While COVID-19 has been a humbling experience for many business owners, the pandemic has been an outright disaster for the health and fitness industry. A lot of fairly significant brands, including Golds Gym, 24 Hour Fitness, YogaWorks and Flywheel, have filed for bankruptcy. On top of that, over 38,000 fitness clubs and studios in the US have been shut down due to the virus. It has been reported that less than 50% of these businesses will reopen successfully.
Here are some unsettling statistics:
- 34% of gym exercisers have or plan to cancel their gym memberships after.
- COVID-19 and more than 20 million gym memberships could be cancelled due to COVID-19.
- As a result of the coronavirus, 40% of Americans exercised at home for the first time.
- At least 500,000 fitness club employees have been furloughed as a result of the club shutdowns.
There are a variety of factors that continue to be real threats to the industry. The main threat remains government mandated shutdowns. Some places in California and New York (specifically Manhattan) have been dark since March, with no real sense of when they will get the green light to reopen. This has been a devastating loss, especially in these areas where commercial rents are at an all-time high.
Another factor that threatens health and wellness are the continued reports from the media that gyms, studios and fitness centers are not safe and could be super spreaders for the virus. At this time there is no evidence that the spread is coming from the fitness industry. As a matter of fact, most studios (especially boutique fitness) may be safer than your average grocery store. These studios are able to limit class size, maintain adequate social distancing, enforce mask wearing, evaluate who is appropriate to return to the studio and keep accurate records of those who were in the studio at any given time.
Lastly, negotiating with landlords has been significantly challenging for most businesses. When over 38,000 studios were forced to close back in March, there was a mixed response from landlords. While some offered abatements and others offered deferment, there were many that offered nothing. This challenge continues even as businesses have been allowed to reopen, albeit at limited and lower capacities. There continues to be a huge need for rent relief and additional government aid for this industry sector. This may prove to be the most significant barrier for a majority of health and wellness businesses to remain financially solvent now and in the future.
While this industry has seen many devastating effects, there are some positives on the horizon. The volatility of the late spring and early summer is beginning to stabilize. According to ZenPlanner, member check-ins are steadily increasing — up 1% over the last month to 79% of what we’d normally expect this time of year. Revenue is slightly behind check-ins but increasing at a faster rate — it increased 3% over August to 75% of normal in September. This number is especially encouraging when compared with April, when the number dipped to 14%. Nationwide, revenue is at 77% of 2019 numbers, up two percent from last month.
Despite having the impact to financially devastate the health club industry, the 37% of all survey participants indicated they would work out more after COVID-19, and over 50% of them said they are motivated to do so by a renewed appreciation for their health and well-being according to a survey by the Sports and Fitness Industry Association.
Gyms and studios that have seen success are the ones that were able to be flexible and creative: expanding class offerings outside a typical schedule, consistent communication and engagement with members and students, and hybrid memberships and class options. They are also investing heavily in digital and expanding their on-demand and virtual platforms.
Boutique fitness and micro gyms have seen an increase in new customer acquisition since reopening, as many Americans may still be fearful of going to a big box gym and are looking for a smaller, more intimate experience. Several local studios including Pilates in the Grove have seen an increase in revenue from 1:1 private sessions both virtually and in-studio.
Businesses looking to grow and capitalize on this positive trend should seek to start a marketing campaign aimed at people who are tired of working out (or avoiding working out) at home. Once people come through your door, make sure they feel safe and welcome. Take extra time with leads and members to strengthen your community.
Along with the positive trend of increasing revenues, the industry has also seen a surge in proprietary inventions. Many in the industry were not about to sit back and allow the pandemic to shutter them forever. Instead, they saw a need for better and have gone on to create new products, features, and programs that will most likely be a part of our new normal well into the future.
While there are still massive hurdles to overcome in the health and wellness industries, the future is promising for those willing and able to innovate and stay the course for the long haul. We on the business side of this industry are hopeful that our communities will rally together to keep health and wellness alive. As they say ... our greatest wealth is health!