How the luxury fitness bubble popped as the pandemic wore on

Gym rats, take heed: The luxury fitness boom may very well be cooling down as high-end exercise brands like Peloton and SoulCycle struggle to make gains at this stage of the pandemic.

Peloton — the company behind a line of gadget-forward stationary bikes that enjoyed a swell of business during the early lockdown period — announced layoffs, studio closures and price hikes on its signature product in Canada and the US. this monthfollowing a sharp decline in sales.

Another high-end fitness brand is struggling, outside the home: SoulCycle, the chain of group cycling studios that launched in 2006, closed 25 percent of its locations earlier this week.

That includes a complete exit from the Canadian market with the shutdown of its lone Toronto studio, the company confirmed to CBC News.

“I think that explains the kind of popularity at the lower end of the consumer fitness market in terms of brick and mortar,” said Natalia Petrzela, an associate professor at the New School in New York and author of Fit Nation: The Gains and Pains of America’s Exercise Obsession.

“More people are going back to the gym in person, but it is 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, at-home fitness brands are losing clientele while people favor affordable brick-and-mortar gyms and fitness centers.

A woman walks past a SoulCycle fitness studio in Lower Manhattan in New York City. The chain of group cycling studios that launched in 2006 closed 25 percent of its locations earlier this week. (Drew Anger/Getty Images)

Small gym owners still getting back on their feet

As pandemic-related measures relax, people are “re-evaluating their relationship to what they spend on exercise and why they want to work out,” said Petrzela.

“What Peloton is experiencing is kind of a correction — not even a failure — but a correction on that over-the-top enthusiasm and excitement for home fitness at a moment when so many people had no other options,” she said.

The company reported in May that its third quarter revenue fell short of expectations, taking in $964.3 million, a decline from the $1.26 billion it raked in a year earlier. Its market value plummeted by $46 million as pandemic-driven demand for at-home fitness dried up.

“But at the same time people aren’t going back to work out in the same way that they did before,” said Petrzela. “So something like SoulCycle, which was the darling of the boutique fitness industry, has to adjust as well.”

Sergio Pedemonte, the CEO of personal training company Your House Fitness, says that he’s still struggling to find trainers after a mass exodus from the industry in 2020. (Submitted by Sergio Pedemonte)

Even as affordable gym chains thrive, small business owners are picking up the pieces two years later. One of the ongoing challenges is a shortage of qualified personal trainers, according to a Toronto-based business owner.

“There are too many personal training companies, too many gyms that require trainers, but there are no trainers,” said Sergio Pedemonte, the CEO of personal training company Your House Fitness. Pedemonte runs both an at-home service and a studio and gym.

He says that he is still struggling to find trainers after a mass exodus in 2020, when many in the industry left to pursue other ventures while CERB payments provided a financial safety net.

“I think that the biggest struggle of all these in-mortar companies is that their [monthly] Build-up has gone down,” he said, after provincial governments shut down and restricted gym access. His business was making roughly $100,000 in monthly membership revenue when the pandemic hit — that number then swiftly fell to zero.

The brick-and-mortar studio of Your House Fitness in Toronto is pictured. (Your House Fitness)

Sara Hodson, the president of the Fitness Industry Council of Canada, said that business owners are still reckoning with the challenges and changing consumer behavior of 2020.

“You look at an industry that was shut down, that lost all of its revenue, that had to stay afloat, and at the same time had to reinvest in technology in order to do everything that we could to keep Canadians active,” said Hodson. from Vancouver.

Future business models will focus on mind-body health

The Canadian fitness industry’s market size expanded in 2022 and is now on par with pre-pandemic numbers after a two-year slump, according to market research firm IBISWorld. Petrzela said more consumers have come into fitness during the pandemic.

“This is a result of the fact that the pandemic and its kind of enforced sedentary-ness led a lot of people to realize that exercise really is very important, both for general well-being and — honestly — in terms of certain COVID comorbidities, she said.

‘More people are going back to the gym in person, but it is the lower-end businesses that are thriving,’ said Natalia Petrzela, the author of Fit Nation: The Gains and Pains of America’s Exercise Obsession. (Sylvie Rosokoff)

Because so many people invested in high-end home fitness setups (a basic Peloton setup has a price tag of about $1800 Cdn), most won’t be willing to “shell out on a high-end health club or boutique experience,” she said. Hence, the shunning of SoulCycles and Flywheels in favor of GoodLifes and Fitness Worlds.

In an industry that yo-yos between trends, Hodson and Petrzela agree that the next phase of fitness and lifestyle branding will remain a hybrid model of virtual and in-person connection.

“What we’re really seeing across the industry and even when we look at global trends is this massive return to in-person connection,” said Hodson, who is also the CEO of gym chain Live Well Exercise Clinic.

Globally, the fitness industry is seeing a ‘massive return to in-person connection,’ said Sara Hodson, president of the Fitness Industry Council of Canada. (Submitted by Sara Hodson)

She said she has observed that her older clientele are more open and able to engage with virtual classes as a result of the pandemic, but are also returning to the company’s brick-and-mortar facility.

“I think that the next popular business model is going to combine connected fitness, in-person experience and community,” said Petrzela. “That’ll probably engage meditation, recovery, stretching, maybe even certain forms of therapy, quite honestly, that fit under that mind-body health bracket.”

“But I think that there is no question that connected fitness and home fitness is here to stay.”

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