New IBISWorld study shows fitness industry still challenged but poised to return to growth

June 9, 2023

Impacted by pandemic closures and a drop in real household discretionary income, the fitness club industry has contracted at an annualised 6.8% through to the end of 2022/23, according to a newly released report from market research business IBISWorld.

IBISWorld’s latest Gyms and Fitness Centres in Australia (Industry Report R9111), shows industry revenue will slip by an estimated 1.5% in 2022/23 alone to total an estimated $2.2 billion.

Advising that “the gyms and fitness centres industry has faced its biggest challenge during the COVID-19 pandemic” the report notes that “revenue was consistently expanding before the pandemic (as) rising health consciousness and obesity drove demand for fitness services … (with) the appeal of premium and functional training gyms aided industry profitability.”

Highlighting an “oversaturated” market for budget 24/7 gyms, the IBISWorld study also notes that wages are the industry's largest cost and that, with so many part-time and casual workers “gyms have a lot of leeway in controlling their labour costs”.

Return to Growth
On a more positive note the report does advise “revenue is poised to return to growth, albeit at a slower rate than pre-pandemic (with) continued growth in health consciousness and obesity rates (set to) buoy industry demand.”

However, it notes “the potential saturation of budget 24-hour gyms will shift demand for premium and functional training gyms and fitness centres”.

The report is also positive about boutique fitness brands, noting that they have “evolved from a niche product to a popular mainstream option.”

On pricing it advises “growing consumer interest in the community and experience over the price is contributing to a surge in boutique gym subscriptions.”

In summary, it predicts that industry “revenue is on track to rise by an annualised 1.6% through the end of 2027/28, to an estimated $2.4 billion.”

Rise in Health Consciousness
Gyms and Fitness Centres in Australia (Industry Report R9111) suggests that the ongoing rise of health consciousness among the Australian public is presenting an opportunity for revenue growth.

It suggests that this health consciousness (growing at an estimated 0.5% in 2022/23) means Australians are more likely to exercise.

However, this tempered by falling household discretionary income (shrinking by an estimated 7.1% in 2022/23) that is impacting spending on ‘non-essential’ products and services, like gyms and fitness centres.

The report also notes that rising numbers of overweight and obese people across Australia - which already experiencing an ongoing rise climbed even further during the pandemic - will see overweight and obese individuals motivated to attend gyms to lose weight and improve their health.

Employment
With Australia experiencing low unemployment, IBISWorld also stated that this is increasing labour costs and shortages for employers.

It adds “this low unemployment rate has supported real household disposable incomes and consumer sentiment during a period of economic uncertainty.”

Overall, it noted that 19,802 were employed in the industry, representing a -5.2% decline during the 2018 to 2023 period.

Click here for more information on Gyms and Fitness Centres in Australia (Industry Report R9111) on the IBISWorld website.

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