What happens next?
The year 2020 will go down as a pivotal one for many sectors across the UK, and worldwide. Everyone’s been affected differently, but one thing all industries can agree on is that things won’t be the same as they were before.
The fitness industry is in a unique position. For those of us in the industry, the value of health and exercise has always been high. It’s now probably even higher. However, this hasn’t been reflected in government support when compared to sectors that have struggled as a result of the UK lockdown. And that’s us putting it politely.
Everyone’s got an opinion about what’s going on. From BBC reports about the industry being on the verge of a meltdown, to the more optimistic figures on recovery that others have reported. Can we hope to return to the ‘golden age of fitness’ that Leisure DB‘s 2019 state of the industry report predicted? Or, will this turbulent time last for much longer than originally expected?
In part one of this three-part content series, we’re investigating the real impact of lockdown on gym operator revenues and offering some surprising and underreported findings.
This is the view of the Head of Sales here at Hussle, Jamie Owens. Jamie is uniquely qualified within the fitness industry having held senior management positions across several of the largest operators in the sector including Nuffield Health, Virgin Active, and LA Fitness before joining Hussle to work as a marketplace supplier to the sector.
He’s spent the last month on the (virtual) road talking to operators from across the industry to get the real picture of performance and recovery. Having hosted roundtables and industry meet-ups to get an understanding from those at the heart of the operation since gyms have been able to reopen, he’s got the insight to offer.
That’s a big chunk of people who will decide not to renew a membership that was a regular payment for them beforehand. There are several factors at play that help to understand what’s in the mind of the ‘lockdown lapsed’ member.
Interestingly, operators are reporting a big shift in where their customers are working out. Whilst a proportion of customers have moved towards WOFH, there is also a marked difference in which clubs are getting used and when they are busy.
If this becomes a longer-term trend, many operators will find that their estate is now in the wrong location to attract members, especially single-club members.
The budget sector has already acknowledged this with The Gym Group recently announcing their intention to focus on property deals in areas where people are home working.
This is perhaps an understandable location-based impact, as what once was a convenient location near work is no longer as accessible if members are working from home most days of the week.
Looking into who exactly is more likely to lapse, Data from the US suggests that Millennials, Gen Z, and women are less likely to return to the gym than other demographics. This isn’t overly surprising as it will be these people who have benefited more from virtual and online alternatives. Hussle survey responses showed that significantly more women participated in virtual fitness classes than men during the lockdown.
So, what now? Membership figures are down across the board and gym attendance is far from what it used to be. Although it’s still increasing, it’s very slow and operators need to think about how to grow again.
One operator we spoke to reported that a recent campaign on Facebook that would previously have been expected to yield c.20 new members per club only attracted 1 new member per club in August. At that level, the investment in that marketing channel is uneconomic.
The reality for fitness operators, therefore, is that there’s still a huge percentage of people who haven’t returned. Some of these people might come back in time. And others won’t.
The recovery challenge will vary between venues, but there is going to be a gap between pre-and post- lockdown membership levels that can’t be made back up without doing something different. Options for change could involve further cost-cutting, price increases, or trying to identify new revenue streams that are not inhibited by occupancy restrictions.