Foot traffic is back in (most) gymnasiums
Foot traffic to gyms has been on a rough road to recovery, but numbers are nearly back to pre-pandemic levels as this Omicron wave comes to an end. According to Placer.ai, as of the second week of February, foot traffic to gyms is just 3% below 2019 levels. another variant – it will soon exceed pre-pandemic levels.
But like many categories of retailers, the recovery is not the same for all price points. Value chains are performing better while mid-price chains are struggling to rebound. Planet Fitness, a value chain that offers memberships for around $10, topped foot traffic in 2019. Meanwhile, 24 Hour Fitness offers memberships for around $50 and has yet to fully recover.
Pedestrian traffic recovery from 2019 levels
Home fitness is in trouble
2020 couldn’t have been better for home fitness, as our usual workouts in gyms and fitness shops came to a halt. Add to that crippling anxiety and we became desperate for endorphins. People took to Google to find out how to buy home fitness equipment and we found a wide range of options ranging from Peloton bikes at $1,495, Peloton treadmills at $2,495, mirrors at $1,495 $ and extremely expensive free weights (and of course $20 yoga mat). According to a Vox article from 2020, there was at one point a 600% markup on dumbbells. NPD Retail reported that health and fitness equipment revenue more than doubled to $2.3 billion from March to October in 2020.
Home Gym Equipment US Google Searches
As a result of these expenses, Peloton announced revenue figures for 2020 that were a 232% increase over the previous year. Platoon stock soared over 400%. Tonal, the wall-mounted strength training technology, saw a 700% year-over-year sales increase. This immense growth would be difficult for a company to sustain under normal circumstances. So what happens when life picks up and places like Planet Fitness and Cyclebar experience high traffic?
Unfortunately for Peloton and other home fitness companies, this resulted in a significant drop in sales. Peloton lost $439 million last quarter, temporarily halted production of bicycles and treadmills, laid off 2,800 people and canceled plans for a new $400 million factory in Ohio. 18 months after Lululemon acquired Mirror for $500 million, Mirror sales accounted for less than 3% of Lululemon’s total revenue in 2021.
Peloton has not fired any of its “star” instructors, some of whom have amassed huge followings. This testifies to the success of his courses. Contrary perhaps to popular opinion, I don’t believe Peloton was a flash in the pan. I love taking fitness classes and being motivated by other human beings. But I also like the convenience of being able to train at home when time is limited. I believe there is a prosperous future for home and away fitness.
The 2021 e-commerce figures are here
Last week, the census released fourth quarter e-commerce numbers. Online spending increased by 9.4% compared to the fourth quarter of 2020, while total retail sales increased by 15.2% during the same period. Online sales increased 1.7% quarter over quarter. However, the percentage of online sales to overall retail sales has dropped slightly and now stands at 12.9%. 2022 will likely see continued growth in e-commerce, but at a modest pace.
e-commerce sales are stabilizing