Fitness’ biggest ever Challenge

Image courtesy of Exercise and Sports Science Australia (ESSA)

With fi tness facilities emerging from lockdown, Karen Sweaney looks at the challenges that lie ahead

Years of growth in fitness - with innovative concepts, new gym chains, club growth and expanding franchises - all driven by ever growing participation and member numbers - came to an abrupt halt in March this year when the impact of the Coronavirus pandemic saw the industry enter an immediate, unplanned and near total shutdown.

As with almost all sectors of the economy and wider society in Australia, New Zealand and nations across the world, the cessation of activity was not mitigated by operators having quickly adopted best practice in hygiene and sanitation during February and March as the threat of Coronavirus first emerged.

While the initial result was facility closures and massive uncertainty over what the future held, the ever entrepreneurial spirt of many in the industry saw them move classes and programs online to maintain engagement with their communities, albeit that these activities generated significantly less income than that of a facility in its ‘normal’ operational model.

With many parts of the economy shutdown, areas of open space, parks and trails almost instantly turned into open-air exercise areas. While even outdoor gyms were closed, joggers, cyclists, speed walkers and yoga enthusiasts stretching on mats seemed to become an increasingly familiar site.

At the same time, retailers selling in-home exercise equipment quickly ran out of stock as people set up gyms in their garages, backyards and other domestic spaces while bicycle retailers reported never having been busier.

However, while anecdotes suggested people were exercising more, research undertaken by sport and entertainment consultancy Gemba during April found that only 23% of Australians were exercising more than before the Coronavirus lockdown, while 44% of the population was actually doing less physical activity.

The decline in activity was most marked in the 30 to 39 years age (63% doing less activity compared with 17% doing more) and 50 to 59 years age groups (48% doing less activity compared with 14% doing more).

Before the Coronavirus, the fitness industry had enjoyed

Image courtesy of Blue Magic/Novofi t.

With exercisers having learned “how convenient it is to be able to squeeze in great workouts from the comfort of their home” will they now return to commercial gyms?

years of ongoing growth. Four million Australians - more than 6% of the entire population - had a gym membership spending a record $3.5 billion a year on being active.

With all of that activity coming to a shuddering halt in March, while some moved online, all had to face ongoing expenses while income evaporated.

Facing significant numbers of member cancellations, gyms immediately froze member direct debits when the lockdown began but still had to meet franchise and licence fees, amenity bills, ongoing rental and site costs (although some landlords did allow ‘rent honeymoons’) and other fixed costs.

While predictions from some quarters that the sector would not be operational again until at least September seem to have been unnecessarily gloomy, as clubs become operational again new challenges are looming.

At the time of writing, with the worst potentialities of the pandemic seemingly averted, clubs in New Zealand are fully operational while, across Australia, clubs are again operating - but at reduced (and different) capacities according to each state’s levels of easing restrictions.

It is also worth bearing in mind that new outbreaks and a reoccurrence of cases could see shutdowns reintroduced.

Fitness will never be the same Most of all, the industry of mid 2020 is and will be very different from how it was performing before the March shutdown.

In a world where the term ‘the new normal’ has entered the lexicon, Steve Pettit, Chief Executive of the Australian Institute of Fitness, explains fitness will not return to “normal” and “will never look the same as it did pre COVID-19”.

Commenting how “the traditional fitness industry was switched off overnight” in March, he advised “the phased reopening will test the fitness industry as costs are turned back on and members are phased back into gyms and fitness studios.”

Changing Habits While former members may still have fears over the threat of Coronavirus - albeit that gyms are now operating at optimum levels of hygiene - perhaps the biggest challenge is whether people will stick with the new exercise habits that they have formed during the shutdown.

Nicholas Rizzo, Fitness Research Director for athletic equipment reviews website RunRepeat, explains “with gyms closed for such a long time, people have been forced to drastically change their exercise habits and find new ways to stay active.”

Suggesting members are likely to be cautious about the potential health-risk of returning to the gym, Rizzo notes “people are also aware that they are not going to be able to enjoy all of the same luxuries that their gym may have offered them prior to the pandemic while still paying the same price.

“Not being able to get that same value in return is leading to some members to decide to cancel.”

Research undertaken by RunRepeat during the shutdown found rising exercise levels in Australia, Canada, the UK and the USA while gyms were shut during the Coronavirus pandemic - contrary to Gemba’s findings.

Commenting on this, Rizzo suggested “(people learned) how convenient it is to be able to squeeze in great workouts from the comfort of their home, when it wouldn’t be possible to make it to the gym otherwise.”

Others factors include the keenest users of gyms - urban millennials (those born between 1981 and 2000) - being among the worst hit by Coronavirus job losses.

Commenting on findings in a recently released report from Club Intel (What Members Say Matters) that highlight this, Phillip Mills, founder and Executive Director of Les Mills - a sponsor of the study, stated “there’s a major risk identified here of losing our crucial 18 to 39-year-old market. Whether this is driven by fear of infection or - as I suspect - more by financial insecurity, the way to retain them is to provide such value that they will prioritise us, as they have during previous recessions.”

Location In addition, many gyms may just be in the wrong place. If office workers do not return to work in significant numbers for some months, with a possible permanent increase in working from home, gyms in city centres and business locations may start to look somewhat redundant.

Exercise Association of New Zealand (ExerciseNZ) Chief Executive, Richard Beddie, confirmed this, recently advising “city centre gyms have been hit harder than suburban gyms due to the 40% of Kiwis that are still working from home during some

or all of their working week.”

He also confirmed issues with rents, noting “the biggest challenges for gyms are their commercial leases, with almost 50% of landlords refusing to have meaningful engagement with tenants.”

Newer research from RunRepeat has also suggested that over 30% of Australian gym-goers have no intention of returning to facilities.

Staying Members Finding that nearly half of all gym members globally will not return to their gyms upon reopening (46.67%), the Australian figure of 31.34% was more positive than for other nations.

However, Australia was found to have the highest percentage of gym members who had either already cancelled or were considering cancelling their gym membership (41.15%).

Local research showed smaller potential declines in gyms membership, with a consumer survey conducted during May by Fitness Australia finding that more than 85% of gym users

Image above courtesy of Sydney gym Flow Athletic

will renew their memberships when gyms safely reopen.

In addition, advertising media have reported on internal research by the Fitness and Lifestyle Group that advises three in four gym-goers have plans to return to their branch within the first week of opening.

Encouragingly, a survey from ExerciseNZ shows that gyms and fitness facilities were back to 70% activity levels within two weeks of re-opening at the country’s COVID Level 2.

ExerciseNZ’s post-Coronavirus reopening survey showed the number of new people keen to stay. However, the survey suggests trainers have been hit harder than gyms, with many reporting around barely 50 to 60% of their pre-COVID income.

Commenting on the findings, ExerciseNZ’s Beddie explained “while 70% is a solid start, it’s not enough for most facilities and gyms to survive as they have very high fixed business costs. A downturn of 30% is not sustainable for long, so all exercise facilities will be exploring options over the coming months on how to stay viable.”

Consumer Insights More than ever, information about how the industry and consumers will behave is vital.

Plagued, as ever, by lack of market data specific to Australia, the industry is largely relying on overseas data, with Club Intel’s recent What Members Say Matters report proving particularly insightful.

Surveying 2,000 adult gym members in the USA, researchers found that member usage prior to closure will be a powerful predictor in relation to the likelihood of members returning.

More than half (52%) who visited their facility on average 12 times or more a month indicated they were very likely to return, compared to around a third (37%) of those who use their facility eight to 12 times a month and 22% who use it once or fewer times.

Commenting on this, Phillip Mills noted “frequency of attendance is a seminal metric for our industry that’s powerfully associated with customer retention and delight.

“We are in the motivation business as much as that of exercise prescription and need constantly to find ways to inspire.”

When it comes to the actions that facilities can take to encourage members to return, key things members would like to see include disinfecting equipment after each use, members having immediate access to hand sanitising stations and facilities enforcing limits on the number of members allowed in the building and also in group exercise classes.

The What Members Say Matters report also provides six recommendations for facility operators to consider, as the sector emerges from lockdown.

These include a call to ‘think and plan differently’ for the next 12 months, as the data points to a ‘new era’ for the industry - framed by lower membership numbers, slower ramp-up periods, and more scrutinised business practices.

According to the Club Intel, authenticity and transparency will also take centre stage during the reopening phase. The survey showed that members want operators to be honest about what’s happening with respect to the virus and their facility - and that it’s important to hold staff and members accountable when it comes to reinforcing policies, even if that requires taking a stand.

There’s also a call to take into consideration the effects of the fitness industry having pivoted to digital during the lockdown and operators seeking relevance among the gen Z and millennial generations will need to commit to providing virtual fitness content.

As ExerciseNZ’s Beddie adds “we’ve seen a huge increase in general awareness of ‘moving your body’ and even if ‘going for a walk’ and ‘joining the local gym’ aren’t the same thing, awareness is high.”

Optimistic about how the industry will perform moving forward, Pettit concludes “we have been reminded of how vital our health and wellbeing is, so I actually think the fitness industry will go from strength to strength.” Karen Sweaney is Editor of Australasian Leisure Management.