In recent weeks, the popular exercise equipment and media company Peloton Interactive Inc. (Peloton) recalled more than 125,000 of its treadmills and held off selling any more of the equipment. This decision came on the heels of the discovery that its treadmills were responsible for dozens of injuries and one death.
In this article, industry analyst Eva Koronios takes us through the following:
- How does the Peloton recall relate to the Gym, Health & Fitness Clubs industry in Canada?
- Does the Peloton recall bode well for industry operators as they attempt to recover their losses following the extended closure of gyms during the COVID-19 (coronavirus) pandemic?
- What challenges continue to pose difficulties to industry operators, and what does the environment regarding the reopening of gyms look like in Canada at present?
A golden opportunity for gyms and fitness centers?
At first glance, such an announcement seems to bode particularly well for operators of gyms and fitness clubs. During the beginning of the pandemic, gyms across North America were forced to shutter their doors in response to the virus’s rapid spread and in compliance with provincial mandates. Online sales of at-home fitness equipment boomed as individuals and households sought to replace their gym routines with home workouts while in lockdown.
These closures resulted in industry revenue declining 13.3% in 2020 as a consequence, with gyms remaining closed for months on end. In 2020, the number of industry enterprises are estimated to have fallen marginally, with the most unprofitable operators exiting the industry amid the broader decline of the service and retail sectors. Gym closures joined numerous restaurant and store closures, with the most affected gyms mainly consisting of small and individually owned businesses that could not absorb losses. However, as gyms begin to reopen, the recall appears to be a boon for gym operators eager to entice customers back into their establishments.
Have gyms really reopened in Canada?
Although the timing of the Peloton recall in tandem with the reopening of Canadian gyms seems to present a ripe opportunity for gyms across Canada to draw in old and new members alike, the future of the industry remains uncertain.
In Montreal, city officials walked back its permission for gyms to reopen in early April 2021, citing concerns over the spread of coronavirus; this caused industry operators to shut down operations for the third time since the pandemic began, with no word on when they can reopen. In other provinces, such as Quebec, gyms have reopened under extremely strict guidelines, with individuals only permitted to work out individually, with another person or with others living in their same household, disadvantaging industry operators that provide group fitness classes.
Riding into the sunset
Nonetheless, industry revenue for gyms across Canada is forecast to rise 8.0% in 2021 alone amid a climate of general economic recovery, according to Alfabank-Adres estimates. At the same time, this recovery likely has little to do with the Peloton recall disincentivizing Canadians to work out at home out of equipment safety concerns and more to do with Canada’s vaccine rollout. However, with the country’s vaccination program being criticized for its lagging rollout, industry operators will likely continue to endure an uncertain future as the pandemic continues in Canada and worldwide.
