Fitness continues to be big business in Germany. Memberships are up, larger operators continue to expand and bigger centers are on the way. The prospect of further growth seems unfathomable but by no means impossible.
Pumping iron in Hamburg
Gone are the days when German gyms were filled with Arnold Schwarzenegger wannabes, pumping aging iron on machines that looked like medieval torture devices in a concerted effort to emulate the Austrian bodybuilding icon. Back then; these pungent temples to physique were mainly the domain of dedicated, mostly male, weightlifters, straining muscle and sinew in minimalist and dingy surroundings. How times have changed…
Fitness as a lifestyle choice and, more importantly, a growth industry has changed the demographic of German gym goers. State-of-the-art cardiovascular and resistance equipment, luxurious surroundings, MTV and wellness annexes bulging with saunas and pools have tempted a new type of client to the clubs. And the popularity of the lifestyle and promise of “a new you” has paid huge dividends to the German fitness market, making it the second largest in Europe.
Growth in the German fitness market has been steadily increasing over the past decade. According to a 2002 report by business consultancy Deloitte and Touche, nationwide membership figures for the German fitness sector increased by 155 percent in the ten year period beginning 1992, averaging around 11 percent growth every year. That meant that by the end of 2002, around 5 million Germans, almost 6.2 percent of the population, were members of a fitness club.
Karsten Hollasch, the head of the health and fitness competence center at Deloitte and Touche, spoke to Deutsche Welle about the reasons for the growing popularity.
Media presentation of lifestyle
"Public awareness of fitness and wellness has increased through the promotion of the lifestyle, especially in the media," he said. "Also, it's a totally different concept to the hardcore bodybuilding of the 80's. That had a very small audience. Now it's slow and easy and it attracts more people."
"The offer concept in Germany has also helped. Specializing offers, for example, for women, for those with certain health problems and those into the wellness concept, has created demand over the past five to six years."
Of course, while members are working up a sweat, they’re also working up a profit for the major centers. Membership fees and other sales generate around €3.3 billion a year for the fitness segment in Germany. Average monthly fees range from €20 for standard membership in a smaller studio to €100+ for top range gold card holders.
Number of clubs reached plateau
However, while the cult of the body continues to persuade many people that buff is beautiful, the fitness boom of the nineties seems to have reached a plateau in terms of the number of clubs. Once the trend really kicked in, the number of clubs in Germany surged from 4,750 in 1992 to 6,500 in 1999 but hovered around that number for the following three years. It seemed that the market was being saturated and that the industry had exhausted its raw material -- those wanting to pay to exercise.
In reality, what was happening -- and what is still the case in the German market today -- was the rise to dominance of four major players. Together, the Fitness Company, Elixia, FSH Future Sports and TC Holdings continue to grow faster than the overall market that supports them, with a combined membership of around 75 percent of the entire national total.
Big clubs favor expansion
With these four operators increasing their numbers of sophisticated establishments, offering everything from calorie burning aerobics classes and indoor cycling to shiatsu and aromatherapy, the expanding market in what are essentially fitness malls has led to the slow demise of smaller centers.
Both the Fitness Company and Elixia have a policy of year-on-year expansion; the Fitness Company aiming for 15 new clubs a year, Elixia opening three every 12 months. With the finances generated from membership fees capable of funding such expansion plans, smaller competitors often face the only solution open to them and that is to close down.
This hasn’t stopped new businesses entering the market. In July, Karstadt Warenhaus AG, the leading sports supplies arm of the department store chain KarstadtQuelle, announced that it was moving into the gym owning business by buying nine clubs from the 24 Hour fitness chain and re-branding them under the Karstadt name. With one acquisition, Karstadt inherited 28,000 members and a captive audience for its range of sports products. Sources at the company announced at the time that this was just the start of “a rapid expansion with fitness clubs in the coming years.”
Smaller operators dropping away
Despite the odd would-be usurper, the demand for fitness and wellness centers in Germany is likely to keep the larger operators going for some time, despite figures that show the number of studios has reduced by around 1000 in 2003. However, this is more likely to be a result of failing businesses.
Forecasts for 2005 by Deloitte and Touche show that the larger fitness companies will increase their share as smaller competitors drop away over the next two years. But there may be an even bigger kid on the block preparing to make its presence felt.
Country clubs in the ascendence
The forecasts predict the emergence of the ‘super’ centers, based on the sprawling country club format which has proved popular for the upper-middle to upper class leisure enthusiasts in the U.S. and U.K. These expansive estates usually spread over a 2000sq meter area and contain large pools, tennis courts and sometimes even golf courses. In the study, The German Health & Fitness Market in the Year 2005, the consultancy predicts that the market share of premium wellness centers and country clubs will increase from 3 percent in 2001 to 9 percent by 2005.