Health and Science

On-demand fitness spending is spiking, and consumers are sticking with it longer than traditional gyms

Key Points
  • Spending on fitness classes and gyms grew just over 5% last year, but on-demand fitness spending jumped nearly 59%, according to Cardlytics.
  • By the fall, traditional gyms and studios lose more than three-fourths of the customers that joined in January, but on-demand fitness programs retain about half of their customers through the nine-month mark.
  • Spending for on-demand fitness spikes during the holidays.
  • On-demand is also much cheaper, with the average user spending about $48 per month, versus $59 per month for traditional gyms and $136 for boutique studios.
Peloton machine
Source: Peloton

The fitness business is still booming, but one sector is taking a distinct lead.

While spending across traditional gyms, boutique studios and on-demand streaming fitness combined grew just over 5% last year, on-demand fitness spending jumped nearly 59%, according to Cardlytics.

On-demand offerings, which include Beachbody, Gaia, Peloton, Daily Burn, and Forte, to name just a few, still make up just 6% of total fitness spending, while traditional gyms, like Planet Fitness, Golds Gym, LA Fitness, Crunch, and Anytime Fitness still lead with 72% of the market. Boutique studios make up the rest. On-demand's growth, however, is astronomical, with spending up 129% since 2017. Traditional gym spending was up just 6%.

"A lot of it comes down to the fact that it's new, it's fun, it's fresh, it's not the same thing over and over," said Dani Cushion, chief marketing officer at Cardlytics. "The on-demand space is picking up more and more because it's so convenient. It's a much lower hurdle for people to get a workout in."

And that may be why they're staying as well. By the fall, traditional gyms and studios lose more than three-fourths of the customers that joined in January, but on-demand fitness programs retain about half of their customers through the nine-month mark, and spending for on-demand classes spikes during the holidays.

On-demand is also much less expensive, with the average user spending about $48 per month, versus $59 per month for traditional gyms and $136 for boutique studios.

Peloton, which is one of the pricier streaming fitness models, is seeing huge growth. Its subscribers grew 96% annually to 712,000 and subscription revenue rose 107%, according to its second-quarter earnings release.

Some large gym brands, like Crunch, are now offering on-demand workouts, and some are taking the hybrid to a new level. At LEKFIT, a Los Angeles-based boutique-type workout, the focus was first on streaming content.

"We actually did digital first. We followed the Warby Parker business model," said Lauren Kleban, LEKFIT's founder and CEO. "We saw the business going there really, really early on. Instead of pouring tons of money into brick and mortar, we just took it online, which is definitely less of a financial commitment."

The digital platform of classes costs $19.99 per month. That is now supported by the opening of a three-floor 6,000-square-foot flagship studio and boutique in Los Angeles. In its studio, LEKFIT offers a five-pack of classes for $170.

LEKFIT's digital platform drives 90% of its revenue, according to a press release, and has seen 100% annual growth. About 87% of its subscribers live outside the boutique hubs of Los Angeles and New York City, with a substantial international following. Kleban admits her digital clients are more loyal.

"We have very low churn rate as far as digital goes. I know for sure if I weren't in this industry I would be working out from home. People want to be healthy and fit. The digital space has made that really easy," she said.

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