Fitness industry continues growth: Analyst report - SNEWS

Fitness industry continues growth: Analyst report

At least one analyst has, in a lengthy report titled "Fit for Growth," forecast continued growth in both the fitness equipment and health club industries. Writing for Ryan Beck & Co, analyst Mark Rupe called the industry large, strong and still growing.

At least one analyst has, in a lengthy report titled "Fit for Growth," forecast continued growth in both the fitness equipment and health club industries.

Writing for Ryan Beck & Co, analyst Mark Rupe, who initiated coverage in the fitness area for Ryan Beck when he moved there recently, called the industry large, strong and still growing.

"We believe the fitness industry is fit for continued growth due to several underlying factors, such as favorable demographics, rampant obesity, increased awareness and higher healthcare costs," Rupe wrote in a late June report.

Rupe noted that the fitness industry today is an industry overall worth more than $20 billion and is the fastest growing portion of the broader sports equipment and apparel market. He breaks out the retail equipment market as worth $5.9 billion and the health club segment with a value of $14.8 billion. In addition, he reports that in the last two decades, fitness equipment sales and club revenues have increased at annual rates of 6 percent and 7.5 percent, respectively. In terms of equipment, treadmills are noted as still leading the evolution in fitness equipment, increasing their share of the market to nearly 80 percent, up from 33 percent in 1980. (Of course, our annual SNEWS® Retailer Survey notes and detects a shift at the ground level that may eventually trickle up to those who keep these statistics. Click here for the full survey results from June 30, 2006.)

Reasons for the growth, often despite economic downturns, and expectations for continued growth are, one, that fitness is no longer discretionary, but rather nearly a mandatory part of life. In addition, Rupe pointed out the aging population, the upward trend in obesity, a growing awareness of the health benefits, and the rising cost of healthcare as other factors. Fitness is no longer discretionary because it's not just about looks, but about health and saving money.

Those outside the industry are also looking to tap into it or partner with providers of it. No longer is there a strong line between fitness and diet, nutrition or wellness, Rupe wrote, which has expanded opportunities for clubs and equipment manufacturers alike.

"Fitness clubs are offering nutrition and weight control counseling (e.g. Life Time Fitness), equipment manufacturers are marketing productivity/weight loss messages (e.g. Nautilus’ TreadClimber and Bowflex) and testing the sale of nutritional products (e.g. Life Fitness-branded private label products), and diet and nutrition companies are partnering with clubs, or in NutriSystem’s case, acquiring a club franchise (Slim & Tone)," he wrote. "Furthermore, personal care companies are partnering with health clubs (e.g. Avon and Curves), and hotel chains are partnering with fitness companies as well (i.e. Hilton with Bally Total Fitness and Westin with Reebok). In addition, we find it interesting that 24 Hour Fitness was integral in the development of NBC’s 'The Biggest Loser' reality television show, and is also offering 30-day passes to its clubs for purchasers of Konami’s popular 'Dance Dance Revolution' video game."

Rupe concluded that the future remains bright for fitness, with a continued convergence in the marketplace and the fitness industry. He also forecast in the report that consolidation will increase among both equipment manufacturers and retailers, with retail consolidation putting more pressure on vendors.


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