It’s fair to say that I am a fitness fanatic and a gym junkie, and through my constant involvement in a variety of gyms and martial arts establishments over the past 20-years, I have witnessed first hand the change in the landscape.
The thing that has struck me most about the gym market is that, unlike the broader economy, it has been racked by deflation.
For example, when I joined a gym named Deakin Health Spa in Canberra in 2003 (which became Fitness First in late-2005), my membership fees were $20 a week.
When I joined Recreation Carnegie in Melbourne in 2012, my membership fees were $18.50 a week.
And currently I have an all clubs membership at Goodlife, where I am paying just $17.50 a week.
I know this is just my experience, but it does suggest that the cost of a typical big box gym membership has fallen in nominal terms over the past 15 years, and has obviously fallen much further in real inflation-adjusted terms.
I also know a variety of individual clubs that have dropped their membership prices significantly over recent years.
At the other end of the spectrum, a huge number of small, expensive functional circuit style franchises has proliferated, such as CrossFit, F45, 12 Round Fitness, etc, which offer smaller group training at boutique prices.
With this in mind, it is interesting to read a report today from ABC News claiming that the gym market has hit saturation point:
The Australian fitness industry is now worth $2.4 billion, according to IbisWorld.
Most of this comes from gyms and fitness centres, with a small remainder split by independent personal trainers working outside a fitness space.
Fitness Australia chief executive Bill Moore said the industry has been lifted by the invigorated interest in personal wellbeing in the last decade.
“There’s never been as many health clubs as there are now,” he said.
“The accessibility, the availability is nothing like it has ever been before.”
One of the most significant shake-ups has been the introduction of budget 24/7 gyms — intermittently staffed centres that represent the “high volume, low cost” side of the market.
IbisWorld market researcher Bao Vuong said the business model helped expand the size of the industry over the last five years, but the gains may be coming to an end.
“As the market becomes more saturated, this is anticipated to slow industry revenue growth,” he said…
Competing on price — and the associated cost squeeze — has left plenty of challenges for the rest of the industry…
I can’t say that I am surprised by this. That said, one thing that has probably saved the industry from consolidating already is the population Ponzi. Adding 400,000 people to Australia’s population every year at least ensures that demand is ever-expanding.
Still, it’s hard to believe that the escalation of gyms amid falling membership prices (at least at big box gyms) can persist. The industry will have to consolidate at some point.
Perhaps a slowdown in consumer spending from falling house prices in Sydney and Melbourne will be the catalyst?
