Gold’s Gym kicked off the slew of fitness industry bankruptcies in May after months of government-mandated gym closures. Since then, it’s become clear that people will not be returning to their pre-pandemic schedules of sweating and panting in a crowded enclosed space three times a week.
Around the Clock Fitness, 24 Hour Fitness, Soulcycle competitor Flywheel Sports and Towns Sports International, parent company of New York Sports Club and Boston Sports Club, all followed Gold’s towards Chapter 11 filings.
Fitness centers have now reopened in most states with limited capacity and strict distancing restrictions. Lower capacities have been matched by lower demand. According to a Bloomberg survey from September, only a third of respondents plan to return to a gym or fitness studio “soon.” A Fox News survey from June found that at least 24% of Americans who exercise twice at least twice a week said they may never return to the gym.
As a result, the gym industry lost a total of $13.9 billion during shutdowns as of August 31 according to the International Health Racquet & Sportsclub Association (IHRSA), an industry group. Their research warns that a quarter of the country’s gyms could close by the end of the year if they don’t receive aid from congress.
The biggest threat to gyms, however, may not be COVID-19, but rather the home fitness industry, which has been growing explosively over the past seven months — and potentially becoming the new law of the land. 42% of respondents to Fox’s survey said they currently have a home gym set-up which they prefer over a gym membership.
The biggest predator in the industry is Peloton, whose recent growth has started drawing comparisons to Netflix and Amazon. The stationary bike program raked in $607 million in revenue in the second “pandemic” quarter, up 172% from their figures last year, as the quarantined masses tried to stay fit and sane. These numbers marked the eight-year-old company’s first ever profitable quarter according to New York Magazine. The same quarter, their subscriptions doubled year-on-year, surpassing the million member mark.
Peloton has been growing in more ways than one. Their job postings are up 179% and they’ve hired over 800 new employees since March. They’ve also scooped up 42,600 Twitter followers and half a million new friends on Instagram. Most importantly, their share price has more than doubled since last year. Last month, Peloton cut the $2,000 plus price tag cost of their most popular bike by $350 “to make it more accessible to more people,” according to an email from the website, which is now available for a low $1,895 to while their most premium treadmill costs still $4,295.
Peloton’s social following is growing just as rapidly as its share price. Year-over-year its added some 700,000 followers - a 168% increase.
Lately, the company — which once marketed its bikes so aggressively to women that one of their ads, which featured a husband giving his wife a Peloton for Christmas, was called out for sexism and dropped their share price 15% — is trying to appeal to a broader set of customers. Their new ad campaign starred non-actors, school teachers, an NFL agent, a military veteran, a baker, a public defender, a grandpa and a nurse, all describing “why they ride.”
Competitors in home fitness are seeing similar booms. Icon Health & Fitness — owner of NordicTrack, ProForm and Freemotion, which makes workout machines as well as the on-demand fitnes streaming platform iFit — picked up $7 billion in new funding from private equity firms this summer, as a precursor to an initial public offering. ProForm makes a $799 bike, less than half the price of a Peloton, compatible with their iFit workout program, which currently has about 700,000 paid subscribers. Cycling juggernaut SoulCycle has attempted to crossover from in-person workouts to home fitness, launching their own home bike for $2,500, which streams classes using Equinox’ digital fitness platform Variis.
“Smart gyms” were just starting to catch on before the pandemic, but they’ve also exploded in popularity and availability. Mirror, a $1,495 “smart gym” that instructs home workouts via a spooky black mirror fixed to your wall has been leading the way. Lululemon acquired the start-up behind the product for $500 million in June and is reportedly finding “early success” in sales. The device, which is compact and easy to fit in small apartments — one of its main selling points — has racked up 12,4000 new Facebook likes since March.
NordicTrack, Mirror and Peloton are the big dogs, but funding is currently being sprinkled over a field of up-and-coming competitors. Zwift, a training program that holds virtual-reality cycling races recently passed the $1 billion funding mark after raising $450 from private equity firms. Tempo sells a $1,995 “smart gym” AKA a wall-mounted TV screen similar to Mirror’s, except it comes with gym equipment and brags AI technology to correct your form. It was recently valued at $250 million. Tonal, a third $2,995 home “smart gym” that’s been called the “Peloton of weight training,” recently picked up an additional $110 in VC funding bringing it up to $200 million value total.
Given these products’ high price points, cheaper options for home exercise are poised to pick up steam and challenge Peloton’s reign of terror. In late September, Echelon Fitness, which sells rowing machines and a Mirror-like smart gym, released a home bike for $499, supposedly in collaboration with Amazon. In a strange twist, Amazon said the bike was not one of their products and asked Echelon to stop selling it. But the announcement alone of a sub-$500 bike was enough to dip Peloton’s share price, according to Bloomberg.
Cubii, a $250-$350 portable elliptical device launched on Kickstarter in 2014, has seen a turbo sales boost during Covid-10 and was recently acquired for $100 million by private equity firm Gridiron Capital. Traditional, non-boutique sports retailers like Dick’s Sporting Goods are also capitalizing on the home fitness trend. Dick’s hasn’t had to launch any new products to chart a massive third quarter and see sales rise 20% year-on year, thanks to good old-fashioned dumbbells and stationary bikes flying off shelves. To accommodate, while peers are shrinking their footprint, Dick’s is embarking on an aggressive store expansion plan.
An army of fitness apps that don’t involve buying gear and typically go $10-$40 a month have also become an alternative to traditional gyms, each with their own special twist. If you didn’t already spend enough time using Apple products, in September, Apple launched Apple Fitness Plus, which streams workouts set to Apple Music playlist, from your local Apple device. ClassPass, known for its flat-rate subscription program to IRL workout classes, adapted almost immediately to the pandemic. Within a month, it was streaming 50,000 classes from 4,000 studios around the world.
FitBit founder Lindsay Cook launched FitOn, a service with an array of video workout classes as well as meal planning and data tracking. The list goes on and on, but a few notable maller fish include Exer Studio, which raised $200 million in VC funding this month, FitGrid Class App, which pitches itself as a fitness-based social media app, Aaptiv, which markets itself as "the world's first audio fitness brand,” as well as growing yoga apps Glo, Obé, and StretchIt.
Also making a bid for capturing former gym-goers that want to leave their house to work out is Silofit, a start-up that converts small office spaces into fully equipped gym studios, that can be booked solo or with a trainer by the hour, a la carte. The first company of its kind, Silofit is still only in Montreal and Toronto, but could present an alternative model for skeptics of the home fitness trend.
Traditional gyms are also trying out new methods that has Vogue asking “are outdoor gyms the future of fitness?” This month, Equinox opened up its first line of open-air gyms, called “Equinox + In The Wild” in New York and Los Angeles. To keep things COVID-19 friendly, clients book specific time-slots and masks are required at all times except during workouts. Heaters that can raise the temperature by 40 degrees if needed will make outdoor workouts possible into the winter. NYC fitness favorites PureBarre, Physique 57 and SoulCycle (in addition to their new at-home bike) have also been piloting in-person, outdoor classes under tents around the city.
When a vaccine hits the market all the investor and consumer cash being poured into home and virtual fitness could go to waste. Gym-goers who are willing to experiment with different products and programs right now might head back to their local Planet Fitness as soon as it’s definitely safe. But for now, the “end” of the pandemic is a distant fantasy and if you can get enough people hooked on your particular method of making them sweat safely, the industry is anyone’s game.
About the Data:
Thinknum tracks companies using the information they post online, jobs, social and web traffic, product sales, and app ratings, and creates data sets that measure factors like hiring, revenue, and foot traffic. Data sets may not be fully comprehensive (they only account for what is available on the web), but they can be used to gauge performance factors like staffing and sales.
