One of the more surprising elements of the current landscape, according to the specialist, is how landlords have behaved in expecting to keep rent static despite the impact on gyms. “I’m generalising of course, but a lot of landlords are like, ‘This will come back. In 12 months, we’ll be operating more normal, or maybe in 24 months,’ but the idea that they’re trying to hold onto current rent or even reducing it by 10% or 20%, we are surprised that they’re slow to react.”
Moving onto the topic of gym memberships and categories, it was noted that high-volume, low-price (HVLP) gyms are performing the best. Their attractiveness to younger cohorts and the quality experience that many are now providing were cited as reasons for this, as well as, unlike boutique gyms, the fact that smaller classes are not a significant uptake driver.
Although this has been a tough time for the fitness industry, certain gyms could experience competitive advantages and be able to lever the current, difficult environment to their benefit. “Whether they’ve gotten creative or just tough negotiations with landlords, because the landscape is not favourable, [gyms] are possibly going to see longer-term better occupancies.”
The explosion in at-home fitness and whether this segment will have a future when people start returning to the gym were also on the agenda. Peloton will see growing competition, and from players with much lower price points, which could prove challenging. Meanwhile, Lululemon’s acquisition of Mirror, an at-home fitness start-up, should be successful, in part owing to the “tremendous” marketing machine at Lululemon.
To access all the human insights from Third Bridge Forum’s Fitness Industry – North America Market Update & 2021 Outlook Interview, click here to view the full transcript.
The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.
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