Gym rats beware: The luxury fitness boom could very well be cooling off as high-end exercise brands like Peloton and SoulCycle struggle to make gains at this stage of the pandemic.
Peloton – the company behind a range of forward-thinking stationary bikes that saw strong growth at the start of the lockdown period – announced layoffs, studio closures and price hikes on its product flagship in Canada and the United States this monthfollowing a sharp drop in sales.
Another high-end fitness brand is struggling outside the home: SoulCycle, the group cycling studio chain launched in 2006, closed 25% of its locations earlier this week.
This includes a full exit from the Canadian market with the closure of its sole Toronto studio, the company confirmed to CBC News.
“I think that explains the kind of popularity at the lower end of the mainstream fitness market in brick-and-mortar terms,” said Natalia Petrzela, associate professor at The New School of New York and author of Fit Nation: The Gains and Pains of America’s Exercise Obsession.
“More people are returning 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. While in-person studios are still recovering from government shutdowns, home fitness brands are losing customer base as people prefer affordable gyms and fitness centers.
Owners of small gyms are always getting back on their feet
As pandemic-related measures ease, people are “reassessing their relationship to what they spend on exercise and why they want to train,” Petrzela said.
“What Peloton is going through is a kind of correction – not even a failure – but a correction for this over-the-top enthusiasm and excitement for home fitness at a time when so many people had no other options,” said she declared.
The company announced in May that its third-quarter revenue fell short of expectations, taking in $964.3 million, down from the $1.26 billion it raked in a year earlier. Its market value plummeted by $46 billion as demand for home fitness due to the pandemic dried up.
“But at the same time people are not going back to training in the same way as before,” Petrzela said. “So something like SoulCycle, which was the 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 ongoing challenges is the shortage of qualified personal trainers, according to a Toronto-based business owner.
“There are too many personal training companies, too many gyms that need trainers, but there are no trainers,” said Sergio Pedemonte, CEO of the training company. Your House Fitness staff. Pedemonte operates both an in-home service and a studio and gym.
He says he’s still struggling to find trainers after a mass exodus in 2020, when many industry players left to pursue other projects while CERB payments provided a financial safety net.
“I think the biggest difficulty with all of these companies in mortar is that their [monthly] the buildup has gone down,” he said, after provincial governments closed and restricted access to gyms. His business was generating about $100,000 in monthly subscription revenue when the pandemic hit — that figure then quickly dropped to zero.
Sara Hodson, president of the Fitness Industry Council of Canada, said business owners are still considering the challenges and changing consumer behavior in 2020.
“You’re looking at an industry that’s been shut down, lost all revenue, had to stay afloat, and at the same time had to reinvest in technology in order to do everything we can to keep Canadians active,” he said. said Hodson. of Vancouver.
Future business models will focus on health of mind and body
The Canadian fitness industry’s market size grew in 2022 and is now on par with pre-pandemic numbers after a two-year recession, according to market research firm IBISWorld. Petrzela said more consumers have been getting in shape during the pandemic.
“It’s a result of the fact that the pandemic and its kind of enforced sedentary lifestyle has made a lot of people realize that exercise is really, really important, both for general well-being and – honestly – in terms of certain COVID comorbidities,” she says.
Because so many people have invested in high-end home fitness facilities (a basic Peloton setup is priced at around C$1800), most won’t be willing to “shell out” on a high-end health club. upscale or a boutique experience,” she said. Hence the abandonment of SoulCycles and Flywheels in favor of GoodLifes and Fitness Worlds.
In an industry that oscillates between trends, Hodson and Petrzela agree that the next phase of the fitness and lifestyle brand will remain a hybrid model of virtual and in-person connection.
“What we’re really seeing in the industry and even when we look at global trends is this massive return to connecting in person,” said Hodson, who is also the CEO of gym chain Live Well. Exercise Clinic.
She said she’s observed her older customer base being more open and able to engage in virtual classes in the wake of the pandemic, but 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. “It will likely engage meditation, recovery, stretching, maybe even some form of therapy, quite honestly, that falls into that mind-body health category.”
“But I think there’s no doubt that connected fitness and home fitness are here to stay.”