Herman Rutgers. The current and future Landscape of Fitness

Transcription

1 Herman Rutgers The current and future Landscape of Fitness

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4 Key Developments in the Health & Fitness Market; The Good, the Bad and the Ugly. Facts, figures, observations & thoughts Herman Rutgers FIBO African Summit 2018

5 Roadmap Fitness market Personal Training Pricing Trends Boutiques Q&A

6 Meet Joe 2016 Deloitte

7 7 Lessons from Joe Ask questions; what does the customer want Adjust your service-offering on that ( music, airco ) Ensure a Wow -effect ( newspapers, drinks ) Manage expectations ( traffic ) People make the difference ( same car hardware / different software )

8 World Health & Fitness Market 2017 Revenues; $ 87,2 Billion (+ 5 %) Members; 174 Million (+ 7 %) Clubs (+ 0 %) Fitness is the #1 sport worldwide IHRSA Global Report 2018 May

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10 Top 10 Global Markets (revenue, 2017) 1. USA 30,0 $BN 2. Germany 5,6 3. UK 5,5 4. China 3,9 5. Japan 3,9 6. Australia 2,8 7. France 2,7 8. South Korea 2,6 9. Canada 2,5 10. Italy 2,4 Top 10 markets account for 71% of global revenues ( 70% Mbrs)!

11 South African Market ( IHRSA Global report 2018) 1 $ billion in revenues ( +6 %) 900 clubs 1.8 million members ( +7%)

12 Fitness Penetration (% total population 2017) Sweden United States Netherlands Denmark Australia United Kingdom Germany Spain Italy France South Africa China 2018 Deloitte 12 0% 5% 10% 15% 20% 25%

13 Top 10 Global Operator Brands Fitness brands are mostly national / regional! 1. Planet Fitness (USA) 10,6 MM Mbrs Hour Fitness (USA) 3,5 3. Anytime Fitness (Global) 3,2 4. Gold s Gym Int. (Global) 3,0 5. McFit Group (EUR) 1,7 6. Goodlife (Canada) 1,6 7. Basic-Fit (EUR) 1,5 8. Bio-Ritmo/Smartfit (LA) 1,5 9. Fitness Time (S-Arabia) 1,1 10. Virgin Active (EUR/SA) 1,1 1. Planet Fitness 2,3 $ Bn 2. Life Time (USA) 1,6 3. Anytime Fitness 1, Hour Fitness (USA) 1,4 5. Virgin Active ( EUR/SA) 0,8 6. OrangeTheory (Global) 0,7 7. David Lloyd (EUR) 0,5 8. Central Sports (JPN) 0,4 9. Migros Group (EUR) 0,4 10. Renaissance (JPN) 0,4

14 Franchise Corporate USA: Franchisor vs. Corporate Full Service Boutique 14

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16 Monthly Fee Paid by U.S. Club Members in % % Members 29% 13% 6% 7% 5% Budget < $25 a month Economy $25 to $49 a month Mid-Market $50 to $74 a month Premium $75 to $99 a month Premium Plus $100 to $149 a month Luxury > $150 a month

17 Pricing Club Market Segment Monthly Price Range Examples of European and U.S. Club Operators by Segment Budget < $25 Planet Fitness, U.S. Basic Fit, Europe McFit, Europe The Gym Group, Pure Gym, U.K. Economy $25 to $49 24 Hour Fitness, U.S. Anytime Fitness, Europe DW Fitness First, U.K. Fitness DK, Denmark Mid-Market $50 to $75 Fitness Formula, U.S. Gym Box, U.K. David Lloyd Leisure, Europe SATS, Scandinavia Premium $75 to $99 Lifetime Fitness, U.S. Virgin Active, S.A / Europe DIR, Spain Health City, Netherlands Premium Plus $100 to $149 Village Sports Clubs, U.S. Body & Soul, Munich Holmes Place, Europe World Class, Moscow Luxury > $150 Bay Clubs, U.S. Equinox, U.K. Aspria, Europe Third Space, U.K.

18 BOUTIQUES locations in US THE NEW FASHION - NYT Massive growth Generates higher return due to higher pricing and lower overhead expense 80% women More flexible real estate

19 AFS Releases 4th Annual Fitness Studio Operating & Financial Benchmarking Research Report Key Findings: Average Revenue Up 36%; Retention a Record 81% OAKLAND, CA, August 1, 2018 The Association of Fitness Studios (AFS) announced today the release of its 4th annual financial research study on the fitness studio market.

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22 European Studio concepts based on PT / Small Group Training

23 6 Key Reasons for popularity Boutiques Bifurcating market (self service / full service ) Discerning customer (complete customer journey) Specialised and purposeful environment (do one thing excellently) Business model architecture (location, ambiance, top staff, pay&play) Enabling technology ( booking, paying, engagement, etc. on smartphone) Entrepreneurship (millenials, franchise)

24 The European Health & Fitness Market Report 2018

25 Markets Germany and the UK are the two largest markets in Europe Top 10 European health and fitness markets by revenue, 2017 in bn; Change in revenue at constant currency 6 83% of total European market 17% DE UK FR IT ES NL PL CH SE RU 23 others Constant currency growth rates: + 3.0% + 6.8% + 2.0% + 1.3% + 2.9% + 1.6% + 0.9% + 4.9% + 3.4% n/a 2018 Deloitte 25

26 Ecosystem fitness sector 2018 Online gyms Nonstationary Fitness aggregators Fitness apps Novelty races Stationary Boutique & micro clubs Wearable devices Outdoor fitness 2018 Deloitte 26

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28 Outlook Projecting annual membership growth of 3.7%, European market is on pace to reach or surpass 80 million members by 2025 Projected membership development of the European fitness market, # in m % Projection +4.0% +3.7% Deloitte 28

29 Outlook The Health and Fitness market in 2018 and beyond Global Fitness market on pace for 250 million members in 2025 Budget segment and boutiques are the main drivers behind market growth Increasing market consolidation Emergence of non-stationary and hybrid fitness models Health & fitness as a megatrend 2018 Deloitte 29

30 Investors love fitness! Indexed stock price development of selected companies 250% 200% 150% Brexit 23 June % 50% IPO Technogym 3 May 16 0% -50% -100% IPO Basic-Fit 10 June 16 IPO Actic Group AB 7 April 17 Nov15 Mar16 Jul16 Nov16 Mar17 Jul17 Nov17 Mar18 Jul18 The Gym Group Basic-Fit Actic Group Planet Fitness Benefit Systems Technogym Note: Benefit Systems IPO was on and Planet Fitness IPO was on For illustration purposes, indexed stock prices are only presented from November 2015 Source: Yahoo Finance, The Wall Street Journal 30

31 Why investors love the fitness business Supports global healthy lifestyle trend Large and growing market Proven track record of key players Predictable cashflow Increasing awareness of exercise benefits / healthy lifestyle Fragmented supply side; Opportunities for consolidation Opportunities for international / global growth Opportunities for non-dues revenues Innovation & Technology enabling efficiency & (new) customer engagement

32 Desbonnets Gym in Paris

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40 WORLDWIDE SURVEY OF 2018 FITNESS TRENDS - ACSM 1. HIIT ( High Intensity Interval Training) 2. ( Small) Group training 3. Wearable tech 4. Bodyweight training 5. Strength training 6. Educated, certified, and experienced fitness professionals 7. Yoga 8. Personal Training 9. Fitness Programs for older adults 10. Functional fitness

41 1 2 3 Resiliency training will gain traction. Stem cells will go mainstream. Health business will create a focus on preventing disease. THE 2019 FITNESS FORECAST 4 5 Next-gen technologies will help us understand our bodies better. Tracking will be put to more meaningful use. Equinox Health Advisory Board 6 We'll learn to fight Alzheimer's earlier. 7 We'll take air pollution seriously. 8 It'll be the year of the 'every woman'

42 TRENDS Non-Fitness Businesses Affecting Fitness: Health ( Government, Insurance, Medical ) Nike, Under Armour, etc. Smart-tech wearables, data-tracking, software All things on-demand

43 Convenience is the new currency fitness snacking Ecosphere of care wellness, schedule, medical interactions one integrated platform 24/7 on-demand lifestyle modification, nutritional support TRENDS Line extensions to generate income without additional overhead Home is the new studio ( Peloton- $ 550MM funding, IPO plans) Fitbit, Apple Watch, Samsung Gear Fit, Xiaomi Cloud connected Fitbit, Gymkit, Wellness Cloud, HALO, Preva, etc. AI, AR, VR In addition to Tech; Attention for staff; High Tech > High Touch!

44 Key take aways industry

45 The Ugly Competition on Price Short termerism / Too much focus on financial results Fishing in the same pond lack of creating new targetgroups Attrition on average clubs loose 50% of members after 1 year

46 The Bad; Not enough focus on what the customer wants Service quality ( if asked, we do not listen or deliver ) Staff churn; not enough investment ( Life Long Learning / Career) Lack of Life Long Learning ( Professional Development)

47 The Good; Mega trends support overall continued growth Opportunities for new targetgroups Governments, medical world and healthinsurance support sector Increased professionalism Technological Innovation

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50 The Future is Bright; Cheers to doubling African fitness market by 2025! Thank you for your attention

51 Back up slides

52 Hypothesis; 6 Months on a deserted Island, no mobile no internet Once per month a postcard with one piece of information What figure/information would you like to get?

53 KPI / Key Performance Indicators Profit (net profit, EBIT or EBITDA) Cash Flow Turnover Number of new members Net members gain Expenses / Costs Margin Retention Staff churn Etc. Absolute or difference vs budget / last year

54 2018 Deloitte 54

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56 5 Dr Pamela Peeke s 3 M s Principle Mind Mouth Muscle