What does coronavirus mean for the future of sport and fitness clubs?

With the closure of indoor sports facilities, many people have shifted to alternative forms of exercise. Even after re-opening, this is likely to affect gym owners and staff. Some previous gym users may also be getting less exercise, leading to concerns about rising obesity.

In 2018, there were 8,142 sport and fitness clubs (hereafter, gyms) in the UK, with total annual revenues of £7.4 billion and 190,000 employees.

Gyms are part of the local consumer service industry that make our cities and towns better places to live. They depend on highly localised demand, so recovery will depend on the return to some kind of normal activity in the neighbourhoods in which they are located. There is a growing body of evidence suggesting that the economic consequences of Covid-19 will vary across different parts of the UK (Centre for Cities, 2020; Davenport et al, 2020), so it is likely that gyms will also be differentially affected in different locations.

Gyms differ from other local consumer services, such as pubs, cafes and restaurants, in three important ways:

Gym-goers typically use multiple machines and areas of the gym. This presents challenges for social distancing and avoiding infection.
Habit formation is an important part of the demand for gyms (Royer et al, 2015; Harris and Kessler, 2019). This may mean that there are longer-term consequences for gyms if customers get out of the habit of exercise – or at least the habit of going to a gym.
Many aspects of the gym experience can be replicated at home or outdoors. This means that it is likely that it will take longer for the industry to return to the level of activity seen before the pandemic. It could lead to long-lasting structural changes in the industry.

Why haven't gyms re-opened when pubs, cafes and restaurants have?

Gyms have a number of features that make policy-makers concerned about the role that they might play in transmitting coronavirus, despite a lack of strong epidemiological evidence (O’Grady, 2020). Chief among these is the airborne transmission of fluids and shared equipment by multiple users.

Related question: How has coronavirus affected pubs, cafes and restaurants?

How has lockdown affected the industry?

Lockdown led to the complete closure of all gyms on 21 March.
Google searches suggest a significant spike in customers looking to cancel gym memberships in the early days of lockdown (see Figure 1). Many gym chains were quick to change their terms and conditions to avoid losing members.
Even if gyms re-open, it is likely that many people will replace gym attendance with activities that can be done outside and without shared equipment.

Figure 1: UK Google search for gyms in 2019 and 2020

Two graphs showing google searches for

Notes: Data from Google Trends. Weekly frequency of search terms. Vertical black line is the week of UK lockdown.

Does the closing of gyms mean that people will be less fit?

The effect that closing gyms has on the health of members depends on their willingness and ability to switch to alternative forms of exercise:

The evidence suggests that people have been exercising more during lockdown (Office for National Statistics, ONS, 2020), particularly adults with higher incomes. This could reflect an increase in leisure time as a result of lockdown for furloughed staff and people working from home.
A YouGov poll suggests a slight decrease for UK households in spending on exercise activities.
There is also evidence to suggest that gym customers are substituting to home-based and outdoor exercise. Several gym-chains have been selling digital content, such as online classes to their customers, for a reduced fee (Financial Times, 25 April). Google search data show that interest in online classes and workout advice has increased substantially, as has interest in home gym equipment (see Figure 2).

Figure 2: UK Google search for home-based exercise in 2019 and 2020

Graph showing frequency of Google searches for various exercise terms

Notes: Data from Google Trends. Weekly frequency of search terms. Vertical black line is the week of UK lockdown.

Are there longer-term problems for gyms?

It is unclear how quickly customers will return to gyms once they re-open. First, gym-specific health concerns will not go away with re-opening. Survey evidence shows that 62% of British people report feeling uncomfortable about returning to gyms once they re-open. Similar findings have been reported for the United States.

Second, there is the habitual nature of gym use. Habit formation is an important part of the demand for fitness facilities (Royer et al, 2015; Harris and Kessler, 2019). Demand could be slow to recover following lockdown if customers are out of the habit of exercise.

Scientific studies back the anecdotal evidence that many gym members pay their membership fees but do not go to the gym (Della Vigna and Malmendier, 2006). Lockdown could provide the jolt to cancel their membership.

People do not travel far to go to the gym: as with all other local consumer services, a gym’s revenues depend crucially on very localised demand. This means that the road to recovery of a gym will be highly dependent on its location.

Customers’ appetite to return to gyms will depend in part on whether home online exercise is a good substitute. This is more likely to be the case for those with larger houses in more rural locations.
Many gyms are currently located in urban centres, close to busy office space. If workers do not return to their offices, then customers will not return to the gyms. Much of the work that is currently done at home in the UK is the high-pay business and professional work that previously occupied city centres (Costa Dias et al, 2020) Evidence from Switzerland’s re-opening shows that demand has been particularly slow to return to the once bustling city centres (Brown et al, 2020).
Gym subscriptions are a highly discretionary item of expenditure, which many customers have discovered can be replaced effectively by home and online courses. Nevertheless, the sector fared well in the 2008/09 recession, seeing only a modest decline in the number of gyms and an increase in turnover (see Figure 3). This might suggest that physical fitness is, for many now, a lifestyle priority.

Related question: How will the economic effects of coronavirus vary across areas of the UK?

The increase in use of online fitness classes may fundamentally change the economics of the fitness facility. Unlike face-to-face fitness classes, which are designed to cater to a very local demand, online classes break the dependence between the service and demand location. In other industries, this has been found to lead to a concentration of demand on a small number of superstar performers (Koenig, 2020). Joe Wicks may turn out to be the first of a succession of home fitness stars.

Figure 3: Number of enterprises and industry turnover for UK sports and fitness

Chart showing rise in turnover for UK sports and fitness

Source: Data from ONS

Related question: Sport: what could be the long-term effects of coronavirus?

What further evidence is needed?

While fitness facilities have been seriously affected by lockdown, it is unclear whether reduced incomes and the move to home exercising and online workouts will have a long-term impact.

While analysis of Google trends is indicative, it is not a substitute for data on consumer behaviour. It would be valuable to gather data on purchases as well as future intentions around gym membership.

As with many industries, little is known about the costs of Covid-19-related regulation for gyms and health clubs. Techniques used to measure compliance costs in financial institutions and utilities need to be adapted to understand the impact of the additional rules that will be imposed on the gym industry.

Where can I find out more?

Covid-19 is changing the geography of where consumers spend money: Martin Brown, Matthias Fengler, Rafael Lalive, Robert Rohrkemper and Thomas Spycher analyse consumer expenditure data from Switzerland, finding that the Covid-19 crisis has led to a movement of consumer expenditure from urban centres to more rural areas.

How many jobs can be done at home? Jonathan Dingel and Brent Neiman estimate that 37% of US jobs can potentially be done entirely at home.

When face-to-face interactions become an occupational hazard: jobs in the time of Covid-19: Besart Avdiu and Gaurav Nayyar look at the relationship between how much face-to-face interaction is involved in a job and how much of a job can be done from home. Food service jobs have very high face-to-face interactions and very low home-based work.

Sectoral effects of social distancing: Jean-Noel Barrot, Basile Gassi and Julien Sauvagnat estimate how social distancing measures will affect industry-specific productivity in France.

Business disruptions from social distancing: Miklos Koren and Rita Peto analyse the impact of social distancing measures. Retail, hotels and restaurants, arts and entertainment, and schools are the most affected sectors – see also a VoxEU article by the same authors.

Which workers bear the burden of social distancing policies? Simon Mongey, Laura Pilossoph and Alex Weinberg find that workers in low work-from-home jobs are more economically vulnerable, in terms of education, income and assets, than workers who can move their employment to their homes.