Recession. Economic crisis. Nobody likes those words (if you do, let’s talk, I would love to know your perspective!), whether we are business owners or not. It is no mystery, though, that running your own business, especially one that lives off subscriptions and memberships — like the fitness industry — you worry whether it will survive the hard times and in what shape it will come out at the end.
It would be great if the recession was something we could just ignore — wait it out and go back to normal as if it never happened. Except we can’t — unless you like to play roulette on your business’ existence.
As the world rolls, periods of an economic downturn are something that we have to face once in a while. So maybe, instead of stressing out or hoping they will not happen, let’s better focus on finding the best ways to keep our businesses in good shape through those hard times.
Considering we are looking straight into the eyes of the economic crisis again — and economists are speaking in a collective tone, predicting that recession is rather inevitable — let’s take a moment to determine what it means for your fitness business. What can you expect, and how can you prepare to minimize its impact on your company?
A quick look back: how did the fitness industry handle past economic crises?
To better understand what the future can bring, it’s worth rethinking the recession periods we faced in the past. Let’s take a quick look at the Covid pandemic and the Great Recession (2008–2009).
Covid-driven digital transformation
The pandemic made us realize, stronger than ever, that every economic crisis has its specifics — so it can affect various industries (and even various segments of some industries) in a very different way. While grocery stores were functioning more or less normally, online services were thriving, and businesses such as beauty salons, gyms, fitness centers, etc., had to shut down, facing one of their worst nightmares: being unable to do their thing.
But while beauty services couldn’t be provided online, fitness operators had the opportunity to jump in on a lifeboat sailing through the digital world. Of course, it wasn’t a perfect solution for everyone, but it was generally possible to provide fitness services online. This led to a big transformation, where many companies started looking for ways to transfer (or expand) their offerings to the internet. And fitness businesses that were already operating online faced a great chance to grow.
An important thing here is that gym members didn’t stop coming to facilities because that was what they chose — they still wanted to work out and attend their favorite fitness and yoga classes but were forced to stay home. Also, the pandemic made people (around the globe) re-evaluate the value of physical activity and realize, more than ever, its positive impact on their health. Keep that in mind because I will refer to that further in the text.
What’s also interesting, in the article published at the beginning of the pandemic (March 2020) on Vigyr’s blog, we can find a fragment stating that “historically, fitness businesses have not been significantly affected through times of economic turbulence.” Also, the author refers to the IHRSA’s opinion that “the industry itself is thought to be incredibly recession-resilient.”
The great surprise of the Great Recession
The Great Recession was also an incredibly challenging period. It also impacted the fitness industry; however, it hit it in a much different way — and was the most painful for different segments than in the case of the pandemic. People were still able to attend gyms and fitness facilities, but spending in various areas, of both everyday life and business investments, had to be drastically limited.
At this time, I worked on the manufacturer’s side. People still went to facilities to work out but the biggest thing was really the budgets of facilities. There was not much spending happening in 2008/2009 so the facilities probably became a little worn down because everyone was conservative on spending.Crystal Wheeler, Club Industry
What’s interesting, however, in the article from 2019, Borislava Baeva, the CEO and founder of MyStrongCircle.com, shares insights showing that even during the peak period of the Great Recession, the fitness industry was overall on the growing trend — which continued long after the crisis ended:
The number of memberships, clubs, and the overall industry size were all above their pre-recession levels. Since 2006, the US fitness club industry grew on average five percent every year, reaching $32 Billion in 2018.
Recession-proof nature of the physical activity
My main conclusion from the above is that even though the pandemic undoubtedly had a huge impact on how people perceive the role of physical activity in their life, they were already aware of its importance long before. And secondly, the economic crisis is not something that immediately stops them from embracing their wellness — even if they’re stuck in their homes.
The fitness industry experts seem to share this opinion. Among them, Anthony Vennare, founder of the Fitt Insider:
As consumers prioritize their health, they are less likely to let the market and economic conditions impact how they spend their time and money. Even when they have to make cuts this time around, I don’t think fitness will be on the chopping block.
A similar voice comes from Jonas Dücker, the CMO at RookMotion:
I feel like many people learned the importance of physical activity and fitness during the last few years for body health as well as mental health. But I do think that segments such as expensive connected fitness devices will have a tough time now, while solutions that focus on maybe outdoor fitness will keep growing as they have been the last few years.
This year’s Wakefield Research and Restore Hyper Wellness survey results align with those opinions. As many as 62% of the surveyed adult Americans claimed they wouldn’t cut back on preventative health and wellness activities in a recession. What’s more, they declared that to be able to afford those, they would be willing to limit their spending on social and cultural activities.
Okay, but what lessons should you learn from all of that?
Things are less scary when you’re well prepared
First of all, don’t underestimate the risk. One of the goals of giving you an overview of past recession periods and sharing the industry experts’ voices is to help you understand what problem you are facing and what consequences can come with it.
It’s hard to predict what exactly will happen in the upcoming year, but being prepared for various scenarios can save you tons of stress and, most importantly, help avoid certain risks for your fitness business. And there are two main fundamentals of this preparation.
Solid financial model
Anthony Vennare advises that you start by building out a strong financial model:
It can help fitness operators make sure that they’re acutely aware of all conditions in their business. Being more financially prepared to outlast the cuts and decreases in membership, revenue, etc., will serve them positively over the long run.
It would be hard not to agree with that. It’s not news that having a solid financial foundation for your business is key to keeping it in good shape and avoiding costly surprises. It’s not only something that eases going through the crisis but a powerful tool for running a company that generally supports its functioning (e.g., decision-making, monitoring performance, etc.) and growth.
Good marketing strategy
You should also work out a good marketing strategy. Running your promotional activities randomly, based on shots in the dark, won’t ensure success — even in times of economic stability. Remember to rely on data (about your business’ performance, customers’ behaviors, etc.) but also keep in mind that some things that worked well before may not be so efficient anymore.
Why? Simply because the reality you (and your members) will be facing is not usual. And, as I already pointed out, every crisis has its own specifics, so it’s impossible to foresee what exactly will happen. In such situations, an agile approach is key. You should have a well-planned strategy but also carefully observe the market, be open to changes and ready to react quickly.
Also, don’t be afraid to experiment! Testing different solutions is not only perfectly normal but nearly a must in times of uncertainty. If you can’t predict the future, how else would you figure out what will work best? So go ahead and try and test — and if you need some tips on how to start, check out our article about creating digital fitness strategies.
The matter of marketing strategy leads us to another helpful insight:
Don’t give up on your members, and they won’t give up on you
It is a relatively new trend in gym members’ behavior. According to Jason Crowe, co-founder and partner at The SageHouse, a meaningful shift has come to the fitness operators’ notice:
One of the new interesting trends in the fitness industry we’ve heard from The SageHouse is returning gym members. Before the pandemic, when a member quit, he was gone for good, and a gym operator did not have much to do to reverse it. Nowadays, behaviors have changed because there are so many different options to work out — online, from home, hybrid, with apps, etc. People are more likely to experiment with new things and quit. It also means they are more likely to return if they don’t like new experiences. It’s therefore essential to make sure your marketing and sales efforts target past members.
As per Jason’s advice, it’s clear that equipping your marketing strategy with a good plan for activities aimed at re-engaging your former members is now more important than ever. In case you’re not sure how to address that, worry not. We have an article that will help you in this area, too! It contains 6 effective ideas you can use.
Digital fitness is the way to go
As we all know, the acceleration of the digital transformation of the fitness industry that happened over the past two years brought along the change in fitness members’ behaviors and preferences. And even though the pandemic doesn’t keep people locked up in their homes anymore, many remain users of online fitness services. A high percentage of fitness enthusiasts follow the hybrid model — mixing visits in brick-and-mortar facilities with online workouts.
According to RunRepeat’s research that predicts a huge boom in the fitness industry within the next six years, online fitness is likely to have the highest growth rate of up to 33.10% per year. And actually, a recently launched Digital Futures 2022 report presents stats that can confirm this conclusion. 46% of organizations surveyed for this research claim that they are “actively and/or heavily investing in digital.”
Even though Digital Futures 2022 is focused only on the UK’s market, it is full of valuable stats about the digitalization of the fitness industry that can give us some perspective on the possible state of other markets, too.
Conclusions from those reports clearly show that the best way to avoid getting outrun by the competition, maintain good member retention rates and keep attracting new customers is to expand your offer with online training options and invest in the digitalization of operations.
I think that an online offering should be available by all facilities and for all demographics. This too gives a consistent bit of cash flow and also member retention. Those facilities that have not gone on board are still likely missing those members who have not returned to working out in the facility.Crystal Wheeler, Club Industry
Ensure your digital offers’ attractiveness
Of course, what your digital offer will consist of also plays a significant role in how your business will perform. Filling it with innovative technologies that make online training more reliable (thanks to solutions imitating working out with a personal trainer) and fun (e.g., by introducing gamification elements) is key. Why? Because it leads to boosting members’ engagement and loyalty towards your brand.
Nowadays, the internet is full of fitness apps, so you need to find a way to stand out among the competition. Luckily, the industry already has quite a few great solutions to help you with that. Some even in the form of ready-made solutions that you can simply implement in your fitness software. You can read all about it in our article “What are the current technology trends in fitness apps?”
How to prepare for the recession? — summary
Even though the vision of the recession may be scary, the past events taught us a lot about handling such challenges. Of course, nobody says it will be easy, and it’s hard to tell with 100% certainty how much the fitness industry will be affected. But there are several actions you can take to prepare for the hard times — and when you think of it, most of them are not that hard to implement.
Well-thought-through financial and marketing strategies will be your fundament for handling whatever is to come. And preparing those with a data-driven approach will help you ensure their reliability and avoid costly mistakes.
I hope the insights and materials you found in this piece will help you prepare for the upcoming year’s challenges. Well, no time to waste! Go ahead and start preparing the plan to make your fitness business recession-proof.