Peak gym: Why the fitness centre boom might be coming to an end – RN
Since it opened in 1981, Sydney gym Hiscoes has survived recessions, the Global Financial Crisis and numerous changes to the fitness industry.
But in the last few years the gym has faced an increasingly crowded market, with consulting group IbisWorld warning of market saturation.
Hiscoes director Susan Kingsmill said about a third of the gym’s clientele were long-term customers, but the greater competition meant it is always looking for leads on transient customers that move between gyms.
“At the moment we need 170 to 200 leads a month to keep the whole ball rolling,” Ms Kingsmill said.
“We don’t have an option for failure, so we don’t do very bold things, we do modest things.”
Budget 24-hour gyms squeeze margins
The Australian fitness industry is now worth $2.4 billion, according to IbisWorld.
Most of this comes from gyms and fitness centres, with a small remainder split by independent personal trainers working outside a fitness space.
Fitness Australia chief executive Bill Moore said the industry has been lifted by the invigorated interest in personal wellbeing in the last decade.
“There’s never been as many health clubs as there are now,” he said.
“The accessibility, the availability is nothing like it has ever been before.”
One of the most significant shake-ups has been the introduction of budget 24/7 gyms — intermittently staffed centres that represent the “high volume, low cost” side of the market.
IbisWorld market researcher Bao Vuong said the business model helped expand the size of the industry over the last five years, but the gains may be coming to an end.
“As the market becomes more saturated, this is anticipated to slow industry revenue growth,” he said.
Hiscoes director Susan Kingsmill says the gym has had to adapt to a rapidly changing industry. (Supplied)
Ms Kingsmill said she thought the budget 24-hour gym craze was “a real step back” and is glad the model is reaching its peak.
Competing on price — and the associated cost squeeze — has left plenty of challenges for the rest of the industry.
“We’ve all done the best we possibly can with the costs in the fitness industry, and we are all offering great value,” she said.
“So we really need the economy to do well, we really need people to have money in their pocket so they can start to pay a market rate for really good service.”
‘Fitspo generation’ provides growth
Just as it always has, the fitness industry still caters to the traditional 18-to-39-year-old demographic, according to Bill Moore.
He pointed to the influence of the “fitspo generation” for leading the recent market growth for fitness and exercise services in Australia.
“That’s the Instagram generation of selfies and the celebrities out there with enormous followings,” he said.
“[Gyms] do still seem to cater to that youthful market – the fitspo generation really has a lot more people interested in the physicality of exercise.”
It’s a message that has seeped through to well established businesses.
Hiscoes uses its social media presence to appeal to a new generation of gymgoers.
“We use our social media guru to tell us when those key words are trending the strongest, then we go out with our flyer.
“We’re right in the middle of the advertising world here, and we need to look up to par for those millennials.”
Whether this will continue to drive growth remains to be seen.
Ms Kingsmill said she still expects plenty of volatility ahead, with plenty of churn in the boutique end of the market as some small businesses succeed and others fail.
But she said Hiscoes is banking on one aspect of its business to help see it through.
“The fitness industry had always been about people and passion,” Ms Kingsmill said.
“The one thing that sets our people apart from other gyms I’ve been in is they’re actually real people – they drink beer and they eat pizza, and they often tell you they don’t like exercise.”
The business has survived by operating more like a series of boutique gyms rather than a massive complex, one that contains “little communities” focussed on specific sports or activities.
“Our focus is very much on teaching people to do stuff that they’ve not done before or think they’re not very good at.”