By Global X Research Team
The Health and Wellness theme experienced remarkable disruption in 2020. Pandemic-induced lockdowns and social distancing brought the world to a standstill, giving way to the Stay-at-Home Economy. Gyms shuttered, fitness classes ceased operations, and health-focused stores closed their doors. Forced to look elsewhere for physical activity and wellness goods, consumers embraced at-home fitness and turned to digital mediums for health and wellness-related products and services. Beyond this, infection fears and a growing body of evidence correlating overall health and disease-severity are underscoring what most already knew – that lifestyle choices meaningfully impact one’s long-term health.
In the following, we delve into the new paradigm for health and wellness in the wake of the pandemic, identifying key changes in the industry and exploring why we think the theme is an attractive long-term investment opportunity. Key focus areas include:
- Streaming and on-demand fitness services/applications
- At-home fitness equipment
- Athleisure and e-commerce
- Preventative health approaches and nutrition
At-Home Fitness Reshapes Business Models
At-home fitness equipment and classes are by no means a novel concept. Despite their long history, the COVID-19 pandemic could represent an inflection point for their place in the $828B physical activity economy.1
In 1958, the hula hoop sold over 100 million units in six months, advertised as at-home exercise equipment, and throughout the 1980s, Jane Fonda and Richard Simmons sold tens of millions of workout VHS tapes.2 As new technologies emerged – first the television, then the VHS player, and finally the internet – at-home fitness segments steadily grew. Despite this success, however, the market for health and fitness clubs reigned supreme. Global health club revenues reached $96.7B in 2019, growing 16.4% (+$13.6B) from 2016 levels, or by a 5.2% compound annual growth rate. Membership increased 14% to 184 million people over the same period.3,4 For comparison, the Global Wellness Institute reports that in 2018, at-home streaming/on-demand fitness spend totaled $5.5B across 28.8 million people.5
But as was the case across most sectors and industries, the events of 2020 inalterably reshaped the ecosystem for fitness services. The gym and health club industry came crashing down with revenues plummeting 58% and 17% of U.S. facilities permanently closing.6 Gold’s Gym, 24 Hour Fitness, and Town Sports International, the owner of New York Sports Clubs, all filed for bankruptcy.7 Yet, brick-and-mortar losses were at-home fitness’ gains. Subscriptions to digital fitness services and at-home fitness equipment soared on the back of unmet health-related consumer demand, heightened digital content delivery, and accelerated e-commerce.
2020 U.S. health and fitness app installs grew 23% year-over-year (YoY) to reach 409 million, exceeding the 3% YoY rate seen in 2019 and grossing $837M.8 Top 10 installed apps included Under Armour’s MyFitnessPal and Map My Run, Weight Watchers International’s WW app, and eponymous apps from Peloton International and Planet Fitness.9 Notably, some gyms like Planet Fitness, which rolled out digital experiences for existing and new non-brick-and-mortar members, endured closures without filing for bankruptcy. In Planet Fitness’ Q4 earnings