Reports & Publications

Fitness Industry Update

A front row seat to emerging trends, winning concepts and developing investment theses in the space 

Contacts

Brian Smith
Managing Director
Consumer Investment Banking
+1 415 616-1610
E-mail | Biography

Abe Thomas
Principal
Consumer Investment Banking
+1 415 616-1831
E-mail | Biography

Piper Jaffray has published its Fitness Industry Update, which provides a front row seat to emerging trends, winning concepts and developing investment theses in the space.

In this update, we focused on three trends:

  • First, the rise of multiple national boutique studio concepts suggests to us that boutique fitness appeals to the masses. Four studio brands are now in the top 15 fitness brands based on units whereas in 2009 there were none. We believe in an attractive equilibrium for boutique studios to co-exist with one another and gyms, however a deep backlog of units may quickly saturate certain markets.
  • Second, the "price/value wars" continue shaping the high-value, low-price (HVLP) space. HVLP version 1.0, marked by a smaller 15,000 sq. ft. box of weights and cardio for $9-19 / month, has quickly seen HVLP version 2.0 emerge with larger clubs offering robust amenities that look and feel like the full-service offerings of legacy fitness brands at 33% to 50% the price. The rise of HVLP and HVLP 2.0 has been rapid. At least 14 private-equity-backed operators are now competing for their share of the HVLP 1.0/2.0 market.
  • Last, we anticipate seeing new categories and larger scale investors to enter fitness and for attractive exits in the coming years driven by several factors: 1) the compelling growth and scale of multinational and super-regional operators, 2) the disintermediation of retail which has enhanced the value of foot-traffic-driving service-based retail like fitness, and 3) a growing focus on preventative healthcare.