AusLeisure

Despite other surveys suggesting a rebound among fitness operators, market research company IBISWorld has highlighted the challenges that the industry is facing with declining revenue, falling profitability and the potential market saturation of budget 24/7 gyms.

Looking at fitness industry income, IBISWorld analyst, Ekaterina Ezhova notes “industry revenue has contracted at an annualised 6.8% decline through the end of 2022/23, to $2.2 billion (while) in 2022/23, gyms and fitness centres industry revenue is set to decline by 1.5%.

“Profitability is expected to tumble to 4.0% in response to a drop in real household discretionary income combined with a slump in consumer sentiment, which indicates that consumers are less willing to spend on discretionary items, like gym memberships.”

IBISWorld also note six key industry trends:

1. Purchasing at-home gym equipment during the pandemic will have long-lasting consequences for gyms and fitness centres. Certain customers may continue displaying an affinity for performing exercises in the comfort of their homes, subduing demand for the industry.

2. Hybrid gym memberships are here to stay in 2023. Customers have started to prefer the combination of working out online and in person. Members want to be able to go to the gym a couple of days a week while still working out at home. The goal of hybrid gym memberships is to provide a degree of convenience and flexibility that consumers anticipate, as this option allows them to stay consistent with their fitness goals.

3. Health consciousness will continue its steady rise, benefiting demand for the industry, particularly from people aged 55 and over. Exercise participation will continue rising. The industry will benefit from the growing awareness about the importance of a healthy lifestyle underpinned by the greater understanding that exercise helps with weight loss, boosts physical and mental energy levels, lowers medical expenses and contributes to increased longevity.

4. The potential saturation of budget 24-hour gyms will shift demand for premium and functional training gyms and fitness centres.

5. Many boutique and small-scale gyms will enter the industry, representing most new businesses. These gyms strictly focus on a specific fitness, and the instructors tend to be more highly qualified than a standard gym. Furthermore, these new fitness facilities tend to focus on providing unique customer experiences, which range from cultivating a community atmosphere to providing special facilities and services, such as fitness studios with sleeping pods, a smoothie and coffee bar, as well as dietetics, remedial massage and myotherapy. Despite the challenging operating conditions in 2022/23, these niche fitness studios will gain expansion as the economy begins to improve.

6. Participation in yoga and Pilates will rise as the benefits of flexibility and core strength become widely recognised.

Image credit: Club Pilates.

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