Can gyms and at-home fitness both win?

Foot traffic is back at (most) gyms 

Foot traffic to gyms has been on a rocky road to recovery but numbers are almost back to pre-pandemic levels as this Omicron wave comes to an end. According to Placer.ai, as of the second week in February, foot traffic to gyms is only at 3% below 2019 levels. The demand for fitness is there – and barring another variant – it will soon surpass pre-pandemic levels. 

But like many retail categories, the recovery is not the same for all price points. Value chains are performing better while mid-priced chains are struggling to rebound. Planet Fitness, a value chain which offers memberships for around $10, has surpassed 2019 foot traffic. Meanwhile, 24 Hour Fitness offers memberships around $50 and has yet to fully recover.

Foot traffic recovery compared to 2019 levels
 

At-home fitness is struggling

2020 could not have been better for at-home fitness, as our usual workouts at gyms and boutique fitness locations came to a halt. Add in some crippling anxiety and we became desperate for endorphins. People turned to Google to figure out how to buy at-home fitness equipment and we found a wide range of options from $1,495 Peloton bikes, to $2,495 Peloton treadmills, to $1,495 Mirrors, and extremely overpriced free weights (and of course $20 yoga mats). According to a Vox article from 2020, there was at one point a 600% markup on dumbbells. NPD Retail reported that health and fitness equipment revenue more than doubled to $2.3 billion from March to October in 2020. 

Home gym equipment Google searches in the U.S.
 

As a result of this spending, Peloton reported 2020 revenue numbers that were a 232% increase over the year prior. Peloton stock soared more than 400%. Tonal, the wall-mounted, strength-training technology reported a 700% year-over-year increase in sales. This immense growth would be difficult for any company to sustain under normal circumstances. So what happens when life resumes and places like Planet Fitness and Cyclebar see high traffic numbers?

Unfortunately for Peloton and other at-home fitness companies, this has meant a significant drop in sales. Peloton lost $439 million last quarter, has temporarily halted production of bikes and treadmills, laid off 2,800 people, and canceled plans for a new $400 million factory in Ohio. 18 months after Lululemon’s $500 million Mirror acquisition, Mirror sales made up less than 3% of Lululemon’s total 2021 revenue. 

Peloton did not lay off any of its “star” instructors, some of whom have amassed huge followings. That speaks to the success of its classes. Perhaps contrary to popular opinion, I do not believe that Peloton was a flash in the pan. I love going to fitness classes and being motivated by other human beings. But I also love the convenience of being able to workout at home when time is scarce. I believe that there is a successful future for both at-home and away-from-home fitness.

2021 e-commerce numbers are in

Last week the Census released the fourth quarter e-commerce numbers. Online spending has increased 9.4% from Q4 2020 while total retail sales increased 15.2% in the same period. Online sales increased 1.7% quarter-over-quarter. However, the percent of online sales to overall retail sales has dropped slightly and is now at 12.9%. 2022 will likely see continued e-commerce growth, but at a modest rate. 

e-commerce sales level off