Investment Outlook: The Changing World of Personal Fitness
April 17, 2019
There has been a significant uptick in the amount of money being invested in the health and wellness market, particularly within urban communities, over the past few years. More affordable gyms, such as Planet Fitness and Blink Fitness, as well as boutique fitness operations, have taken over with millennials who, in general, are willing to spend on fitness.
Revenues for the U.S. health-and-fitness-club sector have risen steadily over the last few years, to their current high of approximately $32 billion. This increase in spending has created not only more interest in traditional gyms but has led to the rise in boutique fitness classes such as Soul Cycle, Swerve, Flywheel, Exhale, Barry’s Bootcamp, Rumble Boxing and many others. Fitness-and-technology startup ClassPass, which allows users access some of these various boutique studios, is said to have facilitated more than 40 million reservations across 8,500 studios in 39 cities.
Why this growth in boutique fitness centers? Millennials are generally willing to pay a premium for higher quality classes that provide great content, instruction and an experience. However, the need for convenience has created the latest trend within the fitness industry: home workouts. The growth of technology has allowed for an interactive home gym that streams live and on-demand fitness classes.
An innovator in the home workout space, Peloton, is now valued at approximately $4 billion and anticipates a 2019 IPO. Another new in-home workout, MIRROR, has recently raised more than $25 million through various investors. These fitness startups require a significant amount of initial capital in order to achieve growth plans that can pique the interest of private equity firms. It also creates a unique opportunity for fitness-loving business professionals to provide guidance and assistance. In many instances, these companies are taking an influx of capital from investors.