As gyms hit peak season, the market does the splits
EVERY year, like clockwork, swathes of humanity go through the same routine. On December 26th and January 1st, as the fog of cheese, chocolate oranges and champagne lifts, remorse creeps in. Online searches for “get fit” and “lose weight” surge (see chart). Health clubs of all shapes and sizes stand ready to respond. “Intent typically takes seven to 14 days to turn into reality,” notes Humphrey Cobbold, chief executive of Pure Gym, Britain’s largest gym chain. So this week will be one of the busiest for the gym industry globally.
There will be other ripple effects, too. According to recent data from Cardlytics, which monitors spending in Britain, people spend 18% more in sports shops the week before joining a gym (compared with the week prior), and 16% more in speciality health shops. Spending on fashion items also increases around the time of joining a gym.
Many gym recruits will wear their new togs for an ordeal known as high-intensity interval training. In the basement of Another Space, a “boutique” club near London’s Leicester Square, music pumps and lights flash as a trainer shouts instructions to a group of mostly young women. They are pushed through bursts of burpees, handclap push-ups and various kicks and punches at boxing bags. The regime is murderous, but the club’s luxurious changing rooms and made-to-order-smoothie bar soothe some of the pain. Such high-end gyms can charge up to eight times as much as low-cost ones, based on two visits a week over a year, estimates Ray Algar, an industry analyst. Boutique venues such as SoulCycle or Pure Barre are popping up, particularly in big cities and often backed by private equity.
They are at one end of a bifurcating fitness market. At the other are budget gyms, which have accounted for the bulk of gym growth in recent years. America’s market leader, Planet Fitness, promises “the best value on the planet”, and has over 10m members; its shares soared in 2017. One in seven people in Britain is a gym member, and 35% of private memberships are low-cost, up from 14% in 2013, according to Leisure DB, a data firm. Mid-range clubs, meanwhile, have fared less well. Virgin Active recently sold its less luxurious facilities in Britain to avoid being squished in the middle.
Pure Gym expects soon to reach 1m members. Part of its appeal is that, unlike traditional gyms, members are not bound by a long contract. “We have taken a £500 decision and turned it into a £20 decision,” says Mr Cobbold. That will be good news for some gym converts because many will soon suffer a second round of regret. Most new joiners do not plan to squander money. But gyms thrive on non-attendance. According to the IHRSA, an industry body based in Boston, fewer than half of gym members in America hit the treadmill at least twice a week—until the exercise cycle begins anew the following January.
Source: The Economist Business