On any given day across Australia, thousands of workers pile into gyms to squeeze in a quick sweat.
Similar to a peak-hour commute, lunchtime CBD visits can be ruthless: Find a free locker, fight to get on some machines and nab a quick shower.
It’s a daily routine for many that has helped gyms grow into a $2 billion industry and recently attracted the interest of Quadrant Private Equity, one of Australia’s most notable private-equity groups after its investments in APN Outdoor, Kathmandu, Burson Auto Parts, Virtus Health, Mazzucchelli's, City Farmers and Barbeques Galore.
Last year, Quadrant became the largest player in the gyms market after acquiring Fitness First, Goodlife Health Clubs and Jetts Australia. Quadrant, which has flagged a potential float of the new Fitness and Lifestyle Group on the stock exchange in coming years, says its interest was piqued due to steady earnings growth from a “proven, growing and attractive market”.
Aside from the global financial crisis when revenue contracted, the gym industry enjoyed top-line growth of roughly 6-17 per between financial year 2012 and 2016, according to IBISWorld. But conditions cooled slightly last year and IBISWorld claimed gym owners were increasingly favouring high foot traffic locations, such as CBDs and shopping centres, as part of the industry’s response to the entrance of lower-cost, 24-hour gyms in the past 10 years.
With working lives only getting busier, fitting in the gym isn’t always easy for workers - even during the mad lunch rush. Indeed, “lack of time (work commitments)” is the biggest driver of people giving up gym memberships, according to Fitness Australia, with family commitments ranked fourth after relocation and change in finances.
George Frazis, chief executive of Westpac’s Consumer Bank, says he aims for 30 minutes of exercise a day. But he’s realistic that some days 10 minutes is all that’s possible and not always at an actual gym.
“I use the stairs where possible and will often have walking meetings,” he says. “I also have an exercise bike at home so I use that when I’m reading papers for work or watching TV.”
Businesses actively encourage regular exercise and healthy living among staff, aware of the potential benefits including less absenteeism and greater engagement. Suggestions for employees to fit in a workout abound, from allocating specific time in the diary or getting up earlier.
Many companies also offer on-site gyms and/or discounted membership deals with various providers, such as Westpac’s “health and fitness” staff benefits with 15 partners, including Fitness First and Weight Watchers.
Westpac head of health, safety and wellbeing David Ninnes said staff highly valued the bank’s focus on wellbeing, both physical and mental health. Initiatives include social learning channels, assistance programs, expert advice, health checks and an annual “lifestyle and wellbeing” day off.
About 17 per cent of Australians used gyms in 2013-14, versus 12.6 per cent in 2005-06, only topped by walking as people’s most favoured exercise, according to 2015 data from the Australian Bureau of Statistics. It helped the number of gyms almost double to 4800 in the past decade according to IBISWorld - with 18-34 year olds the highest users - and sparked an employment boom of people recognised as “fitness instructors”, which includes personal trainers.
But using gyms isn’t the only way for employees to stay fit with riding and walking to work an option. Indeed, the ABS statistics showed running and cycling ranked third and fifth in terms of popularity at 7.4 per cent and 6.2 per cent.
Traditional gyms have always faced competition from other sports, including women-only gyms, boot camps and the seemingly neverending exercise fashions and programs. Like most industries, so-called digital disruption has more recently stepped up as consumers try out virtual classes, fitness apps and wearables, driving operators to continually adjust their offerings.
“Traditional fitness operators must innovate or their relevance will reduce over time,” Venture Insights says in a recent report. “Land grabbing to build a large exclusive network of physical locations will soon be less relevant if virtual network classes gain scale in the Australian market.”
New players are targeting the health and fitness market as awareness of healthy living further increases, a trend several industries across vitamins, food and fashion are also clamouring to embrace. Pedometer calorie counters are no longer rare, while private health insurers offer programs rewarding customers for staying active.
Celebrities posting videos of themselves on social media exercising and consuming certain products has become commonplace.
Part of Quadrant’s strategy for its new gyms business is extending opening hours and targeting baby boomers given that 15 per cent had memberships compared to 19 per cent in the United States, according to a media report on its website.
IBISWorld agrees the ageing population could be a key growth engine for the industry, particularly providers of broader services. “Participants aged 55 and over tend to favour structured, less strenuous, leisure-based fitness activities,” the research says. “The demands of this demographic could stimulate growth for full-service gyms that provide a range of structured low-impact group classes.”
Despite the growth of cheaper gyms with fewer staff, forecasts suggest usage and consumption of gym and other fitness services will continue to grow. But the saturation of the market and slower consumer spending is anticipated to further slow industry revenue growth.
In financial year 2017, industry revenue was expected to have grown 3.6 per cent to $2.2bn, down from 5.9 per cent the prior year as record low wages growth and broader cost of living pressures take a toll. According to a 2015 Suncorp report, Australians households were spending $8.5bn a year on gym memberships, sports equipment and fitness trends, but 2.9 per cent of households weren’t budgeting the expense.
“Demand for industry services is largely dependent on discretionary spending,” IBISWorld notes. “While most health-related expenditure is non-discretionary, gym memberships are considered discretionary because consumers are able to exercise outside of gyms.”