Gym rats, beware: The luxury fitness boom may very well be cooling off as high-end exercise brands like Peloton and SoulCycle struggle to turn a profit during this pandemic.
Peloton — the company behind a line of advanced stationary bikes that enjoyed a flurry of business during the early lockdown period — has announced layoffs, studio closures and price increases for its flagship product in Canada and the US. this monthafter a sharp decline in sales.
Another high-end fitness brand is struggling outside the home: SoulCycle, a chain of group cycling studios launched in 2006, closed 25 percent of its locations earlier this week.
That includes a complete exit from the Canadian market with the closure of its lone studio in Toronto, the company confirmed to CBC News.
“I think that explains the kind of popularity at the lower end of the consumer fitness market when it comes to bricks and mortar,” said Natalia Petrzela, associate professor at the New School in New York and author of the book. Fit Nation: The Gains and Pains of America’s Exercise Obsession.
“More people are coming back to the gym in person, but it’s the lower-end businesses that are thriving.”
The fitness industry is between a rock and a hard place, with two previously reliable business models floundering at this stage of the pandemic. As personal studios continue to recover from government shutdowns, home fitness brands are losing clientele as people favor affordable brick-and-mortar gyms and fitness centers.
Small gym owners are still getting back on their feet
As pandemic-related measures are eased, people are “reevaluating their relationship to what they spend on exercise and why they want to exercise,” Petržela said.
“What Peloton is experiencing is a correction — not even a failure — but a correction of that over-enthusiasm and excitement about home fitness at a time when so many people had no other option,” she said.
The company reported in May that its third-quarter revenue fell short of expectations, taking in $964.3 million, down from the $1.26 billion it earned a year earlier. Its market value fell by $46 billion as the pandemic dried up demand for home fitness.
“But at the same time, people are not returning to exercise in the same way as before,” Petržela said. “So something like SoulCycle, which has been the darling of the boutique fitness industry, has to adapt as well.”
Even as affordable gym chains thrive, small business owners are scrambling two years later. One persistent problem, according to the owner of the Toronto-based business, is the lack of qualified personal trainers.
“There are too many personal training companies, too many gyms that want trainers but there are no trainers,” said Sergio Pedemonte, CEO of personal training company Your House Fitness. Pedemonte operates both a home service as well as a studio and gym.
He says he is still struggling to find trainers after a mass exodus in 2020, when many in the industry left to pursue other ventures while CERB payments provided a financial safety net.
“I think the biggest struggle of all these in-Malta companies is theirs [monthly] the backlog has gone down,” he said after provincial governments shut down and restricted gym access. His business was making about $100,000 a month in membership revenue when the pandemic hit — a figure that quickly dropped to zero.
Sara Hodson, president of the Fitness Industry Council of Canada, said business owners are still anticipating challenges and changing consumer behavior in 2020.
“Look at the industry that was shut down, that lost all of its revenue, that had to stay afloat while also having to reinvest in technology to do everything we could to keep Canadians active,” Hodson said. from Vancouver.
Future business models will focus on mind and body health
The market size of Canada’s fitness industry expanded in 2022 and is now at its pre-pandemic level after a two-year decline, according to market research firm IBISWorld. Petrzela said more consumers have gotten into fitness during the pandemic.
“It’s a result of the pandemic and its kind of forced sedentariness that has led a lot of people to realize that exercise is really, really important, both for overall well-being and – frankly – with certain co-morbidities of COVID. ” she said.
Because so many people have invested in high-end home fitness equipment (a basic Peloton setup has a price tag of about Cdn$1,800), most won’t be willing to “splash at a high-end fitness club or boutique,” she said. he said. That’s why they eschew SoulCycles and Flywheels in favor of GoodLifes and Fitness Worlds.
In an industry that yo-yos between trends, Hodson and Petrzela agree that the next phase of fitness and lifestyle branding will remain a hybrid model of virtual and in-person connection.
“What we’re really seeing across the industry, and even if we look at global trends, is this massive return to personal connection,” said Hodson, who is also CEO of the Live Well Exercise Clinic chain of gyms.
She said she’s seen her older clientele become more open and able to engage in virtual classes as a result of the pandemic, but also return to the company’s brick-and-mortar facilities.
“I think the next popular business model will combine connected fitness, personal experience and community,” Petrzela said. “That will probably include meditation, recovery, stretching, maybe even some forms of therapy, frankly, that fit into that mind-body health group.”
“But I think there’s no doubt that connected fitness and home fitness are here to stay.”
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