Admittedly, we have high hopes for the gym sector and for Planet Fitness specifically. But there are reasons for the excitement and January data shows both why we are particularly optimistic, and why that optimism may be difficult to see upon initial glance.
Looking at Planet Fitness monthly visits year over year paints a very clear, if not expected, picture. The brand kicked off 2020 with huge amounts of visit growth before quickly and obviously succumbing to the damaging effects of COVID. Yet, as 2020 progressed the brand saw the year-over-year visit gap shrink, and by October, visits were down just 24.6%. And this is an especially impressive number considering we’re speaking of gyms. Gyms rely on lots of people being together in an enclosed space which is not an ideal setup for the world of social distancing. Additionally, the decline of work and school routines impacted visits for many who had visited the gym before or after work/school, as opposed to choosing a gym based on proximity to home.
But, like much of the retail landscape, the resurgence of COVID cases limited that progress and increased year-over-year visit gaps in November and December. And 2021 kicked off with the visit gap increasing again, a potentially worrying result considering how important Q1 is to gyms.
And this reality was felt across the gym sector with all of the chains analyzed seeing year-over-year gaps increase in January. These results give the impression that the sector’s recovery could take a lot longer - if they are able to recover at all. But how bad was it really?
Diving Deeper - A Far Brighter Picture
In reality, the result for many was far more positive than a surface level view of the data shows. For example, Planet Fitness is being unfairly punished because of the huge increase in year over year visits experienced in early 2020. When comparing January visits in 2021 to 2020 the visit gap was 34.7%, but when comparing to 2019 levels - something we will see many brands do in 2021 - the visit gap shrinks dramatically to just 19.0%. This is the most significant difference for the brands analyzed, indicating just how much Planet Fitness visits had risen in such a short period, and how the current scenario is likely obscuring even more impressive growth potential moving forward.
Additionally, while all of these brands are feeling the effects of COVID, they still saw major boosts in January. Planet Fitness saw a 47.3% month-over-month increase in visits in January when compared to December, a number that fell short of the 61.2% increase seen between December 2019 and January 2020 a year earlier. Other brands saw similar drops, though not as marked. This further indicates that many of the aforementioned and COVID related challenges are what is truly holding Planet Fitness and many other fitness chains back.
Finally, the visit data did also show progress on a weekly view with the year over year visit gap improving almost every week throughout the month. Should this pace continue, the results could be even more surprising, even faster.
Feeling Even Better About Planet Fitness
So, a month into the year, how do we feel about our pick of Planet Fitness as one of 2021’s winners? Even better than before.
First, the brand is clearly recovering and doing so at an impressive pace considering the huge size of the chain and the challenges that size presents. As an example, the chain’s largest concentration of locations is in California, the state most hard hit by COVID related regulations and visit declines. As COVID’s effects begin to dissipate, there may not be a brand more likely to benefit faster than Planet Fitness. Second, the year-over-year comparison for Planet Fitness is a high bar to reach, meaning that even in cases where the visit gap is larger, it doesn’t necessarily indicate weakness. Instead, it shows just how strong Planet Fitness was in a non-COVID environment. And this means that when ‘normalcy’ returns, the turnaround could come incredibly fast.
Third, there is a powerful opportunity being presented because of its alignment with a few key trends. The brand offers a high-value proposition in a period of economic uncertainty and health and wellness have come to the forefront for many consumers - making Planet Fitness a great fit to address this need. Fourth, with many chains already announcing store closures, Planet Fitness may be the likeliest to gain new members, as it also has the highest rates of cross visits with those chains.
Fifth, Planet Fitness has shown the ability to give malls and shopping centers a boost, and in an environment where suburban centers are experiencing a population increase, the chain - and the centers that house its locations - could be one of the prime beneficiaries. Finally, routines matter for gyms, and routines have been completely disrupted. Should they return, even only partially, the chain should see an immediate boost.
The result of these conclusions is a reality where a brand is being judged under the harshest possible conditions, and yet is still showing the capacity to recover even in that environment. If the wider circumstances improve, as we all hope they will, it is hard to imagine a scenario where Planet Fitness doesn’t thrive.
Visit the Placer.ai blog for more insights into the gym sector.