This is the 3rd in a series of articles examining the impact of COVID-19 on the fitness industry and exercisers in general.
Don Mclean sang in American Pie how Feb 3, 1959 was the day the music died. In reference to the tragic plane crash that killed Buddy Holly, Ritchie Valens and the “Big Bopper”.
It might have been March 11th. Maybe 10th or 12th, 2020, but one of those days something died. COVID-19 pandemic started to shut down just about everything at that time. Schools, businesses, sports…almost everything not deemed essential. Our way of life prior to COVID-19 died. It remains to be seen what will resurrect to the same.
It was also the time that supply and demand was radically changed. No more demand for many things like travel, cars and appliances as well as in person shopping experiences. Demand surged for online shopping, medical supplies, groceries, toilet paper and of course, fitness equipment.
Perhaps the most surprising of items with skyrocketing demand is fitness equipment. It’s relevance in the home has not been the same since the last recession of 2008. Prior to 2008, high ticket treadmills and weight stations were flying out the door. I know, I lived it.
After the recession, gyms and workout studios started to pop up like no other time. They had a steady and good run from approx. 2010 to 2020. I know, I lived that side of the business as well. Then “the music died”, March 2020 version. Everything changed.
I itemized how those offering exercise in a common space will need to adapt to this change.
Those adaptations will be under scrutiny and review for some time to come. Unfortunately, some operators will not make it, but others will thrive.
A major ripple effect of the increased demand for fitness equipment is the impact on its supply chain.
Most of the western world have become increasingly reliant on Asia for its fitness equipment since 2010.
With the global barriers to commerce at an all time low, Asia has been THE fitness supplier to the world. For example, 85% of the worlds medicine balls are made in 1 factory!
Will the fitness industry continue to be impacted as other industries have by Asian production being reduced during COVID-19?
Specialty retailers, big box stores and online merchants have been hit with a wave of demand, the organizations with the most inventory being best positioned to prosper. 7–8 weeks into this, just about all of that inventory is gone now, and the game is getting very interesting. Who can bring in more inventory the quickest?
Many of the manufacturers have been shut down. Any North American manufacturer of equipment has moved to making medical supplies or stopped or reduced operations. Equipment has not shipped for up to 6 weeks from many places.
Prior to COVID-19 hitting North America, Asian production was down. Slowly it is coming back to life, but North American ability to import is paused for the most part.
Combine increased demand for some items with decreased ability to produce and procure same times, we have ourselves a supply chain crisis, a crossroads.
Here are 6 ways dried up supply and increased demand will affect the fitness industry:
1. Value of pre-existing equipment, equipment already in hand will go up. Based on prices for kettlebells on Kijjiji, prices are much higher than Pre COVID-19. Basic economics, lower supply with high demand equals higher prices.
2. Some manufacturers have moved on. Already happened. They have moved to a more lucrative industry, like medical supplies. Will they come back? Remains to be seen, but this shortens the supply pool even further. Will new suppliers emerge? Probably. How long will that take?
3. Lead times for equipment will get longer. This will especially impact the B2B side of the industry. The side that supplies hotels, company and private gyms etc. Prior to COVID-19, there was a steady flow with training accessories and cardio equipment taking a couple of weeks from order to delivery, whereas custom strength equipment was 6–8 weeks. Expect those lead times to triple as we get to 2nd half to 2020. How long with this last? Unsure.
4. The resellers of new equipment will suffer. This includes specialty retailers and dealers unless they have a direct pipeline to a manufacturer to shorten lead times.
5. The repair business will spike. Getting repairs done on the existing equipment when the new is not available will result in significant growth for technical repair side of the business. That means those who have access to parts inventory will flourish as well as field technicians and service businesses in general.
6. Refurbished equipment business will prosper. This was a side of the industry has had an excess of inventory for the last 5–6 years. Equipment that was discarded 6 months ago, now has value!
Prior to COVID-19, global fitness equipment sales were predicted to hit $13Billion by 2022.
Compared to other industries, fitness equipment is not that big.
However, it remains to be seen if these numbers will be affected based on the impact of COVID-19 on supply chain.
The argument can be made that demand will go up in some sectors (residential), but not sure in others (Gym expansion).
One thing is for sure, the world keeps changing. When one door closes, another opens. Opportunities are created in times like these.
Greg Lawlor works with facilities and specialty retailers as part of his role with Johnson Health Tech Canada.
COVID -19 stands to disrupt fitness supply chains, 6 ways this will affect the industry. was originally published in ILLUMINATION on Medium, where people are continuing the conversation by highlighting and responding to this story.
Powered by WPeMatico