Gym rats, take heed: The luxury fitness boom may well be cooling off as high-end exercise brands like Peloton and SoulCycle struggle to make a profit at this stage of the pandemic.
Peloton, the company behind a line of advanced stationary bikes that enjoyed brisk business during the initial lockdown period, announced layoffs, studio closures and price increases on its flagship product in Canada and the US. this monthafter a sharp drop in sales.
Another high-end fitness brand is struggling outside the home: SoulCycle, the chain of group cycling studios that 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 only studio in Toronto, the company confirmed to CBC News.
“I think that explains the kind of popularity at the lower end of the physical consumer market in brick-and-mortar terms,” said Natalia Petrzela, associate professor at the New School in New York and author of Fit Nation: The Ins and Outs of America’s Fitness Obsession.
“More people are going back to the gym in person, but it’s the low-end companies that are thriving.”
The fitness industry finds itself between a rock and a hard place, with two previously reliable business models floundering at this stage of the pandemic. While in-person studios are still reeling from government shutdowns, home fitness brands are losing clientele, while people prefer affordable gyms and fitness centers.
Small gym owners are still bouncing back
As pandemic-related measures are relaxed, people are “reassessing their relationship to what they spend on exercise and why they want to exercise,” Petrzela said.
“What Peloton is undergoing is a kind of correction, not even a failure, but a correction of that exaggerated enthusiasm and enthusiasm for physical exercise at home at a time when so many people had no other options,” he said.
The company reported in May that its third-quarter revenue missed expectations, grossing $964.3 million, down from the $1.26 billion it grossed a year earlier. Its market value plummeted by $46 billion as pandemic-driven demand for home exercises dried up.
“But at the same time, people won’t go back to exercising the same way they used to,” Petrzela said. “So something like SoulCycle, which was a darling of the boutique fitness industry, has to adapt as well.”
Even as affordable gym chains thrive, small business owners are picking up the pieces two years later. One of the current challenges is a shortage of qualified personal trainers, according to a Toronto-based business owner.
“There are too many personal training companies, too many gyms that require trainers, but there are no trainers,” said Sergio Pedemonte, CEO of personal training company Your House Fitness. Pedemonte has a home delivery service and 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 seek other companies while CERB payments provided a financial safety net.
“I think the biggest struggle of all these mortar companies is that their [monthly] the backlog has subsided,” he said, after provincial governments closed and restricted access to gyms. His business was earning roughly $100,000 in monthly membership revenue when the pandemic hit; that number quickly fell to zero.
Sara Hodson, president of the Fitness Industry Council of Canada, said business owners are still facing the challenges and changing consumer behavior of 2020.
“You look at an industry that was shut down, that lost all of its revenue, that had to stay afloat and at the same time had to reinvest in technology to do everything it could to keep Canadians active,” Hodson said. from Vancouver.
Future business models will focus on the health of mind and body
The size of the Canadian fitness industry market expanded in 2022 and is now on par with pre-pandemic figures after a two-year slump, according to market research firm IBISWorld. Petrzela said more consumers have gotten fitter during the pandemic.
“This is a result of the fact that the pandemic and its kind of enforced sedentary lifestyle led a lot of people to realize that exercise is actually very important, both for general well-being and, honestly, in terms of certain co-morbidities of COVID, ” she said.
Because many people have invested in high-end fitness equipment at home (a basic Peloton set is priced at around Cdn$1,800), most will not be willing to “splurge on a high-end gym or fitness experience.” boutique,” he said. he said. Hence the rejection of SoulCycles and Flywheels in favor of GoodLifes and Fitness Worlds.
In an industry that moves between trends, Hodson and Petrzela agree that the next phase of fitness and lifestyle branding will continue to be a hybrid model of virtual and in-person connection.
“What we’re really seeing across the industry and even when looking at global trends is this massive return to in-person connection,” said Hodson, who is also CEO of the Live Well Exercise Clinic gym chain.
He said he has seen his older clientele become more open and able to participate in virtual classes as a result of the pandemic, but they are also returning to the company’s physical facilities.
“I think the next popular business model will combine connected fitness, in-person experience, and community,” Petrzela said. “That will probably involve meditation, recovery, stretching, maybe even certain forms of therapy, honestly, that fit that level of health of mind and body.”
“But I think there’s no question that connected fitness and home fitness are here to stay.”
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