European Health & Fitness: “100 Million Members by 2030”?
For the EuropeActive book “Horizon 2030, The future of the health and fitness sector”*, I wrote the closing chapter “Growth scenarios towards 2030”. The book was finished in February 2020,i.e. before the Corona crisis hit us all by surprise. For this article I have conducted a critical review of this chapter against what we know today, summarized and adapted the text and added some notes in relation to the C19 impact on our industry. It is obvious that 2020 will be a stagnant and disrupting year in many respects, but I believe that our overall long term growth perspectives ( 100 million members by 2030) should remain unchanged. The short term is more difficult and uncertain to predict in the current international economic/social/political climate and the “80 million members by 2025” is perhaps in danger… Read this article and let me know if you disagree 😊
Looking back; Major innovations and developments the past decade
The last decade was full of important developments, many based on the exponential growth in acceptance of digitization and artificial intelligence. Here is what I see as the 7 major events of the last decade;
* Club concepts; growth in low cost, convenience clubs and boutiques. (C19 has accelerated home fitness and the need for hybrid models- brands offering both online and offline services)
* Programming; personal training, small group training and the emergence of virtual and online fitness (C19 crisis has stimulated new forms of exercise and in particular outdoor options)
* Technology; increased importance of social media in marketing & improved IT systems; arrival of platform companies / intermediaries / aggregators. (The C19 crisis and resulting lockdowns and work from home trends have catapulted the online/digital developments also in fitness!)
* Financing; IPO’s, increased importance of private equity and smart franchising concepts. (C19 has reinforced the need for a strong balance sheet with good cash position)
* Public Policy; Health & Fitness accepted and embraced by many governments and the EU as a factor for good in combatting physical inactivity. (The C19 crisis has further strengthened the fact that fit people have a more resistant immune system.)
* Operations; Improved attention to quality of staff, education and certification (C19 has a big impact on health and safety protocols)
* Consolidation; Big operators growing their market share, many mergers and acquisitions. (C19 will accelerate this trend as some operators may not survive the C19 crisis – e.g. ; Golds Gym, DW Sports, Exerxise4Less, 24HourFitness, etc.)
If we zoom in on the last 5 years, here are some of the key operator events;
2015; 1Rebel opens first club and starts Boutique trend in London (UK) The Gym Group goes IPO in the London Stock Exchange (UK)
2016; Basic-Fit goes IPO on the Amsterdam Stock Exchange (NL) Nuffield health acquires 35 Virgin Active facilities (UK)
2017; Virgin Active sells 14 clubs in the UK to David Lloyd leisure and all 12 clubs in Portugal and Spain to Holmes Place (ES/PT)
2018; McFit announces development of the world’s largest fitness experience center in Oberhausen; The Mirai (DE)
2019; SATS lists on the Oslo stock market (NO)
2020; Pure Gym acquires Fitness World, creating 2nd largest European chain (UK/DK) RSG acquires Gold’s Gym International (DE/USA)
Top 10 operating brands; what has changed in a decade ( 2019 versus 2009)
How much change the market has gone through is clearly demonstrated by comparing the top-10 operators in 2019 with those 10 years earlier. It is a totally different table; 5 brands disappeared altogether from the top 10 ranking (Kieser Training, Moving, Holmes Place, Fitness Dk and Virgin Active) and 8 are entirely new to the list. Many companies who are in the top 10 in 2019 were founded within the decade. The #1 brand in 2019 has more than double the number of members compared to the #1 brand in 2009 and in that year, not one brand had more than 1 million members and a decade later the top-2 companies have more than 2 million and #3 has more than 1 million members ! The past decade also saw 6 European IPO’s (The Gym Group, Basic-Fit, Technogym, Actic, Benefit Systems and SATS) and dozens mergers and acquisitions. The financial world has the fitness sector quite clearly on their radar and I do not see this to change in the future. If we then try to project from now ten years out, how different will the top 10 look in 2030? It is anybody’s guess but rest assured there will be many changes again!
Looking ahead; What could the market size be in 2030
In order to project the future we need to learn from the past. So let us have a look at the market evolution in the period 2009- 2019, the decade for which we have good market data. The number of members was 39 million in 2009 and grew to 64,8 million in 2019, a growth of 66 % or an average of almost 7% per year. If we look at the last 5 years; 2014 to 2019, the annual average membership growth was a little lower at 5,5%.
So, if we include a dampening effect of Covid-19 and assume that the European region growth in 2020 will be zero and between 2021 and 2030 will be on average 4% per annum (1,5% average per year lower than the last 5 years) we arrive at 99,6 million, say 100 million members, which would be a nice stake in the ground as a target for the sector.
With this development, fitness will continue to be more “mainstream” and a lifestyle activity and no longer a “niche” activity for a few fanatics. Why do I believe that this goal of “100 million members by 2030” is still a realistic objective? (disclaimer; based on today’s information, without dramatic new developments in the “C19-Crisis”)
Here are 10 reasons;
1. Fitness penetration overall in the European region is still low and has ample room for growth; The overall penetration of fitness membership as a % of total population in the European region (EU plus UK, Norway, Switzerland, Russia, Turkey and Ukraine or a total of 796 million in 2019) is only 8,1% in 2019 ( EuropeActive/Deloitte Market Report EHFMR 2020 ). With a predicted growth to 100 million and a projected total population of 836 million in 2030, this represents 12%; still relatively low compared to the fitness penetration in the Nordics and the USA of around 22% .
2. Countries with larger populations (France, Spain, Italy, Russia, Turkey) and relatively low penetration rates will be in for a catch-up in market penetration, thus adding larger numbers to the total.
3. Positioning of fitness as part of “Health” and increased cooperation with health insurance companies/ medical community, promoting/subsidizing health club membership, will stimulate extra growth (“exercise is medicine”; C19 effect of improved immune system through fitness).
4. Government promotions for prevention and stimulating physical activity will push the market.
5. It is expected that the sector will develop new concepts and programming that will attract new and different target groups ( e.g. seniors)
6. Rising middleclass and average spendable income combined with lower priced offerings from the sector will make fitness more affordable for the masses.
7. Increase in the number of locations in rural areas will bring fitness closer to everybody’s home or workplace.
8. Corporate wellness programs – partly through intermediaries / platforms – will stimulate growth.
9. Improved customer service and better customer experience will be good for retention of existing members and attracting new ones.
10. Intensified investment in qualified staff and certification will improve service to the customers.