The Australian Fitness Industry Report 2012

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2 The Australian Fitness Industry Report 2012 Lynne Pezzullo Director, Deloitte Access Economics and Lead Partner, Health Economics and Social Policy, Deloitte Touche Tohmatsu

3 The Australian Fitness Industry Report Background to the report 2. Approach, including data sources 3. Recent times & participation trends 4. Industry composition & costs 5. Clients 6. Employment 7. Innovation 8. Industry sub sector offerings 9. Regulations and quality standards 10. Outlook

4 The Australian Fitness Industry Report : Let's get physical: The economic contribution of fitness centres in Australia 2011: Fitness Industry Workforce Report This state of the industry report serves to: 1. raise awareness of the economic contribution of the fitness industry 2. promote ongoing advocacy efforts 3. discuss national regulation and standards 4. highlight innovation and challenges 5. identify the trends within, and their impact on, the fitness industry 6. aid decision making by Fitness Australia, including around investment opportunities

5 Our approach ABS reports (notably and ) Fitness Australia data (including workforce data) Online survey (April 2012, n=558)

6 Recent times Fitness industry revenue grew 4% pa over the past 5 years, slowing recently due to the weaker economy & consequent reduction in discretionary consumer spending. 24/7 facilities & fitness studios had greater levels of growth, 11% & 12% respectively. Industry will have revenue of over $1.2 billion in 2012 with average operating profit margin of 4.5%. Income sources Fitness subcontractor rental income 4% Other 9% Personal Training session/s 5% Membership 82%

7 Participation trends 18.3% participate in fitness activities ( , up 2.1% or >420,000 people since ) In 2012, 3.42m Australians aged 15+ years Fitness activities include aerobics/fitness/gym activities, Pilates, weight training and yoga categories. Participation in the fitness industry is 2 nd only to walking in terms of overall participation with growth 2 nd only to jogging.

8 Industry composition & costs This year, over 1,300 businesses are registered with Fitness Australia, about 50% of the industry (2,550 businesses overall). Small businesses characterise the fitness industry - barriers to entry are low and there are very limited regulatory requirements. Nearly half (47%) of industry responses were from gyms, 30% outdoor services, 6% independent trainers, 6% studios, 4% leisure centres and the remaining 7% clubs/corporate/school/other. Staff wages and rent make up more half of expenses Sources of expenses Cleaning 3% Utilities 4% Commissions 4% Other 21% than Staff wages 36% Marketing 5% Rent 27%

9 Client profiles 90% clients visited their fitness centre once or twice per week Commitment to their club was dependent on access to professional staff (74%), overall atmosphere of the facility (68%), and availability of machines in working order (67%) Main barriers to attracting new customers included an unstable economy, too much competition, and customers lack of awareness of service offerings (Sweeney Research 2009) Increases in older age groups are expected over the next few years % population participating Males Females Age group

10 Employment About 75% of all exercise professionals ( 30,000) are registered with either Fitness Australia or Physical Activity Australia More females in the industry (56%) 53% (of all professionals) are aged between years. Only 4% are >55 years According to the ABS, 68% of the fitness professional workforce were employed as casuals, 12% permanent part time, 18% permanent full time and 2% are working proprietors and partners Further details are in Fitness Industry Workforce Report

11 Innovation The industry is dynamic and sensitive to new fitness trends both locally and abroad. The use of technology is increasing the interaction between the club and client and promoting online products and programs. Survey responses indicated businesses seek to differentiate through services provided rather than by price reductions or advertising. Focus is on quality provided and the benefit or overall value to the client.

12 Offerings Influencers Ageing population New spending habits More emphasis on wellbeing Allied heath services such as massage, acupuncture and allied health services are being integrated into business models to further expand market reach. According to survey respondents, about 8% of clients are being referred to medical or allied health services and 11% are referrals from such services.

13 Traditional offerings still matter Survey participants were asked to rank a selection of fitness services according to the importance of each to their business. Traditional offerings ranked highest.

14 Regulation Regulation, codes and quality standards for the industry remain fragmented, both in scope and in requirements. However, survey respondents were aware of and understood regulatory obligations in general. 49% viewed regulation as a net benefit and 31% were indifferent to it. Reasons included: it enhances and maintains the credibility, integrity and quality of the industry. It keeps the industry honest. Those opposed said it was a net cost because the regulation does not apply to the industry as a whole, so those who are not trained or registered to practise may provide a substandard service. Others expressed concern around the cost of compliance, including adhering to award wage rates and legal/insurance costs incurred, or that being registered did not provide significant benefits above the cost at an individual level.

15 Quality standards Fitness Australia is currently in the process of developing an industry-wide quality framework, which aims to enhance standards of professionalism, care, safety and service within the fitness industry. 71% said the new standards would, or may be, an improvement for their business

16 Outlook The fitness industry, relative to the broader industry group of sport and recreation, has been growing at a faster rate in employment, wages, revenue and value added. Drivers are the increased wealth of Australian households, urbanisation and increasing time pressures. The fitness industry influences the economic wellbeing of other industries. Economic links comprise direct and indirect economic contributions. In total, the direct and indirect fitness industry contribution to GDP is worth $1.4 billion. Under the projections demand is estimated to increase from 3.42 million participants in 2012 to 7.15 million by 2020.

17 Opportunity The incidence of physical inactivity related and obesity related disease increases and the population ages - the need for the fitness workforce to be able to contribute to the management of health issues is growing. One of the biggest opportunities currently for the fitness industry is the potential to link in with the general and allied health sector. Australian Institute of Health and Welfare: participation in physical activity has important benefits for the physical and mental health of Australians, and for social and cultural values in our communities (Armstrong et al 2000). In 2011, 7,516 potential cases of chronic disease (cardiovascular disease, Type 2 diabetes, osteoarthritis, cancer) were averted due to fitness memberships. This equals savings of ~$77 million to the Australian economy.

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