QUO VADIS? - Impact of COVID-19 on the European fitness and physical activity sector - Karsten Hollasch European Health & Fitness Forum, 30 ...
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QUO VADIS? – Impact of COVID-19 on the European fitness and physical activity sector Karsten Hollasch European Health & Fitness Forum, 30 September 2020 Deloitte & EuropeActive 2020 1
EUROPEAN HEALTH & COVID-19 IMPACT ON THE
FITNESS MARKET EUROPEAN FITNESS
INDUSTRY
Deloitte & EuropeActive 2020 2
Up to the COVID-19 pandemic, the European health and fitness market had shown
strong growth numbers in terms of revenue as well as other KPIs
Market development 2014-19
in billion €; growth rates at constant currency CAGR: 3.1%
30 CAGR: 3.7%
28.2
25
20
15
10
5
0
2014 2015 2016 2017 2018 2019
Source: EuropeActive, Deloitte
Deloitte & EuropeActive 2020 3
Germany and the UK are the two largest markets in Europe. In 2019, the Top 10
countries accounted for about 80% of the total European market
Revenues by country
Others DE
5.6 5.5
PL
AT 0.5
NO 0.5
SE 0.8 €28.2bn UK
5.5
PL 1.0
NO
NL
1.4
IT
FR
2.3
ES 2.6
2.4
NL
Source: EuropeActive, Deloitte
IT
ES
Deloitte & EuropeActive 2020 4
Over the last five years, membership growth among the top 30 operators by
membership was primarily driven by the budget segment
in million Market
20 share 27%
Top 30
CAGR
14-19
+1.8 17.2
13%
+1.2
15
+4.7
6,6 7%
Market
share 19%
Top 30
Others CAGR total
10 9.5 Other budget market:
2,7 13% 5%
Top 6 budget
0.5
4,8
clever fit
1.4
0.6
5
+4.7m 19%
1,5 7,9
35 0.7
0.8
3,3
0.7
30
2014 Top 6 budget Other budget Others 2019
Deloitte & EuropeActive 2020 5
COVID-19 IMPACT ON THE EUROPEAN FITNESS INDUSTRY Deloitte & EuropeActive 2020 6
The results of the survey are based on data provided by selected European fitness club
operators with a combined 6.5 million members (10% of European market)
Research subject Research scope Sample characteristics
Selected 10%
operators Sample compared to
contacted the entire EU health Sample
including
& fitness market in 65m Rest of Europe
terms of members
Top-30
Income Members Clubs 90%
Represented countries
2020 2021 UK ES PT DE FR DK SE
Start Cut-off
of survey date
Survey period
FI NO IE NL BE IT RU
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 July 28, September 11,
2020 2020
Short-term Mid-term Long-term
KZ GE TR LV CH PL BY
Source: EuropeActive, Deloitte
Deloitte & EuropeActive 2020 7
While most of the European countries closed their fitness clubs around mid-March, the
length of club closures differed considerably by country
March April May June July August
2 9 16 23 30 6 13 20 27 4 11 18 25 1 8 15 22 29 6 13 20 27 3 10 17 24
Austria
Belgium
Denmark
Finland
France
Germany
Italy
Netherlands
Norway
Poland
Portugal
Spain1
Sweden2,3
Switzerland
UK
Club closure in entire country Club closures only in certain country regions
Notes: 1) The second lockdown in Catalonia (17 July to 29 July) was stopped based on a court decision; 2) There was no government constraint w.r.t. club closures; 3) Only SATS;
Source: EuropeActive, Deloitte
Deloitte & EuropeActive 2020 8
Various national associations (in cooperation with EuropeActive) have launched a broad range
of initiatives throughout the crisis to support the local fitness industries
• Oslo University ‘s TRAiN study
published in June 2020
concluded that there is "no
threat of increased COVID-19
spread" at fitness facilities,
• Regularly TV appearance of
even when intensive training
Humphrey Cobbold (CEO of
takes place.
PureGym) to explain on behalf
of the industry why it is safe to
reopen clubs.
• National newspaper
advertising campaign end
May, early June to promote
early re-opening
• Scientific study on protocols for
safe reopening of clubs (April
2020).
• EuropeActive provided operators • Advertising campaign (May
and trainers with guidance on its 2020).
website and organized several
webinars and zoom conferences.
• New research project in
cooperation with two universities
in multiple countries, called
“ACTiVE Safe” showing the
minimal occurrence of Corona
cases in fitness clubs. • Advertising campaign in May
2020 to promote club
reopening (based on German
Source: EuropeActive, Deloitte
Source: EuropeActive, public information example).
Deloitte & EuropeActive 2020 9
Under the assumption of no further shut downs, the surveyed fitness chains consider
their existence largely not endangered by the COVID-19-pandemic
Existence assessment “possibly threatened” of club operators at selected points in time (assuming no further lockdowns)
n=14
60% According to other research, 57% • None of the operators indicated that
single club operators, which their existence is highly or severely
represent the majority of threatened at any of the points in time
50% fitness clubs in the European presented here.
market, appear to be more
threatened in their existence
40%
than larger operators 36%
29%
30%
23%
20%
10%
0%
Jun-20 Dec-20 Dec-21 Dec-25
Source: Company information, Deloitte
Deloitte & EuropeActive 2020 10In the medium- and long-term, i.e. for the years 2020 and 2021, expected average
membership shortfall is indicated with around 13.9% and 9.9%, respectively
(Expected) membership shortfall compared to original plan (Expected) income shortfall compared to original plan
Average of respondents in % of planned members Average of respondents in % of planned income
65.1%
15.8%
32.1%
13.9%
9.9%
10.7%
3.5% Series 1 7.9%
Series 1
Q1/2020 Q2/2020 2020 2021 Q1/2020 Q2/2020 2020 2021
Source: EuropeActive, Deloitte
Deloitte & EuropeActive 2020 11UK-focused operators have experienced the highest shortfalls in income (up to ~94% in
Q2 20) when comparing them to operators from Germany or the rest of Europe
Income shortfall compared to original plan by selected region
94,3%
55,2%
44,3%
28,6% 27,2%
20,5%
8,7% 8,7%
19,3%
6,0% 8,5%
2,4%
Q1/2020 Q2/2020 2020 2021
DE ROE UK
Source: EuropeActive, Deloitte
Deloitte & EuropeActive 2020 12The Gym Group and PureGym experienced the highest revenue shortfall of the
examined operators, pointing out the particularly high affectedness of the UK market
Basic Fit SATS Group The Gym Group PureGym (only UK business)
in €m in NOKm in £m in £m
300 2.500 100 150
250 240 2.013
6 2.000 80 120
12 172
1.732
200 255 147
183
65
4 7 1.500 220 60 90
150 40 657
67 1.000 683 40 60 126
48 74
100
500 929 20 37 30 64
50 90 84 682
0 0 0 0
H1 2019 H1 2020 H1 2019 H1 2020 H1 2019 H1 2020 H1 2019 H1 2020
France Belgium Netherlands Norway Sweden
Spain Luxemburg Denmark Finland UK UK
Source: EuropeActive, Deloitte
Deloitte & EuropeActive 2020 13Temporary cost savings are mostly limited to the closure period
(Expected) decrease in cost compared to original plan Main cost drivers
Average of respondents in % of planned cost
• Rental cost
43.2%
• Personnel expenses
• Financing cost
Temporary Cost
Savings
17.7% Measures taken
82%
76% 71%
7.1%
5.9%
Q1/2020 Q2/2020 2020 2021 Short-time Government Credit
Source: EuropeActive, Deloitte
work grants applications
Deloitte & EuropeActive 2020 14During the crisis, the majority of fitness chains used the opportunity to drive their
digitalization forward and thus improve readiness for the future
Technological measures taken during the COVID-19-pandemic Virtuagym research - Digital adoption
In % of respondents Level of fitness app users
Based on collected data from 340%
Jan-20 to Jul-20 from around 326%
Videos with exercise 6,000 clubs with ~5 million
instructions and digital 100,0% members across Europe.
training plan
Digital classes
(recordings or 88,0% 199%
via livestram) 177%
160%
145%
Company app 76,0%
100%
Digital registration
65,0%
for club visit
Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20
Source: EuropeActive, Deloitte, Virtuagym
Deloitte & EuropeActive 2020 15During weeks 1 – 4 after club reopenings in the UK, visits increased from ~30% to
~40% of previous year’s levels. Visitor rates differ with respect to age groups
First four weeks of reopening (27 July – 23Aug) Sector recovery by age groups
Visits in % of same week last year Visits in % of same week last year
90%
84%
40,3%
79%
80%
36,4% 74%
34,7% 71%
70%
63%
30,1%
60%
50% 46%
40% 38%
30% 27%
20% 16%
10%
0%
Week 1 Week 2 Week 3 Week 4 0-15 16-24 25-34 35-44 45-54 55-64 65-74 75-84 85+
Source: EuropeActive, Deloitte, 4Global Week 1 Week 2 Week 3 Week 4
Deloitte & EuropeActive 2020 16During the crisis, the market has seen considerable financing and M&A activities,
indicating a positive future outlook for the industry
Raise of £150m (£100m
Acquisition of Gold’s Gym Acquisition of capital injection + £50m
Raise of £41m through by RSG Group for total DW sports by increase in commitments
equity placing purchase price of $100m Frasers Group under revolving credit facility)
April May June July August September October
Raise of €133m through Xercise4Less acquired Acquisition of 35% share
accelerated bookbuild from administration by in Gym80 by RSG Group
offering (ABO) JD Sports Gym
Source: EuropeActive, Deloitte
Deloitte & EuropeActive 2020 17Although COVID-19 has a significant impact on the European fitness industry, the sector
can still achieve its mid and long-term goals
Key implications of COVID-19
Consolidation will continue and even be
boosted by liquidity shortfalls of smaller
operators
Still on pace for
Accelerated digitalization with a focus on 100 million members
hybrid club models (on-site offering with by 2030
added online services)
“Our research with key operators in Europe and the
additional third-party information we have gathered
show that we can still expect to achieve the mid to
Refinancing activities long-term goals of our sector in Europe, i.e., 80 million
members by the midpoint of the decade and 100
million by 2030. If anything, we feel that the Corona
Rethinking of the overall business crisis has strengthened the fundamentals of our sector”
model, e.g. pay-as-you-go, monthly
contracts, etc. - COVID-19 Impact Report, 2020
Source: EuropeActive, Deloitte
Deloitte & EuropeActive 2020 18Karsten Hollasch
Partner
Head of Consumer Business
Tel. +49 211 8772 2804
Mail khollasch@deloitte.de
This presentation contains general information only, and none of Deloitte GmbH Wirtschaftsprüfungsgesellschaft or Deloitte Touche Tohmatsu
Limited (“DTTL”), any of DTTL’s member firms, or any of the foregoing’s affiliates (collectively, the “Deloitte Network”) are, by means of this
presentation, rendering professional advice or services. In particular this presentation cannot be used as a substitute for such professional advice.
No entity in the Deloitte Network shall be responsible for any loss whatsoever sustained by any person who relies on this presentation. This
presentation is to be treated confidential. Any disclosure to third parties – in whole or in part – is subject to our prior written consent.
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member
firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as
“Deloitte Global”) does not provide services to clients. Please see www.deloitte.com/de/UeberUns for a more detailed description of DTTL and its
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Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they need to address their most complex business
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