Post-Pandemic Fitness: Consumer Behaviour Shifts, Supply Chain Struggles, and the Evolution of the Fitness Industry
How COVID-19 Transformed Fitness Trends, Disrupted Retailers, and Redefined the Market for Gyms and Home Workouts
The COVID-19 pandemic seemed a tsunami of chaos for the fitness industry. Around 500,000 gym industry employees have been laid off due to COVID with more than 38,000 gyms and health clubs have been closed (Athletic shoe reviews, n.d.) However, the new normal of work from home began to apply to personal fitness as demand for online classes increased. This global shift to at home fitness informs the soar in purchases of outdoor and fitness-related equipment ‘73% of consumers were using pre-recorded video versus 17% in 2019; 85% used livestream classes weekly versus 7% in 2019.’ (Cording, 2020) Retailers such as Peloton capitalised on this trend by providing equipment such as bikes and treadmills, hitting a ‘global membership base of 3.1 million by the end of June 2020’ (BBC, 2020). Despite this success however, the heightened demand for retailers proved challenging. The global supply chain crisis affected the growing success of businesses who successfully made the switch like Peloton with consumers facing delays of weeks and even months for ordered products. Retailers had to adopt a myriad of strategies to meet the new boom of the fitness industry. As the pandemic restrictions began to ease, consumers were left with options that did not seem feasible before, a split between the emerging home fitness market and the traditional gym membership model that was the norm for decades prior. We aim to analyse the surge of outdoor and fitness-related purchases post-lockdown in 2021 and 2022, how supply chain disruptions impacted availability, and how the retailers adapted, either successfully or unsuccessfully.
It is not presumptuous to assume that a global pandemic has casualties far beyond the disease it is actively spreading, particularly one in which social contact was reduced to a minimum over several months. Mental health began to break out of its taboo corner and into mainstream discussion. Fitness is widely proven to be a psychological benefit serving as a social outlet as well a regulator for emotional wellbeing. Therefore, following nationwide closures of gyms and health clubs, home workouts became ‘the most popular “location” for fitness-related activity,’ (Rada & Szabó, 2022). Yoga became increasingly popular due to its low barrier to entry with YouTube videos racking up millions of views and digital bookings reaching the thousands. ‘32% of virtual bookings with an average of nearly 22,000 yoga bookings per day.’ (Cording, 2020) 63% of people across the first six weeks of lockdown say exercise is important for their mental health. (SPORT ENGLAND, 2020) Therefore, we can chart a societal shift in attitudes towards fitness during the lockdown period which influenced the fitness industry for the next two years. A key principle in explaining consumer psychology in economics is the concept of optimisation which is regarded as the ‘first principle of economics.’ (Acemoglu, 2018, pg.85) Acemoglu argues that optimisation means ‘picking the best feasible option’ (Acemoglu, 2018, pg.49) and given the circumstances of post lockdown fitness, home equipment was seen as the optimal choice.
The business model of a gym membership traditionally consists of a fixed monthly fee with additional costs varying from private one to one training as well as studio classes held within the gym. Factoring in costs to commute and fitness wear tacks on at least double what the original membership fee costed. A ‘feasible option’ is defined by Acemoglu as ‘available and affordable to an economic agent.’ (Acemoglu, 2018, pg.49) By opting to buy fitness equipment for home use, consumers felt they made the most rational choice as it is generally a one-time purchase with no reoccurring fees. Aside from cost, there are also emotional factors driving the purchase. A Forbes article argued that ‘consumers who reported that body image issues or feeling embarrassed by lack of experience had previously kept them from joining studio classes, live streaming has made them feel more comfortable trying new classes.’ (Cording, 2020) In most cases, economists would argue that the trade-off for home fitness is the community and social aspect of a gym however the circumstances of the pandemic rendered it a non-factor, in fact, retailers such as Peloton offered consumers online classes providing another reason to make the rational choice. As consumer behaviours changed so did the industry, however matching demand has not been as effective as envisioned.
The aftershocks of the pandemic plagued manufacturing industries worldwide with shortages in products ranging from groceries to furniture. Retailers were facing transportation issues, raw material shortages as well as foundry closures. In particular, the fitness industry was dealt a huge blow as materials such as steel and aluminium were sourced from foundries in China. ‘The gym and exercise equipment manufacturing industry generated $2B in revenue in 2019. Of that, 65% of our exercise equipment comes from foundries in China.’ (Fitt Insider, 2020) Consequently, these supply chain disruptions came at a time where retailers found themselves receiving influxes of orders from consumers influenced by the new fitness trend. Market equilibrium is defined as supply equalling demand, however when demand begins to surpass supply, a disequilibrium is formed. The industry, pegged down by these disruptions could no longer maintain the boom in demand as retailers such as Peloton who enjoyed much initial success, experienced backlogged orders, and rescheduled delivery dates. Complaints from customers ensued which led to official acknowledgment in a statement directly from CEO John Foley. Strategies needed to change to meet demand such as moving production to home countries instead of outsourcing, evidenced by the brand’s ‘nearly $1 billion to improve its production and supply chain this year, including a plan to build its first U.S-based factory.’ (Thomas, 2021) Retailers also began to operate with full transparency towards consumers, advising ahead of time of the delays they may face, example being the CEO of Puma stating, "If you want to buy Christmas presents, you should buy now," (Thomasson, 2021) in late October. Other retailers such as Gym Shark took a three-pronged approach tackling labour and stock shortages along with supplier issues. As personal trainers were left in limbo, the company ‘paid personal trainers to do online workout routines, through Instagram, Facebook or YouTube’ as explained by the Chief Financial Officer, Phillip Daw. Its stock has been ‘designed carefully over many months and stored in warehouses,’ protecting it from ‘cost shocks.’ (ICAEW Insights, 2022) Moreover, they have acquired suppliers across a range of different countries which contained disruption to a minimum and reinforced their supply chain. As the ‘new normal’ began to sink in, retailers realised mitigating these disruptions was the best solution in an environment that promised anything but.
An overlooked phenomenon post pandemic was the return of the gym membership. Consumers who were turned off by the shipping issues plaguing corporations and e-commerce began to shift back to the traditional form of fitness. ‘Gym memberships roared back into the scene with industry giants such as Planet Fitness reclaiming 97 percent of its pre-COVID membership maximum.’ (Two-Brain Business, 2022) Just as consumers initially optimised by making choices to buy gym equipment the inverse now seemed to apply for gym memberships. Commercial gyms such as Pure Gym and Anytime Fitness saw huge growth in the post pandemic period seeing ‘the biggest portfolio growth in that time.’ (Arrowsmith, 2022) However, these were no longer the gyms of old as surveys revealed ‘58% of members who returned to a fitness facility reported that it offered digital fitness content.’ (Jacob, 2021) Consumers found that retailers had begun to reshape their offered services because of consumer habits formed during the lockdown period. As such, consumers now had a choice between the ‘new normal’ characterised by home gyms and led by retailers like Peloton, or a chance to revert to the ‘old normal’ who were now offering hybrid options for those who had holistically incorporated the lockdown and post lockdown regimen. It should be noted that consumers did not automatically shift loyalties back to commercial gyms, especially those who sunk investments into building a home gym or spent on high tech equipment. “If you bought a treadmill in June, why would you pay a gym $50 a month to run on their treadmill?” (Jacob, 2021) However, it can be argued that the landscape of the fitness product market was permanently shaped by these retailer adaptations. Consequently, Peloton which were the figureheads of pandemic fitness began to hit financial losses as restrictions eased, ‘It’s market cap, which once surged to more than $45 billion, has shrunk to about $4.7 billion.’ (Fonrouge, 2023) Therefore, the argument could be made that the surge in outdoor and fitness related purchases was a short-term trend, spurred by the unforeseen circumstances of the pandemic. However, the implementation of a hybrid digital system with more traditional gyms cannot be overlooked, indicating a lasting shift in consumer behaviour.
In conclusion, we have discussed the societal shift towards a focus on fitness and wellbeing which informed the surge of purchases during the post pandemic era. The boom in demand exposed shortages of supply. In turn retailers began to shift their supply chain practices with brands such as Peloton investing in home factories rather than outsourcing, as well as Gym Shark integrating personal trainers to online sessions to deal with labour shortages. Upon returns to commercial gyms, Retailers now adapted to offer hybrid services, incorporating digital and physical fitness practices. Consumers were now left with a new fitness landscape, shaped by their habits, and perceived optimisation.
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