Continuous growth?

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The fitness industry in the US grew by 2.3% last year, that's 2.2% points ahead of the growth in disposable income, in a year of a stagnant economy, serious financial concerns for a lot of householders and general depression.
So how did it happen? And is it sustainable?
There are some stunning statistics in the fitness industry...

• Unlike in "saturated" markets like supermarkets and mobile phones, global westernised countries have penetration rates of gym membership of between 4% and 18%.
• Many "mature" markets show continuous growth over the last 10 years, regardless of the state of the economy. The UK market grew at a CAGR of c. 3% over this time.
• New clubs spring up all the time...in good economic times they may be weighted towards the luxury end of the market while in recession they tend towards the budget end. But open they do.
• On average, something like 50% of members quit their gym every year. While some join a different gym, at least half don't and are lost to the industry, at least temporarily.
• Margins can be very high. In a successful club, net profit margins can be in excess of 50% of Revenue. Essentially, there are no variable costs for additional members (except for modest sign up bonuses and sales commissions) making Gross Margins close to 100%.

And all this against a backdrop of increasing obesity rates. Broadly, two thirds of adults are overweight or obese in both the US and the UK, and not far behind in many other nations.

While it's hard to fully analyse this trend I do have some observations:

• People are becoming more health conscious. While this appears contradictory to the increasing obesity rates, I think the majority of the "right weight" one third are very conscious about staying there, and an increasing number of the overweight are becoming conscious it's a problem and need to do something, spurred on in part by TV programmes like "The Biggest Loser".
• People are becoming more urbanised. Even in our western nations where urbanisation has slowed, there is still a growth in the proportion of people living in cities. Cities that can be uncomfortable or even dangerous in which to exercise outside.
• People are becoming more "time-poor". The gym is a good solution to this problem, for example, being able to squeeze in a spinning session at lunchtime can feel a whole lot more achievable than a full blown bike ride after work.
• People are getting fed up with not achieving results. While a symptom of the gym industry, that lots of members do not achieve their goals, there are benefits of gym training. In particular the regularity of a group exercise session that becomes a fixture in the diary, or the expertise and motivation that a personal trainer provides, are often provided in the confines of the gym.
• People get best results with exactly the type of training provided in a gym. Whether you are into strength training and need the flexible dumbbells and barbells, or into CrossFit that can only practically be done in a CrossFit box, the results focussed latest training schemes require a gym membership.

So what could halt this growth phenomenon in the fitness industry?

• While health-consciousness is growing, so is the knowledge that the role of nutrition in weight issues is overwhelming and that exercise is a very distant second place.
• At some point, the technologically possible and promised flexibility to live anywhere and work remotely may actually lead to a reversal of the urbanisation trend. Going for a walk or run or cycle ride in the countryside will become a much more acceptable and achievable mode of exercise.
• I personally can't see an end to the time poor phenomenon, even though I believe it is more of a mindset than a reality. What I mean is that people place a massive value on "being busy" and feel undervalued if they are not. This fundamental psychological effect is unlikely to change. People will continue to look with suspicion on people who can plan enough time for an hour's hike during the workday. I could be proved wrong of course...
• As knowledge grows about the types of exercise that are most effective, there will still be a demand for a gym albeit a different type of one. During a slow work period recently, I had more time to exercise. I still "needed" the gym, but only for the assisted pull-up machine, and because my gym had a swimming pool. If my membership had not been complimentary, I may well have decided that I didn't need it so much after all.
• Strength training and Metabolic Conditioning work best. More people will get to know this and therefore demand for this type of training will increase. Body weight can be an effective option outside the gym, and a CrossFit WOD can usually be performed at home...whether they will be in the future is questionable. Decades of DVDs and TV fitness programmes, home gyms etc have not dented the gym industry growth...yet.

What I do think is that as people learn more about the over-riding role of nutrition, they will stop kidding themselves that they can eat what they want and "work it off" in the gym. As their eating habits move towards a more healthy diet of more unprocessed, real food, and away from processed, sugar-laden fodder, they may also lose the obsession with working out as a penance. As their bodies respond to proper eating, they may end up doing "natural", unprocessed exercise (like simple walking) instead of processed group sweat sessions. If the social part is also cracked (eg walking with one's family) then another major need for the gym disappears.

So, contradictory as it may seem, health education may end up being the one single factor that stunts the growth of the fitness industry as we know it.