With the Gym Group and DLL focused on finding new sites, it seems there is optimism in the sector’s ability to bounce back following what has been a very challenging year.
Seeking to take advantage of lower retail park rents following the closures of several shops, in particular larger departments stores such as Debenhams and Topshop, many gym chains appear to have ambitious expansion plans despite recent losses.
The Gym Group have seen memberships increase by one third since February 2021 and DLL claim to have hit pre-pandemic memberships levels again back in July 2021. Clearly there is an appetite for getting back into real life gym environments, with enthusiasm for home exercise apparently waning.
Peloton reported lower than expected sales and have decreased the price of their less expensive Bike by around 20%. The recent treadmill incident resulting in the tragic death of a young child has also highlighted the potential dangers of home equipment and resulted in additional recall costs for the company.
With schools returning after the summer break and many workers adopting more flexible working practices, the choice of location for new gym ventures will be an interesting one as many city centre locations see reduced footfall and people spend a greater proportion of their working week at home. Gyms will need to review their premises and peak periods to align to new working routines and exercise habits.
With wellbeing at the forefront of everyone’s mind post COVID, there is great opportunity for the bounce back of gyms although they will need to keep a close on their financial modelling, especially with the additional cost of post Covid protocols. For those with cash or the support of investors the availability of retail space may present a real opportunity for expansion provided membership levels remain buoyant. As always, careful cashflow management and real time financial information will be crucial in guiding management to make informed and timely decisions in what remains a somewhat uncertain landscape.