history.
• Hydrow saw sales increased 3x recently. Usage is up more than 40%.
• FightCamp usage is at an all-time high, and sales are up 6x.
• iFit’s digital subscription + connected equipment from NordicTrack and ProForm has seen a 200% increase in sales versus a year ago.
• Echelon’s sales are up 5x over average daily volumes and usage up 50%+.
• Tempo users are working out 35% more often than the previous six months.

These facts and data have challenged the relevancy of the historical brick and mortar operation business model and its efficiency.

The changes and challenges to the industry are affecting not only fitness but also other sectors such as retail. The pandemic has acted as an accelerator to the ongoing transformation across landscapes.

Many operators never really acknowledged the intensity of the changes introduced by successful B2C models like Peloton, nor have spent the time to understand the diversified wellness goals and behaviors of the new Generations. This has prevented them from working on fresh, innovative strategies that involve a mix of B2B and B2C approaches and modernizing leadership and competencies.

There are many questions, but no full answers of how deep the transformation will be in the near and long term. It is important to ask:

• What will the behavioral changes of consumers who have shifted to training at home for months be? Will this routine remain in place in the long-term? Does this mean that only a smaller portion of fitness enthusiasts will go back to a physical gym? 
• Amongst the operators, who will be able to connect their members online genuinely? How many will be able to compete against brands like Peloton? Is your business prepared with several hundred million dollars in building production studios, developing a network of talented trainers, and music licensing?

There are many different opinions and open questions that remain to be answered. Now is the time to be mindful of the future. Across industries, there will be, and there is an undeniably reshaping in all aspects. What will the future of fitness and sports be like? Only time will tell.

Written by Federico Foli

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