Is your fitness business ready to survive the COVID-19 recession?
The fitness industry has been in uncharted waters during the coronavirus outbreak. Nobody was really expecting it and prepared for, so we decided it was a crucial moment to bring together some resources and try to provide as much information and guidance as possible during this time. During the second-wave, it is more important than ever that you have a strong business model in place to help you fight off the impending global recession.
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The rise of digital fitness
Online and self-coaching have been increasing in popularity since the end of the 2008 recession. This was largely enabled by the expansion of fitness technologies. If someone was seasoned in fitness, they could monitor their progress with wearable devices and even Apps that come preinstalled on their smartphones.
If they were less of tech-geek, they could combine these technologies with an online coach, which often presents a much cheaper and more convenient option, compared with the traditional coaching model.
Then COVID-19 came in March 2020, and not only was it cheap, convenient and nice-to-have but it was also a requirement for anyone looking to continue their fitness journey with professional guidance. In one week unemployment hit record highs across Europe and the United States, all while the entire country was under self-quarantine instructions.
During the same time, fitness app downloads hit record highs. While this posed a threat to every studio, gym and personal trainer, it didn’t come as a surprise to anyone paying attention since already before the coronavirus outbreak, the fitness app market was estimated to grow at a CAGR of almost 12% during 2020-2024, according to Technavio “Global Fitness App Market” report.
How do you determine market demand?
While some may have predicted a drop in consumers focus on fitness, others recognize fitness to be core to human desire. Some people, for obvious reasons, see their health and fitness to be unnegotiable.
An absolute must, regardless of economic or living conditions. This can be observed through almost every recession on record. People don’t stop exercising; they just find cheaper ways to do it.
From a business perspective, this is described as inelastic demand. Market demand is composed of just two elements; a Desire to purchase a good or service, and an Ability to purchase the same good or service. During economic highs, Desire – which is almost always constant when discussing fitness – is equal to Ability.
Consumers want to be fit and they have the means to pay for services that will support them in that desire. The rise of boutique studios throughout the 2010s is a clear example of this; people wanted highly engaging fitness experiences and were willing to pay a premium for it.
While on downturns…
The same cannot be said during economic downturns. During bear markets and full recessions, a gap forms between consumers’ Desire and Ability to purchase fitness offerings. They still want highly engaging fitness experiences, but they can no longer afford to pay a premium for it.
Instead, they must take what they can get at a price that they can afford. This gap marks the death of many businesses.
Demand drops sharply, and even customers they might’ve had great relationships with during the high times will have to walk away as times grow tougher.
But this isn’t true for all businesses. Some businesses not only survive during times like this but manage to thrive – coming out of recessions stronger than when they entered.
In fact, during the 2008 recession, big businesses grew 180% while small-to-medium businesses filed for bankruptcy at a rate of 220% higher than the non-recession average. Why is this? In one word: Adaptability.
Why hasn’t your gym marketing strategy gone digital yet?
Big businesses are often more adaptable in bridging the gap between Desire to purchase and Ability to purchase. Traditionally this has been because of economies of scale.
Big businesses have been able to afford to lower their prices to meet the needs of consumers because of their size. Fortunately for smaller businesses today, technology is democratizing adaptability in the competitive and downtrodden market, allowing you to fight back harder than before.
We teamed up to outline how you can use technology to bridge the consumer’s gap between Desire and Ability to purchase your service. We’re going to look at the theoretical and the practical components of that bridge with lots of tips and inputs to help you understand what needs to be done to not just survive a recession, but grow your business with happy and engaged clients.
Our goal is to make this as simple as possible, but we understand that pivoting your business is not a simple process. We know that it’s a scary one, and we’re not discussing the only way. Our goal is not to encourage you to switch everything to this approach immediately and with no questions asked. A much better approach is to combine what you learn in the upcoming sections with what you’re already doing.
By building an online wing to your business you can better insulate yourself from changes in the industry, diversify your revenue streams, and remain competitive in the era of technology.
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