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Retail industries to benefit from healthier lifestyles while gyms to experience revenue decline

May 27, 2015

With an estimated 64.5% of the Australian population currently overweight or obese, a range of industries are tipped to benefit from a greater focus on fitness and healthy lifestyles over the next five years.

Newly released research from IBISWorld predicts that online sporting apparel retailers, fitness and athletic clothing stores, personal trainers and domestic appliance retailers will all benefit from increases in the sport participation rate and the health consciousness index. IBISWorld expects that these industries will experience revenue growth of between 8.2% and a massive 63.3% over the next five years. 

By contrast, IBISWorld anticipates a less rosy outlook for the gyms and fitness centres industry, forecasting a revenue decline of 2.2% over the period mainly due to fierce price competition sapping revenue.

According to IBISWorld research, the sport participation rate is forecast to grow by 0.2 percentage points over the five years through 2019-20, to 65.7% of the Australian population.

The ‘health consciousness’ index, which represents Australians’ receptiveness to healthy lifestyles by measuring the consumption of alcohol, tobacco, fats and vegetables, and the level of exercise, is forecast to grow by 6.2% over the same period.

IBISWorld has identified social media use, by professional and amateur fitness models and personal trainers, as a contributing factor in encouraging consumers to engage in exercise and sport. Fitness-related industries will continue to take advantage of social media platforms such as Instagram and Facebook to market their products directly to consumers.

Introducing the research, IBISWorld Senior Industry Analyst, Lauren Magner explains “fashion trends and well-known social media personalities that focus on fitness are inspiring Australians, particularly young females, to purchase a range of products and services including personal training, online fitness guides and electronic devices and apps, and fashionable sportswear.”

Online sporting apparel
Online sporting apparel retailers are expected to benefit from the popularity of online shopping and the growing trend towards wearing activewear as streetwear, with revenue forecast to surge by 63.3% over the next five years. 

The diverse range of sportswear and athletic shoes available online and the ability to shop for these products via tablets and smartphones will further fuel demand for this industry.

Here Magner explains “consumers have become increasingly price conscious, but still want high-quality functional and fashionable sports clothing. 

“As online stores typically have lower overhead costs than their bricks-and-mortar counterparts, online sporting apparel retailers have been able to offer consumers more competitive prices.”

Fitness and athletic clothing stores
Despite losing market share to online retailers, fitness and athletic clothing stores are still expected to post significant growth over the five years through 2019/20, with revenue forecast to rise by 21.2%. 

Demand for premium, high-quality sportswear that is fashionable yet functional is expected to rise. In response, clothing retailers will introduce more performance-based products that promote benefits such a moisture wicking, breathability, comfort, fit and flexibility. Furthermore, the growing popularity of fitness classes such as yoga and Pilates has led to strong demand for sports clothing that caters specifically to these activities.

Commenting on the ever increasing popularity of active wear, Magner states “sportswear is no longer confined to the gym or sporting field (as) consumers are becoming increasingly comfortable wearing gym clothing and footwear outside of exercising.

“This has driven strong demand for fashionable activewear that doubles as casual or streetwear.” 

Lorna Jane and Lululemon Athletica have been particularly successful in targeting a young female market with their high-quality, on-trend sporting apparel.

Personal trainers 
Rising levels of health consciousness in Australia and a growing interest in fitness regimes has supported demand for personal training services. Revenue generated by personal trainers is forecast to expand by 10.9% over the next five years. Despite fierce competition from other fitness operators, such as 24-hour gyms, the appeal of personal trainers lies in their ability to tailor fitness programs. 

Explaining this demand, Magner states "increasing obesity levels are fuelling demand for personal training because overweight consumers often prefer the specialised, results-oriented nature of these services over gym memberships.

“Many personal trainers have amassed huge followings on social media platforms such as Instagram. 

“This has provided many younger consumers with an incentive to pay beyond the price of a regular gym membership in the hopes of achieving a similar look and fitness level.”

Domestic appliance retailing
Magner sees that “as technology becomes a more integral part of everyday life, consumers are increasingly turning to smartphone apps, smart watches and other consumer electronic goods designed to monitor physical activity and ultimately improve fitness.”

Sales of activity tracking devices – such as Fitbit, which is worn on the wrist – are aiding other areas of the economy. The use of such devices to improve health and fitness is expected to support domestic appliance retailers that stock consumer electronics, such as JB Hi-Fi and Harvey Norman. While these devices only make up a small proportion of sales at these stores, they illustrate the broad spectrum of retailers and service providers that are benefiting from increased spending on fitness.

Gyms and fitness centres
Revenue generated by gyms and fitness centres is forecast to decline by 2.2% over the next five years. However, this drop indicates growing price competition within the industry rather than a lack of new gym memberships.

Magner concludes “the explosion of 24-hour gyms over the past five years has made it more affordable for new members to join, with more flexible contract options.

“The rapid growth of such gyms is expected to slow down over the next five years as the sector reaches market saturation. This will prompt full-service gyms to improve their services and lower their prices, and encourage more people to exercise regularly.”

IBISWorld reports used to develop this release:

OD5521 Online Sporting Apparel
OD5181 Fitness and Athletic Clothing Stores
OD4195 Personal Trainers
G4221a Domestic Appliance Retailing
R9111 Gyms and Fitness Centres

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