Maxed Out
How the pandemic put the fitness industry’s
fate in the hands of its consumers
By Denny Jacob
Tori Votaw might go back to the gym at some point in the future, but she’s never going to stop using her Peloton.
She has always made time to go to her university’s gym or attend classes at Orangetheory Fitness before the COVID-19 pandemic. But that all changed after the institutions she attended were disrupted in March 2020.
She decided to purchase a Peloton last December and embraced the home workout revolution that was gaining momentum across the country. Votaw thinks she might go back to the gym if rules on masks are lifted, but Peloton workouts are certainly part of her fitness routine now.
“I’d say I’ll be doing a lot more home workouts forever probably,” said Votaw.
Many predicted that the COVID-19 pandemic would result in the death of traditional gyms thanks to the emergence of digital fitness. As the economy has opened back up, it's become clear that traditional gyms are still relevant and that digital options have not cemented their place in society either. But the pandemic has given more power to people – consumers and personal trainers especially – to decide which companies and brands will thrive in the age of hybrid fitness.
“As things become more open and restrictions are less and less, if there’s not a need to further develop the online [component] we’ll keep it where it is so it’s always an option for members if that’s what they want. If the need comes where there are restrictions and our members are saying we want more online, then we’ll invest in that,” said Eric Tepper, director of sales at Chicago Athletic Clubs. “So we’re going to go where the members need us.”
While the outlook has been improving recently, the overall fitness industry landscape has still been decimated over the course of nearly two years.
Twenty two percent of the approximately 40,000 fitness facilities permanently closed their doors as of July 1, 2021, according to a report from the International Health, Racquet and Sportsclub Association, a trade association representing the global health and fitness industry.
The radical changes to the fitness industry are best illustrated by Peloton, gyms and personal trainers. After nearly two years of disruptions, each group is still figuring out their place in a landscape that is still changing because of the pandemic.
Gains and losses
When gyms were forced to close their doors in the early months of the pandemic, people embraced alternative options to continue their workouts from home.
The hottest item quickly became Peloton’s stationary bikes. The product offered users a number of attractive perks during stay-at-home orders: the convenience to workout when they wanted; a variety of workouts; and a sense of community through their online classes.
Tori Votaw, a graduate student at the University of New Mexico, says she likes the variety of classes – strength, hiking, treadmill, etc. – that Peloton offers.
Votaw plans to stick with Peloton and would consider paying for in-person yoga classes when she graduates but probably won't get a new gym gym membership.
The company sold millions of bikes and its stock price soared as a result. Near the start of March 2020, its shares were trading around $25. By the end of the year, the price ballooned around $150.
But Peloton has dealt with a number of issues in the last few months that have dragged down its pandemic boom. A combination of weaker demand for its products even after recent price reductions, snarled supply chain issues affecting shipping time and some people phasing out of home workout routines have knocked Peloton off course.
Shares for one of the pandemic’s biggest winners are now down to around $35 – virtually erasing all gains it made since the start of the pandemic.
Customers who have invested in Peloton’s products will continue to do so. In the first quarter of 2022, its 12-month retention rate for average net monthly connected fitness churn – how it measures the retention of its connected fitness subscriptions – was 92%.
The question for the New York City-based company – and other companies in the connected fitness equipment landscape like lululemon, Tonal and NordicTrack – is whether it can recreate the success it experienced when the pandemic shuttered gyms and people were stuck indoors when those conditions aren’t as pervasive and other connected fitness products create a more crowded marketplace.
An uphill battle for gyms
As hybrid fitness becomes more mainstream, gyms and fitness studios that survived financially will face a key hurdle: bringing back people who are sticking with home fitness.
To do so, countless brick-and-mortar institutions across the country are radically altering their business model for the first time.
Chicago Athletic Clubs began offering fewer group classes and decided to focus on ones that had the broadest appeal like core classes. In Maryland, Merritt Clubs started a virtual fitness membership so members could stay engaged while at home. In Maine, owner Scott Gillespie opened a 6,000 square foot outdoor fitness area where members can weight train or take part in group exercise classes for consumers who feel more comfortable outdoors or want an alternative space when the weather permits.
Joe Cirulli, owner of Gainesville Health and Fitness in Florida, built a 6,000 square foot pavilion not because of the pandemic but to add more space and have another unique element at his gym.
Owner Scott Gillespie says outdoor group classes become very popular at Saco Sport & Fitness.
Such implementations, as well as more people being vaccinated and easing pandemic-related restrictions, have helped gyms rebound to levels close to where they were in 2019.
“We saw an instant uptick – about a 25% uptick – of people who now could exercise with masks on. What we lost a year ago in November, we gained back when people were able to exercise with masks,” said Gillespie, referring to when Maine removed limits on indoor capacity. “Since then, our club has seen very steady growth.”
As people become more comfortable being in indoor settings again, gyms have gotten a boost as people desire a change of pace from home workouts. In May, traffic at gyms nationwide was back to 83% of January 2020 levels and down just 6% from the same period in 2019.
Things have also improved for some of the largest gym chains in the country since. Planet Fitness CEO Chris Rondeau told CNBC that membership at its gyms has almost reached its pre-pandemic peak. The gym chain had around 15 million members in early November, just shy of its pre-pandemic peak of 15.5 million members.
“You’re definitely seeing a pretty solid recovery in the business since the worst of the pandemic,” said Joseph Altobello, a managing director of equity research and analyst at Raymond James & Associates Inc.
While conditions have started to improve in favor of gyms, they will continue to face an uphill battle for some time. The marketplace for fitness offerings is much more crowded and the spread of the omicron variant could limit or restrict business operations once again.
Gym owners universally agree that the pandemic has been the biggest challenge for their business since the Great Recession. But they believe it has made more people receptive to working out and adopting a healthier lifestyle, giving them an opportunity to reach people who weren’t on their radar before the pandemic.
“We could expand our industry to be welcoming to a whole another group of people,” said Michele Melkerson-Granyrd, senior advisor for personal training and wellness at both Castle Hill Fitness locations in Texas.
A new personal best
Irving “Zeus” Hyppolite learned early on that personal training is a referral-based game. As long as he produced results for clients, he wouldn’t struggle to find them.
Before the pandemic, his Inner U Bootcamp regularly sold out each week and often had a waiting list. But everything changed when the pandemic forced gyms and fitness studios to close their doors. Hyppolite knew he had to pivot, so he took his bootcamp where everything else was going: online.
At first he hosted classes on Instagram Live twice a week. Classes would sometimes draw in as many as 300 viewers and Hyppolite was making more through donations than he would at a studio. Once things started opening back up, he pivoted to Zoom for members who liked the digital training experience.
“The landscape of personal training has now shifted. Three years ago, there were people doing digital classes, absolutely. But now it’s almost like you kind of have to. You have to add that component in now,” said Hyppolite, a 34-year-old who has been a personal trainer for roughly 10 years.
Independent personal trainers like Hyppolite have thrived during this reorientation of fitness. Many people still wanted help reaching their fitness goals while working out from home or needed someone to help break up the monotony of their home workouts.
Rina Nisman became a certified personal trainer back in 2014 but mostly just trained friends and family. The pandemic helped her realize she was sitting on a huge opportunity.
“When the pandemic hit and everything turned virtual, it just seemed like the perfect opportunity for me to really dive in,” said Nisman.
The San Francisco-based 34-year-old works with just five clients virtually for now because she still works full-time as a sales manager at a pharmaceutical company. She offers one-on-one sessions, a virtual subscription and fitness challenges that she creates. Nisman believes that hybrid fitness is here to stay because it appeals to a lot of people who want to avoid commuting or for those who worry about daycare options like new and working moms.
A survey from the 2021 Mindbody Wellness Index backs this belief. It found that more than half of the people surveyed who exercise plan to do both in-person classes and virtual.
Although people embraced virtual fitness out of necessity during the pandemic, Dr. Jürgen Martschukat is not surprised that people are sticking with it even as places have opened back up. He points to the 1980s when people worked out from home with the help of Jane Fonda’s exercise tapes. The technology that has replaced it in the years since has naturally evolved but its core appeal of convenience has stayed the same.
“There were some routines and media technologies that people were ready to use, so I’m not surprised,” said Martschukat, a historian and author of “The Age of Fitness: How the Body Came to Symbolize Success and Achievement.”
Irving Hyppolite has been an independent personal trainer since 2016.
Hyppolite says the pandemic slowed things initially because there weren't any gyms to train in but getting clients was never an issue.
”The joke is that you got death and you got taxes and you got people who want personal trainers. There will forever be a wheel for that,” says Hyppolite.
Irving Hyppolite has been an independent personal trainer since 2016.
Personal trainers have benefited during this transformative period of time. Before they were often dependent on renting time or space in a gym to train clients. The hybrid fitness model gives them more control in regards to when, where and how they interact with clients compared to pre-pandemic conditions when they were mostly beholden to gyms because that’s where people were used to working out.
Hyppolite is keeping a hybrid business model going forward because he says it benefits his brand, allows to make more money and gives him more time with his family. On Mondays – one of two days designated to virtual training – he now has time to take his daughter to school in the morning while still meeting his training obligations for the day.
“If the pandemic has taught us anything, I think it’s taught us how valuable time is,” said Hyppolite.
As the pandemic draws closer to entering its third year, the fitness industry’s survival isn’t as dire as it once was but there are still significant hurdles ahead. The high transmissibility of the omicron variant could threaten gyms’ business operations once again, lead people to further invest time in home workouts and push more personal trainers to invest in a digital presence. Many things can still change in the future, but a permanently different fitness landscape is certain.