Health and Fitness Clubs - US - June 2009

SCOPE AND THEMES
What you need to know
Definition
Data sources
Sales data
Consumer survey data
Advertising creative
Abbreviations and terms
Abbreviations
Terms
EXECUTIVE SUMMARY
Industry sees membership growth and revenue stabilization
Memberships hold steady in 2009 but likely to decline as contracts expire
Performance of leading national chains is mixed
Smaller footprint clubs and home fitness games gain momentum
Health clubs borrow ideas from art and entertainment
Innovations follow larger societal trends
Ad campaigns push low price points and appeal to the everyday consumer
Core demographic of 18-35 year olds pays the most and is hardest to please
Financial constraints are greatest barrier to new membership and renewal
Perception of health clubs show signs of improvement
INSIGHTS AND OPPORTUNITIES
Health clubs need to demonstrate added value during recession
Health club experience should follow social internet trends
Health clubs to become fitness destinations with diversified revenue streams
INSPIRE INSIGHTS
 TREND: A SIMPLE BALANCE FOR HEALTH
What it’s about
The learning curve
Taking it to the streets
 TREND: STAYING CONNECTED
What it’s about
I belong
Keep it simple, not stupid
MARKET SIZE AND FORECAST
Key points
Health club revenues hold ground despite slowing economy
Figure 1: Health and fitness clubs’ total revenues, at current prices, 2003-13
Figure 2: Health and fitness clubs’ total revenues, at inflation-adjusted prices, 2003-13
Membership begins to catch up to physical club expansion
Figure 3: U.S. health and fitness club membership and number of locations, 2003-08
COMPETITIVE CONTEXT
Clubs with smaller footprint growing faster
Participation in “free” sports increases
Prolonged recession favors lower-cost clubs over mid-priced
New home fitness video game targets women
Gaming for seniors
SEGMENT PERFORMANCE
Key point
Non-profit segment sees biggest gain in membership
Figure 4: Memberships in health and fitness clubs, by segment, 2006 and 2007
MARKET DRIVERS
Membership holds steady for now
Figure 5: Health club membership status, 2008 & 2009
Saturation of health club leads to highly competitive pricing
Figure 6: Number of health clubs and revenue per member, 2002-06
Initiation fees and personal training suffer most
Town Sports International
Figure 7: Revenue stream growth at town sports international, Q1 2008 & Q1 2009
Life Time Fitness
Figure 8: Revenue stream growth at Life Time Fitness, Q1 2008 & Q1 2009
LEADING COMPANIES
Key points
Leading health club chains post mixed performance
Figure 9: Sales of leading health and fitness club chains, 2006 and 2008
24 Hour Fitness targets the family value market
Two top chains enter bankruptcy
Life Time Fitness and TSI show increase membership but curb expansion plans
BRAND QUALITIES
UFC launches gym brand
INNOVATION AND INNOVATORS
Group classes: Crunch spreads wings with anti-gravity yoga
Social networking: Health clubs to tweet to broader audience
Going green
Chelsea Piers announces dedication to green goals
University recreational facilities finding innovative ways to be environmentally conscious
Computerized training: Koko FitClub provides personalized fitness dashboard
ADVERTISING AND PROMOTION
Major ad campaigns cut back on media spend
Figure 10: Media expenditures for major health and fitness club campaigns, 2006-07
Gyms continue to compete on price points in a difficult economy
Figure 11: Bally Total Fitness: Free Enrollment, April 2009
Figure 12: Planet Fitness: One Dollar Promotion, April 2009
Gyms seek to inspire the ordinary consumer
Figure 13: 24 Hour Fitness: Ali Vincent Testimonial, January 2009
Figure 14: Gold’s Gym: Rowing Off Calories, March 2009
Female-focused concepts push strength and confidence
Figure 15: Women’s Workout World, January 2009
Local advertising offers new approaches
Figure 16: American Family Fitness Centers: Son Has Cancer, January 2009
Figure 17: OZ Fitness: Free Groceries, March 2009
HEALTH CLUB USAGE TRENDS
Key points
Private club penetration increases among under-45s
Figure 18: Incidence of exercise and private health club usage, by age, May 2006-September 2008
Membership holds steady from a year ago but new memberships slowing
Figure 19: Health club membership status, 2008 & 2009
Respondents 18-34 remain the core demographic but are more difficult to retain
Figure 20: Health club membership status, by age, March 2009
Household income remains the largest determining factor of membership
Figure 21: Health club membership status, by HH income, March 2009
MEMBERSHIP TYPES
Key points
Month-to-month memberships decline as recession favors long-term contracts
Figure 22: Type and cost of health club memberships, by year, 2008 and 2009
Females pay less on average and may favor smaller gyms
Figure 23: Type and cost of health club memberships, by gender, March 2009
Younger respondents spend more on membership and are more likely targets for high-end
Figure 24: Type and cost of health club memberships, by age, March 2009
Middle-income group seeks value in long-term contracts
Figure 25: Type and cost of health club memberships, by HH income, March 2009
REASONS NOT TO JOIN A HEALTH CLUB
Key points
Cost remains primary barrier to membership
Figure 26: Reasons for not belonging to a gym, 2008-09
Females may feel more welcome but increasingly look for free alternatives
Figure 27: Reasons for not belonging to a gym, by gender, March 2009
Perception of health club value improved among over-35s
Figure 28: Reasons for not belonging to a gym, by age, March 2009
Gyms commonly perceived as too expensive even among higher-earners
Figure 29: Reasons for not belonging to a gym, by HH income, March 2009
MEMBERSHIP RENEWAL
Key points
Large majority of current members would renew
Figure 30: Probability of renewal, by gender, March 2009
Over-55s are more likely to renew
Figure 31: Probability of renewal, by age, March 2009
Lower earners show lowest likelihood of renewing
Figure 32: Probability of renewal, by HH income, March 2009
Most common reasons for not renewing are financially driven
Figure 33: Reasons not to renew, March 2009
Price discounts are most likely way to increase renewal rates
Figure 34: Reasons not to renew, March 2009
ATTITUDES
Key points
Perception of health clubs improves but turnover rate is unchanged
Figure 35: Attitudes towards health and fitness clubs, March 2009
Female demographic is more price sensitive and feels more time pressure
Figure 36: Attitudes towards health and fitness clubs, by gender, March 2009
Social environment is more important for over-55s, while under-35s are harder to please
Figure 37: Attitudes toward health and fitness clubs, by age, March 2009
CLUSTER ANALYSIS
Big Spenders
Who they are
Opportunity
Fitness Firsts
Who they are
Opportunity
Lifers
Who they are
Opportunity
Cluster characteristics
Figure 38: Health club member clusters, March 2009
Figure 39: Health club membership, by health club member clusters, March 2009
Figure 40: Type and cost of health club memberships, by health club member clusters, March 2009
Figure 41: Attitudes toward health and fitness clubs, by health club member clusters, March 2009
Figure 42: Probability of renewal, by health-club member clusters, March 2009
Cluster demographics
Figure 43: Health club member clusters, by gender, March 2009
Figure 44: Health-club member clusters, by age group, March 2009
Figure 45: Health club member clusters, by HH income, March 2009
Figure 46: Health club member clusters, by race/Hispanic origin, March 2009
Methodology
CUSTOM CONSUMER GROUPS
Key points
Private club penetration
Figure 47: Incidence of exercise and private health club usage, by gender and age, July 2007-September 2008
Figure 48: Incidence of exercise and private health club usage, by marital status and children in the household, July 2007-September 2008
Reasons not to join
Figure 49: Reasons not to join a gym, by gender and children in the household, March 2009
Figure 50: Reasons not to join a gym, by marital status and children in the household, March 2009
APPENDIX: OTHER USEFUL CONSUMER TABLES
Probability of renewal
Figure 51: Probability of renewal, by gender, March 2009
Attitudes toward health and fitness clubs
Figure 52: Attitudes towards health and fitness clubs, by HH income, March 2009
APPENDIX: TRADE ASSOCIATIONS