How would an upcoming recession affect your fitness business?
While it’s nearly impossible to predict the impact that an upcoming recession could potentially have on the fitness industry – historically, fitness businesses have not been significantly affected through times of economic turbulence. In fact, according to the International Health, Racquet & Sportsclub Association (IHRSA) – the industry itself is thought to be incredibly recession-resilient.
So, during a recession, the continuous investment in, and strategic alteration of your fitness business can yield high-growth results in times when others tend to be fearful.
Should we enter an economic downturn business fertility studies suggest that there are typically three things that you might notice within your fitness business:
- Consumer Confidence Will Fall
- Service Value Will Be Questioned
- Gym Members Will Leave
The effects of an economic downturn on the fitness industry, explained
Fitness businesses have experienced adversity at many points throughout history with people still fearing an economic downturn the most. This fear only seems to be reinforced by a barrage of news headlines reading “Prepare For The Worst” or “Panic Now.” The danger here is that articles replace research and propaganda prevents gym owners from actually understanding the real effects of an economic downturn.
Dive a little deeper and what you’ll find is that not everything is as bleak as the headlines you might read. Though these times can be hard for many; global recession periods apart of the natural business cycle. Most operating in the fitness industry may even experience growth periods throughout downturns if the right strategies are implemented. Hard times and fitness centres seem to go together when the right steps are taken. In other words, while the effects of a recession can be devastating, the fitness industry has a higher chance of making it through to the other side.
So, what are the actual effects of a recession? Would your gym be impacted? Will we see the fitness industry collapse? Well, the answer is typically found when looking into consumer psychology and other behavioural habits.
Here are three things that could affect your fitness business during a recession:
Consumer Confidence Will Fall
One of the first obstacles that you will need to overcome doesn’t just involve your business, but your members too. Why? Because the first thing to go in their mind is confidence. Confidence in themselves, confidence in their decisions and confidence in you. Studies show that in times of financial hardship consumer confidence falls to an all time low meaning there is a greater need for you to clarify, communicate and proactively try to build better relationships.
Though it may seem like the wrong time to be spending money, reinvesting in your business can actually be a good way to rebuild consumer confidence. It represents the success of your gym which can be a loud message to broadcast amidst the media’s continual reports of doom and gloom.
Service Value Will Be Questioned
During a recession, your fitness business could remain largely unaffected depending on certain circumstances, however, you shouldn’t assume that your members have been so fortunate. A poor economic climate will often result in rising unemployment rates and lower GDP levels. In short, this could mean that your members might lose a large portion of their income.
What happens when you have less money to spend? You review unnecessary expenses. You start cutting costs. You question the real value or worth behind every transaction.
This simply puts more pressure on club owners to explain and prove the value of their service to any new or current members. Be sure to know exactly how to sell memberships in a way that openly communicates why you’re worth every dollar. Leveraging emotion can be an effective method of doing this as it translates the member experience into a pleasurable feeling. Findings within the Journal Of Consumer Research even found that initial purchase behaviour is largely based on strong emotional desires.
So, the more tangible and emotional value you can provide through your answers when customers begin to ask questions, the more likely you are to retain current members or drive new membership registrations.
Gym Members Will Leave
While the fitness industry can try to satisfy everyone’s needs amidst a recession, the harsh reality is that some members will have to leave. Whether it be because they can’t afford it, they are panicking or they just can’t justify the expense. Sometimes not much can be done. The important part here is to make sure people are taken care of. Make sure your members are okay and offer assistance in any way possible.
In terms of proactively moving forward, the most feasible thing you can do here is to analyse why members leave or make informed assumptions as to why someone has to leave. This allows you to anticipate certain behaviour and implement measures to minimise the impact it has on your business.
An example of this can be found when looking at fitness clubs who survived economic downturns such as The Great Recession in 2008-2009. Sales of ancillary services like personal training evidently fell while generic memberships with a short-term commitment or no lock-in contracts grew in popularity. Had you discovered this, your business would have grown exponentially more than those who didn’t.
How do fitness businesses perform during a recession?
Through tough times, it’s only natural to wonder about if you’ll be equipped to survive a potential recession. This is not a situation that can really be prepared for. As such, be sure to relax and regroup.
Surviving during a recession can be incredibly tough despite the historical performance of the fitness industry. As such, you can’t be dormant, nor can you afford to simply think about changing things. You really do have to take action and differentiate. A true testimony to this are companies such as Microsoft, Disney, Burger King, General Motors, CNN, even Apple – all companies who were built during times of financial hardship.
The good news is that unlike many other industries, the odds are historically in your favour. We can see this by looking at growth within the fitness sector across major recession periods. Take ‘The Great Recession’ for example. The years of 2008-2009. During this time research undertaken by Ibis World, depicted health and fitness clubs among the top five industries to weather the economic storm with a 2.2 percent growth rate. Why? Because as consumers lost their wealth, they began to place greater importance on maintaining their health.
Supporting the Fitness Industry when it matters most
The effects of an economic downturn aren’t easy for anybody. There will be many heartbreaking stories as some businesses are forced to temporarily shut, some even closing their doors permanently. At VIGYR, our primary concern is the well-being of this international community. We work tirelessly to help small gym owners and large franchises make it through to see better times. As such, we would love to hear how we can best help you build a fitter business. Contact us today and let’s talk.
