Trends 2021 - Fitness & Wellness industry.

The global fitness market is about US$100 billion in annual sales, most of this is gym / health club membership. This model broke in the Pandemic of 2020. While the lockdown was a major set back to established business model of selling monthly / quarterly / annual gym memberships, it has also led to a host of new business opportunities.

With every passing month of lockdown I asked myself this question, where is this moving? What will be structure of the fitness industry by the end of 2021 and what are the opportunities in this industry.

Here are few positive developments that hint at things to come:

• Paleton's revenue grew 90% in its FY 2018, 107% in FY 2019 and 99% in FY 2020. Though in the JAS quarter the revenue growth was 232% YOY.
• Peloton market cap is approx US$40 billion, in Dec 2020 it acquired Precor for US$420 million;
• Calm raised US$75 Million at a valuation of US$2 Billion
• Alo Yoga with it's merchandise, content and Yoga classes have a revenue of about US$200 million.
• Lululemon's revenue grew 24% in 2018, 21% in 2019. In the 1st 9 months of 2020, it's revenue grew 4% YOY to US$2.67 billion. It's stock grew 650% over the past 5 years.
• Mirror, an at-home fitness company sells a Mirror like device at $1,500 integrated with a camera and speakers for customers to participate in live fitness classes at home @ US$42 /month subscription was acquired by Lululemon at US$500 million.
• Headspace, a meditation app has revenue in excess of US$ 100 Million, has raised (cumulative) more than US$ 215 Million in 2020 with a valuation of almost US$1 Billion.

On the other hand there is no dearth of bad news from the fitness industry as well.

• Gold's Gym filed for bankruptcy in May 2020 permanent closing 10% of Gold Gym's 700 locations around the world.
• 24 Hour Fitness filed bankruptcy in June 2020, permanently closing 130 of its gyms in the US.
• Town Sports International, parent company of New York Sports Clubs and Boston Sports Clubs filed for bankruptcy in Sept 2020.
• Flywheel Sports filed for bankruptcy in Sep 2020 closing all 42 Spin Studios.
• India's most well funded fitness start up Cure.Fit closed its centers in 15 Tier 2 cities including Mysuru, Surat, Ahmedabad, Indore and others and let go of more than 1,000 employees.

So what does the future hold for the global fitness and wellness industry?

There is an obvious shift towards digitally connected fitness equipments; more importantly the market for home based workouts has continued to increase inspire of opening of fitness facilities and ease of curbs that were forced during the Covid 19 pandemic lockdown.

Market for digital wellness solutions has increased globally; with increasing stress levels executives are turning to Yoga and Meditation for their wellness needs. Calm, HeadSpaces, Asana Rebel and Alo Yoga are just few of the many brands taking away market share from gym memberships.

Home based Zumba Fitness, Obe, Daily Burn or Les Mills workouts are now household names. What made them different from individual unbranded instructors was the quality of content, the engagements and wide variety of options to chose from. With it's high performance, colorful & very popular merchandise range, Zumba has been also nibbling at the global athleisure market.

As more people take to walking 10K steps a day, I expect wearables to keep increasing their market size. With brands like GoQii launching watches that measure much more than steps and heartbeat and Apple positioning it's Watch for achieving mindfulness, wellness & fitness goals and linking it with corporate wellness programs, there is a new category that will slowly but surely takeaway revenue from the traditional fitness industry business model.

Aggregators like ClassPass, GymPass, GymHopper, AndJoy (previously GymForLess), OneFit (also owns Urban Sports Club), BenefitSystems, Fitternity and GrowFitter will need to reinvent to compete and be relevant to multiple platforms that provide online live streaming classes or a library of workouts. Commissions from sale of gym membership do not justify steep valuations of these aggregators, their journey from B2B2C to B2C will be interesting to watch.

Does this mean that Big Box Gyms are dead and no longer viable in the New Normal?

Yes & No. The older business model of large gyms, while they were giant monolith are not going to be very viable. Gyms that offer connected wellness in both physical and digital format will continue to grow.

As with equipment manufacturers, the consolidation in gym chains is also due. We should see more of that with better pricing for the customer. Boutique studios and gyms should continue to grow as they have defined & dedicated audience.

About me

My writing are based on my learning’s over last 2.5 decades. Happy to exchange ideas and thoughts. I write mostly about subjects related to my work but sometimes just-like-that as well. I can be reached at @AdarshNigam on Twitter or LinkedIn

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