“As soon as the lockdowns took effect, the home-fitness business took off like wildfire,” said Matt Powell, vice president and senior industry adviser for the NPD Group, a market research company.
Americans spent heavily across all price points, from $3,000 cardio machines to $20 yoga mats. They also hit the running and hiking trails in earnest — Yellowstone National Park recorded its busiest September and October on record — and embraced other outdoor activities to escape the monotony of stay-at-home life.
Health and fitness equipment revenue more than doubled, to $2.3 billion, from March to October, according to NPD retail data. Sales of treadmills soared 135 percent while those of stationary bikes nearly tripled, depleting inventories.
The trend has stretched through seasonal changes: The surge in bicycle and kayak purchases recorded in the spring and summer is now manifesting in cold-weather gear such as cross-country skis, snowshoes and outerwear.
Demand for equipment that can be used close to home or outdoors is “off the charts,” said Ben Johns, general manager for action sports for REI. Fire pit sales in the fall grew sixfold year over year, he noted.
“People clearly have looked to outdoor activities as a way to escape the realities that we all have to deal with.”
But 2020 also was a punishing year for gyms. Hirsch, the founder and president of Philly Dance Fitness, said business was flourishing at the beginning of the year. She was looking to expand, intent on moving from subleased locations to a spacious studio of her own. Some of her clients were running through final rehearsals of “Take It Off Broadway,” a jazz and burlesque dance show inspired by musicals.
But that changed in March, when the pandemic took hold. Like other small-business owners, Hirsch said, the sudden blow of government-mandated closures slashed revenue dramatically. Since then, any move toward recovery has gotten squeezed by capacity constraints and generalized anxiety that has kept potential drop-ins away. “The reason we are still here right now is because I haven’t been paying full rent,” she said. “If we had to pay full rent we’d be done.”
Now, amid a just-lifted citywide gym closure, Hirsch is just hoping to outlast the pandemic.
“Prior to covid, my job was to figure out what classes people like, find the best instructors and create a really awesome in-studio experience,” she said. “Now my job is to make sure they are good on live streams, troubleshoot tech issues and coordinate all of it so we can market it to audiences. It’s another layer of work that has been really challenging.”
Just as the virus has thrashed a specific set of industries while rewarding others — owing to the unique contours of public safety measures and the dynamics of the stay-at-home economy — segments within industries have been crushed or favored in similar ways.
Perhaps no fitness company better illustrates the explosive sales growth brought on by the pandemic as much as Peloton. Demand for its Internet-connected bikes soared in the spring and summer as gyms were shuttered or restricted and households invested in basement gyms. The company reported revenue of $758 million, a 232 percent increase from the same period the previous year.
The stay-at-home economy sent Peloton stock soaring more than 400 percent in 2020 and helped catapult it into profitability. The company is focused on growth, and has announced a partnership with Beyoncé; the release of a premium bike and a more affordable treadmill; and the acquisition of fitness equipment maker Precor, for $420 million, to ramp up production capacity and expand into the commercial market.
“We certainly want the world to get back to normal, just like everyone else,” said Brad Olson, chief membership officer. “We do believe that the pandemic has compelled consumers to reevaluate their fitness routines and many have discovered that the best, most connected workout can actually be experienced at home.”
Other connected fitness companies have also had significant growth spurts. After Mirror, the maker of the reflective-glass fitness device, was acquired by Lululemon Athletica, it expected to have ended 2020 with $150 million in revenue, up from a previously projected $100 million, according to company forecasts. And Tonal, the wall-mounted, strength-training home gym, reported a staggering 700 percent year-over-year increase in sales in 2020.
Americans were not just buying up high-end, screen-centric devices. When public health measures first led to gym closures in the spring, retail data showed massive sales spikes for an array of recreational and fitness merchandise, from dumbbells and roller skates to surfboards and golf clubs.
Dick’s Sporting Goods said same-store sales jumped by double digits during its most recent quarter, the retailer’s best performance since it went public nearly two decades ago.
Fitness app downloads soar
While the at-home workout trend has been accelerating for years — propelled further because of the coronavirus — so too has the consolidation of gyms, analysts say. Mid-tier players have been squeezed by premier clubs such as Equinox and Life Time Fitness, and more affordable gyms, like Planet Fitness.
Since the pandemic struck, membership rolls have evaporated, shoving some of the most financially vulnerable companies into insolvency. Gold’s Gym, 24 Hour Fitness and Town Sports International, the owner of the New York Sports Clubs and Lucille Roberts chains, all filed for bankruptcy protection in 2020.
Camilla Yanushevsky, an equity analyst at CFRA Research, likens the financial struggles of mid-priced gyms to beleaguered retailers that were too slow to adapt to the world of digital apps and burdened by high debt loads.
Analysts note that Equinox, on the luxury end, and Planet Fitness, on the value end, were both quick to launch workout apps in the early weeks of the outbreak, keeping their members engaged, even if they couldn’t pump iron or practice yoga at their physical locations.
“Our app consumption went through the roof,” said Chris Rondeau, chief executive of Planet Fitness, noting that online engagement fell once gyms began to reopen and members returned for in-person workouts.
“It’s a good supplement,” he said. “Everybody has a kitchen, but everyone goes out to eat because it’s a little bit more enjoyable.”
Boutique studios face their own obstacles. Largely locked out from high-dollar lending, and constrained by capacity restrictions or outright closures, small-business owners confront encroachment from the home-fitness companies targeting their clientele as well as the polished live streams and virtual apps that require robust investments to produce.
“When this shutdown happened we were put on the playing field with major national companies that had been live-streaming for years,” said Hirsch of Philly Dance Fitness.
“These people have lots of money and equipment and they have been filming high-quality, on-demand fitness classes for a long time. And they charge way less than I can afford to charge. I don’t have a marketing budget or plan that would allow me to scale the way I would like to.”
The explosion of home gyms and the desire for professional, on-demand workouts has sparked a gargantuan increase in health and fitness app downloads. Americans are increasingly streaming exercise classes from their phones and smart TVs and tracking an array of personalized health metrics brought to life through ecosystems of gadgets and dashboards.
Business leaders and industry observers also underscore that the threat of the coronavirus itself, not just the major business disruptions, has raised awareness about overall health and well-being. According to the national Centers for Disease Control and Prevention, adults of any age with certain conditions are at increased risk of severe illness from the coronavirus, including afflictions that can be influenced by physical activity and nutrition, such as heart disease, Type 2 diabetes and obesity.
From January through November of 2020, approximately 2.5 billion health and fitness apps were downloaded worldwide, according to data from Sensor Tower — a 47 percent jump from the same period in 2019. A compilation of the most-downloaded fitness apps on Google Play and Apple’s App Store reveals an astonishing rise in interest, coinciding with the public health crisis.
Users downloaded Home Workout — No Equipment, the top fitness app of the year, 43.5 million times, more than doubling its installs from the previous year, Sensor Tower data showed. Strava, the GPS running and cycling app, was downloaded more than 20 million times, a 120 percent spike from 2019.
While home-fitness companies can generate the bulk of their revenue through hardware sales, monthly app subscriptions and digital-only memberships can make up a significant portion of their business. Peloton, for example, recorded 382 percent growth for digital subscriptions — which do not require machines. Similar to the economics of gaming consoles, mobile devices and wearables, companies can extract consistent fees from customers by offering networks of services and software, even if people only buy the central piece of hardware once every several years.
In December, Apple released its own workout subscription service, Fitness+, built around the Apple Watch. The latest premium app from the $2 trillion tech giant highlights the company’s strategy to pull users more tightly into its ecosystem of services, which includes music, TV and cloud storage. And it underscores the developing business opportunities in health and fitness that technologies can exploit during and even after the coronavirus crisis.
Other major retailers are leaning into technology to glean insights from consumer data, build customer loyalty and keep users within their universe of merchandise. Nike claims two fitness apps among the 20 most-downloaded apps in 2020. Users downloaded Nike Run Club more than 15 million times, showing a 45 percent boost from 2019, the Sensor Tower data showed; Nike Training Club registered nearly 14 million installs, up 123 percent from the previous year.
Investors have flocked to the sportswear company over the past year. Shares have more than doubled since the lows of March. And in its most recent earnings report, Nike disclosed that digital sales ramped up by 84 percent compared with a year earlier, including triple-digit growth in North America.
“Humans are social animals”
The year ahead will test which consumer behaviors are fleeting and which are here to stay, experts say.
“The longer this goes on, the tougher it will be to return,” said Landon Luxembourg, a senior analyst at investment research firm Third Bridge Group. Luxembourg described a central tension within the fitness industry, in which customers who have invested in their own equipment and grown accustomed to working out at home might be reluctant to rejoin their gyms and restart their memberships, even after coronavirus vaccines are in wide use. But the allure of returning to old habits, of reclaiming normalcy and reconnecting with the social aspects of working out has its strong appeal too, Luxembourg said.
“There is a group of people that want get out of the house and see people,” said Yanushevsky, of CFRA. “That’s what’s going to keep gyms around. People don’t want to work from home and go to the room next door and lift some weight and be on a Peloton,” she said.
As with virtual school and work, there’s live-stream fatigue, too. “Humans are social animals,” Hirsch said. “The ability to see people in person, we live for that — to give people motivation to work hard and to sweat.”
She added: “I am not worried about group fitness dying. We will return when covid is over. It’s just been a lot longer ride than people were hoping it would be.”
Aside from the lucky few who have the wealth and the space to assemble a Schwarzenegger-class home gym, most people will rely on retail gyms for the heavy-duty gear and the social interaction they can’t get on their own, said Joanna Zeng O’Brien, a Moody’s analyst who covers the fitness industry.
“There is the convenience of working out from home, but people also want to go to physical locations. People miss that,” she said. “For companies that want to stay around and not become obsolete, they have to do both.”