So, gyms and exercise facilities are back open in New Zealand! Covid-19 did its best to challenge all businesses through some dark times earlier in the year, and the health and fitness industry wasn’t excluded. But we are now seeing a little more normality in the industry, though it also should be said that we cannot become complacent. We only have to look at our neighbours across the ditch in Melbourne to see how quickly things can change.
That said, things are looking good here. New Zealand gyms and exercise facilities have reached about 85-90% of pre-Covid-19 levels, according to a recent survey by Exercise Association NZ. While this is good, we should also be cautious as we are in the first stages of post-Covid-19, and we can’t be sure how long this stage will last for. It’s fair to say that it will not be going away soon, particularly when we compare ourselves to other parts of the world where Covid-19 cases are still going up.
So how will New Zealand’s gyms and exercise facilities consolidate now we are at alert level 1?
It is rather ironic that an industry that makes people stronger, fitter, and healthier could be crippled and brought to its knees by Covid-19. In a business article during the lockdown, Brett Sutton, Les Mills Head of Club Operations highlighted that he was worried what Covid-19 could do; not just to Les Mills but to the industry as a whole. Phillip Mills, International Executive Director of Les Mills, expected approximately 70% of members to return back to the gym. Which on the whole is great… but he also added that the remaining 20-30% of missing members is where the profits lay for the business.
So, what changes have to occur for Les Mills and other gyms and exercise facilities if members do not return immediately?
The lockdown earlier in the year was disastrous for business owners and employees. As we know, during the lockdown many businesses folded, and people lost their jobs. And though New Zealand has got itself up off the floor after the lockdown, we must remain cautiously optimistic going forward. We are yet to see the full effects of the economic downturn, as more redundancies are forecasted in the final quarters of 2020. If this is correct, there may be another wave of gym membership cancellations as users look at managing their disposable income more tightly.
Further afield, gyms have reopened in more than half of the states across the USA. Fitness is a $34 billion industry and an estimated 20% of Americans have a fitness or health membership. A recent Fortune article suggested that high-end boutique fitness studios were doing very well since they had reopened – but low-priced gyms like Planet Fitness were struggling with occupancy. TIME magazine earlier this month pointed out that only 20% of Americans said they would not feel comfortable going back into the gym after lockdown. A further 25% highlighted that they would not plan to go back to the gym. Indeed, the franchise gym, Chains 24 Hour Fitness & Gold’s Gym, a recognisable name in the industry, have filed for bankruptcy due to Covid-19.
In the United Kingdom (UK), gyms were due to reopen on Saturday 25th July. At the time of writing this article in early July, the gyms in the UK were one of the last public-facing businesses to reopen. Phillip Mills from Les Mills pointed out that during the lockdown in the UK, it was predicted that 2800 gyms WOULD be gone by June. This is a startling and bold statement, and only time will tell if this is correct or even anywhere near the mark. During lockdown, the Telegraph newspaper in the UK identified that there was a 400% rise in home gym equipment being purchased online, suggesting more gym users now have options to keep fit at home. Will this keep them from returning to the gym? In New Zealand during the lockdown, home exercise equipment was in huge demand and online workouts too. Les Mills even provided live fitness classes broadcast on TVNZ! These classes were watched on TV by about 1.2 million viewers, with another 210,000 streaming them online. So, it is fair to say that the gym membership landscape is changing quickly, and gym owners are having to embrace change whether they like it or not. Things are not going to get back to ‘normal’ next week or in the next few months or even maybe years, but what gym owner’s and members have to do and acknowledge swiftly, is that change is needed if gyms are to survive.
So, what can be done for our beloved gyms and exercise facilities to remain open in New Zealand during these difficult and challenging times? Both users and owners have options:
Will we see an increase in membership prices? This may happen to cover the costs of falling membership numbers. It may not happen immediately, but owners would be naive to think that their businesses can continue to function as if there was nothing wrong.
The big boys in the industry may be the first casualties. Les Mills, City Fitness, Snap Fitness, Anytime Fitness and Jett’s Fitness are the leading industry providers. Smaller outfits or privately owned gyms with fixed costs and smaller overheads may find it easier to survive. Will we see a gradual movement of gym users going to smaller facilities?
To reassure uncertain or potential new members coming to join a gym, owners need to show that social distancing and member safety is enforced as much as is practically possible and that hygiene measures are taken seriously, with wiping down of equipment a primary objective of each gym user.
Gyms and exercise facilities need to have a flexible and ever-revolving business plan. Do the big boys in the industry gamble by leasing or buying new state-of-the-art technology to keep their remaining members happy and to entice new members into the gym? Or do they take stock, build on what they have, and place a greater emphasis on the personal trainers and fitness instructors to go above and beyond to provide a high-level professional experience where each member feels welcome and important?
Will we see landlords increase rental charges for gym owners? Some gyms were struggling financially before the lockdown. It may be prudent for gym owners to speak to their landlord and discuss how both parties can keep going forward successfully. A gym closing because of high rent fees does not necessarily mean that the landlord will be able to replace them immediately – Covid-19 has seen to that. There is no queue of businesses lining up at the landlord’s door to rent space. As a result, landlords may well be open to discussions about reduced rent for a short period of time.
So how are New Zealand gyms doing, early post-lockdown? I think it is fair to say that 7/10 would be an objective score right now as we come to the end of July. We know the industry has approached the post lockdown period well, and Exercise Association New Zealand chief executive Richard Beddie has highlighted that new membership sales show that New Zealanders are wanting to stay physically active, possibly as a result of the increase in physical activity seen during the 3 month lockdown. But the bottom line could be that gym users are also craving to get back into a facility with other people, where there’s a sense of community amongst the users; a bit like a social club, where users like to be seen, it’s a vital part of their lifestyle. They do not necessarily turn up to the gym to workout. There will always be a number of hardcore gym users who will keep coming back to the gyms. But the key for gyms going forward is to offer an excellent experience at an affordable and competitive price while New Zealanders sail through unpredictable waters.
