Survival of the fittest
It’s an industry created to make people fitter, healthier and stronger, but coronavirus has brought the fitness industry to its knees. Will gyms be another Covid-casualty, asks Jim Kayes.
Iconic fitness institution Les Mills may not recover from the coronavirus.
“I am deeply worried about the current situation,” says Les Mills head of club operations Brett Sutton. “And that’s not just for us, but for the whole industry.”
Sutton says Les Mills has had “no revenue” since memberships at their 12 gyms were paused once the lockdown came into effect.
However, the company has $2.3 million from the government’s wage subsidy and has since emailed all 60,000 members asking them to start paying their fees again.
The first Les Mills gym was opened in 1968 by the athlete who threw shot put and discus at four Olympics and three Commonwealth Games, winning one gold, three silver and a bronze medal at the latter.
It’s now a giant in the fitness industry both in New Zealand and around the world, with its programs in 110 countries, through 21,000 gyms and taught by 130,000 instructors.
They are the Arnold Schwarzenegger of the gym industry, a $220 million a year business, but Covid-19 has Les Mills and the rest of the industry on its knees.
“I am worried for the industry,” says Les Mills International executive director Phillip Mills (son of Les Mills). “We will have gyms that go under, that don’t open again. We will see some permanent losses to the industry.
“If we lose a third of our gyms it will have a significant effect on the health of a generation.”
Mills expects about 70 percent of Les Mills customers to return when the alert levels allow, but says it is the final 10-20 percent of members who provide the profits.
“That’s going to be tough,” he says, adding that most gyms would have a “cash runway” of only about two months. Mills points to the UK where it was predicted 2800 gyms would be gone by June with the loss of 100,000 jobs.
The same, he warns, could happen in New Zealand.
At stake is a $500 million industry that employs up 15,000 Kiwis and sees, on any given day, about half a million people walk through the doors of an official gym.
A further 700,000 attend exercise classes such as yoga or boot camps in parks. “That’s 1.2 million New Zealand adults who go to some kind of a gym, so it’s very important to our country,” Mills says.
The problem for gyms is obvious: inside the facility people row, run, cycle, lift weights, box, gyrate and work out next to each other, sweat flowing – and flying.
In a post-Covid world that has to change, but at what cost?
Gyms can open at level two but social distancing will be paramount. That means class sizes will reduce significantly to allow for more space. It means every second treadmill, bike and rowing machine could be turned off if they can’t be pushed further apart.
It means cleaning will ramp up, with more sprays and hand sanitiser available. Les Mills is looking at whether screens will help and is investigating putting air purifiers in their gyms. All in an effort to get people comfortable to return. But will it work? No one knows.
Will the price of a membership have to go up to cover the extra costs of these new look gyms. And if numbers fall, will that price have to rise again?
“That’s a really good question,” Sutton says after a pause so long I thought the call had disconnected. Membership fees won’t increase in the short to medium term, he eventually suggests, but adds they “potentially” will in the longer term.
“Initially we will be getting people comfortable returning to the gym,” he says. If costs rise and memberships fall, he concedes, something will have to give.
“You can’t help but fear for the livelihood of not only our business but everyone in the fitness industry. We’ve been around 52 years and we’re a pillar of the industry. It does feel unthinkable that some brands won’t survive this and, heaven forbid we are one of those, but we are doing everything we can to come out the other side.”
Les Mills is one of the Big Five of the fitness industry, with six gyms in Auckland, three in Wellington and one each in Hamilton, Christchurch and Dunedin. Along with City Fitness, Snap Fitness, Jetts Fitness and Anytime Fitness they have about a third of all gym goers on their books.
The other two thirds range in size, with some, like Marja Captijn’s Gym Nation in Tapanui, west Otago, catering to about 35 clients, some of whom come once a week.
The gym was set up by her husband, Fons Captijn, in 2015. He’s the small town’s GP and realised it was impossible to prescribe fitness therapies to his patients if there was no gym for them to work out in. Marja, a nurse, retrained as a physical trainer and has since taken over the business.
For member Jocelyn Chittock, going to the gym is as much about the workout Captijn has given her, as it is a bit of socialising. “It’s not a lycra gym,” the 74-year-old farmer who has lived in the district all her life says.
“It’s a wonderful, friendly gym and we are lucky to have it in such a small community.”
And it is expected to survive.
“We will have to put in our savings to make it work but we are determined to do that,” Marja Captijn says. “The good thing is that we own all the equipment and we don’t have a big facility so we only have the rates, rent and electricity to cover.
“Those costs are something we will carry because it’s important to keep something like this for the community.”
The Captijns’ gym is one of about 800 fitness centres scattered around New Zealand that are sweating on what a return to level two might mean for the industry. About three quarters of those gyms are members of Exercise NZ whose CEO Richard Beaddie shares Les Mills’ concerns about the shape of the industry post-Covid.
“I’m being intentionally pessimistic but I think 10-20 percent of gyms may not open again.”
In areas where other industries have had big layoffs, that figure could be even higher. And in a twist on the idea that big is better, it could be the smaller outfits, with lower overheads and fixed costs, that survive.
Beaddie says the industry’s long term health is too hard to predict, especially as Kiwis have embraced a return to simpler, outdoor exercise during the lockdown.
Home exercise equipment was also in huge demand before the lockdown and online workouts have been in huge demand. That’s been one positive for Les Mills whose on demand service is now free to 20,000 members for two months.
Their daily class on TVNZ has reached about 1.2 million viewers with another 210,000 streaming it through TVNZ On Demand.
But there is no money coming in since memberships were put on hold on the eve of the lockdown.
With 450 full-time employees and another 1500 contractors, if that money doesn’t start flowing soon, redundancies will be made. “It’s a heck of a lot of money that’s been turned off,” Sutton says, declining to be more specific.
“Since the lockdown we have managed to keep everyone on board and topped up salaries with the government wages subsidy, but the longer it goes on, the tighter it will be.”
Gary Szabo’s Boot It Taranaki in New Plymouth has grown from an exercise in the park business six years ago to one that has had a permanent indoor facility for the past two years.
He has about 60 clients, all but two of whom have agreed to keep paying their membership. That’s meant he has been able to keep paying his two staff.
He thinks the social aspect of training will lure many back to gyms – but not all, as online workouts during the lockdown will have convinced some it is easier and safer to stay home.
It’s a common refrain but Beaddie thinks people will yearn for a return to normality. “Whether that is going back to the gym or having a coffee at your local cafe or popping around to someone’s house for dinner, as much as possible people will want to return to that.
“I don’t think there will be massive changes [to the fitness industry] but there will be changes, we just don’t know what yet.
“The creative gyms will survive. The good ones will focus on what they can do, not what they can’t do.”
And they will hope it doesn’t take too long for people to feel comfortable with each other’s sweat again.
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