Issue No. 112: What’s Trending in 2021

Omnichannel Exercise

To the benefit of the consumer, omnichannel is the answer. But, what exercisers gain in optionality, gyms and studios could lose in leverage.

The result? Instead of serving as the hub, gyms will become a spoke in the fitness seeker’s universe.

Meanwhile, at-home and tech-enabled brands will be executing on an omnichannel strategy of their own. Peloton’s acquisition of Precor and Apple’s decision to bundle Fitness+ with gym memberships signal their plans to be ever-present.

Reinvented Gyms

Micro-gyms, private studios, and social wellness communities are innovating on the in-person experience. Where fitness professionals fit in is less clear.

Silofit* recently raised $3.5M to expand its network of micro-gyms. With $3.8M in new funding, Hydra Studios* offers private workout, meditation, and sauna suites. As social distancing subsides, wellness-centric communities like THE WELL, Compound, and Highcourt could thrive.

Arming the rebels, startups like Playbook and Sutra are helping trainers go digital. As the infrastructure for fitness creators improves, gyms and studios will need to rethink the role of fitness pro to avoid a talent drain, from services and revenue streams to compensation structure.

Celebrity Status

To stand out, fitness and wellness companies are all-in on celebrity partnerships.

Peloton enlisted Beyoncé, Kevin Hart endorsed Hydrow, and Jay-Z joined Pitbull as an investor in CLMBR. No surprise, athletes are getting in on the action, too. Beyond amplifying awareness, brands are tapping celebs to create exclusive content.

And now that fitness instructors are celebrities in their own right, recruiting, compensating, and retaining A-list talent will have huge implications.

High-Tech Innovation

From computer vision and AI to virtual reality, technology will redefine fitness.

Already underway, Tempo utilizes 3D motion capture and advanced AI to track exercisers. At Tonal, 17 sensors guide users through a workout. And Zwift creates virtual worlds on par with video games.

Far from perfect, Oculus, Supernatural, and FitXR have advanced VR fitness. Augmented reality will benefit if Facebook or Apple release smart glasses. Either way, computer vision and motion tracking from Exer, PUSH, and Perch will aid at-home and in-person training alike.

Corporate Wellness

With work-from-home on the rise and employee well-being top of mind, corporate wellness is evolving.

In 2019, the global corporate wellness market was valued at $57B. By 2027, that number jumps to $93B. Eyeing this market, Gympass and ClassPass scaled up their digital fitness and wellness offerings during the pandemic.

Seeking to capitalize, Peloton, Calm, Headspace, and others are moving in. Upstarts like JOON, an employee benefits platform, are gaining traction. Without question, in 2021, mental health will be the priority.

International Expansion

The global fitness and physical activity economy will reach $1.1T by 2023, with Asia, North America, and Europe accounting for 90% of the current spending.

Taking notice, Peloton and Echelon Fitness have their sights set on Germany and the UK. The reverse, Munich, Germany-based Freeletics is scaling up in the States. Well-positioned globally, 75% of Zwift’s members are outside the US. And Strava’s 70M members span 195 countries.

Elsewhere, India’s fitness industry is on the rise. Cure.fit might be the most prominent, but Oga, SARVA, Ultrahuman, and TREAD are worth watching.

And, in years past, the Peloton of ‘X’ referred to modalities, like strength or rowing. Now, it also applies to geographic locations. Volava, VAHA, and Fiture are hoping to become the Peloton of Spain, Germany, and China, respectively.

Closures & Consolidation

Last year, the US fitness industry lost more than $15B in revenue. Prominent gyms, like Town Sports (owner of New York Sports Clubs), Gold’s Gym, 24 Hour, and Flywheel, declared bankruptcy. As a result of the pandemic, 25% of gyms could close permanently.

Meanwhile, the industry saw a number of high-profile acquisitions. Among other deals, lululemon paid $500M for Mirror, Peloton spent $420M on Precor, Francisco Partners forked over $345M for MyFitnessPal, and Eric Roza teamed with Berkshire Hathaway to buy CrossFit.

In 2021, as the industry tries to reorient itself, expect to see more of the same. Down that path, keep an eye on ClassPass – it might be the next M&A target. And it will be interesting to see if any growth-stage companies or SPACs become consolidators.

Anything Outdoors

With gyms closed, fitness equipment on backorder, and social distancing in place, the outdoors offered an escape.

According to Strava, in 2020, users logged 1.5–2x more runs and bike rides than usual, while outdoor walks increased by 3x. As cycling boomed, bicycles quickly sold out. In April alone, bicycle sales totaled $1B.

Recreational sports also got a boost. In July, monthly sales of golf equipment hit an all-time high of $388.6M. Tennis saw participation increase 50% and racquet sales tick up 40% in Q3 ’20. As temperatures dropped, snowshoe sales grew 250% from August through October.

Hopefully, this trend continues to gain momentum.

Well-being > Wellness

In the midst of a pandemic, the mental health crisis intensified. And access to personalized healthcare became the luxury we desired most.

In 2020, digital health startups raised $14.2B. Putting those dollars to work, confronting depression and burnout takes precedence. Next in line, at-home testing (Everlywell, Base, Vessel), and concierge medicine (Parsley Health, Forward, SteadyMD) is in high demand.

When it comes to wearables, devices like Apple Watch, WHOOP, and Oura are focused on health monitoring, not activity tracking. The next mainstream wearable, continuous glucose monitors, are catching on. Category leader Levels is scaling up, as Veri, January, Signos, lifetizr, and others give chase.

With more devices collecting more personalized data than ever before, the need for a central health dashboard is evident. A massive opportunity, Gyroscope and Heads Up Health are interesting here.

Addressing the Health Gap

It’s true: Health is wealth. And like wealth, the disparity between the haves and the have-nots is widening.

Intensified during the pandemic, this unfortunate truth has long been the status quo. As it relates to fitness and wellness, the industry’s efforts have yet to move the needle. In a year where connected fitness makers and meditation apps raised billions of dollars in funding, and immune-boosting supplements sold out, our collective health declined.

The hope, of course, is that investment dollars and digital solutions democratize access to well-being. Which means, looking ahead to 2021, the challenge is bringing that vision to life.

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🎙 On the Podcast

This week, on the Fitt Insider podcast, we’re joined by Avrum Elmakis, CEO of CLMBR — a connected vertical climbing machine.

In this episode, we discuss:

• Starting a business during a pandemic
• Launching on Indiegogo with $1M+ in preorders
• Targeting residential and commercial markets from the start
• Landing celebrity investors like Jay-Z, Pitbull, and Novak Djokovic

Listen to the full episode here.

👀 IPO Watch

ICON Health & Fitness is eyeing a 2021 public offering. According to Business Insider, the fitness equipment manufacturer is hiring banks in preparation for an IPO.

Background. The parent company of NordicTrack and iFit, among other brands, ICON has been in the fitness business since 1977. More recently, the focus has been on reinventing itself to compete with a growing number of connected fitness upstarts.

By the Numbers

• December ’19, iFit secured $200M for its streaming platform.
• iFit has 1M+ paid subscribers and 4.5M members in all.
• October ’20, ICON raised $200M at a $7B valuation.
• ICON is profitable, with $1.5B in revenue for the 12-month period through December ’20.

New products. Continuing to innovate, ICON recently introduced Vault, a Mirror-like competitor, to its equipment lineup. Across its portfolio of brands, ICON’s product offering includes stationary bikes, treadmills, rowers, and strength training equipment.

Keeping pace. Obviously, Peloton is the $40B elephant in the home gym. The two companies have sued each other over patent claims, a saga yet to be resolved. Following Peloton’s lead, ICON’s chief executive Scott Watterson told Business Insider the company intends to sign a high-profile celebrity partnership of its own.

🚫 The End of Haven

Three years after its launch, Haven is disbanding. A joint venture from Amazon, JPMorgan, and Berkshire Hathaway, the initiative aimed to fix healthcare once and for all. That goal proved easier said than done.

Punchline: According to CNBC, the venture failed because it wasn’t so joint after all. Unified in strategy, the trio of companies we’re siloed in execution, working on projects separately with their own employees.

Moving forward: A spokesperson for Haven said the companies will “collaborate informally… to address the specific needs of our individual employee populations.”

Zooming out: For its part, Amazon is still heavily involved in the healthcare space — delivering prescription medications, monitoring workouts, and providing virtual and in-person care to employees. To what extent Amazon disrupts healthcare remains the $3.5T question.

📰 News & Notes

• Peloton is expanding its corporate wellness team.
• Updates to the US dietary guidelines come up short.
• Whole Foods CEO John Mackey’s “solution” to healthcare.
• Clinicians at Kaiser Permanente can prescribe health and wellness apps.
• Mar–Sep: Apartment rental listings mentioning “Peloton” increased 170%.

💰 Money Moves

• Color, a healthcare startup building technology-first infrastructure, raised $167M at a $1.5B valuation in a Series D round led by General Catalyst and T. Rowe Price.
  More from Fitt Insider: Our conversation with General Catalyst’s Holly Maloney.
• Global snack company Mondelēz International acquired a majority stake in Hu Master Holdings, makers of a paleo chocolate bar, valuing Hu north of $250M.
• Garmin Ltd., maker of GPS-enabled activity trackers and technology, acquired GEOS Worldwide Limited, provider of SOS monitoring and response services.
• Milwaukee-based biotech firm GenoPalate closed $4M in Series A financing to scale its DNA-analyzing nutrition platform.
  More from Fitt Insider: The Trillion-Dollar Question
• Kuula, a UK-based digital fitness platform empowering instructors and trainers, landed €500K ($615K) in pre-seed funding.
  More from Fitt Insider: Arming the Rebels

 

*denotes companies actively working with Fitt Insider or receiving investment from Courtside Ventures, where we are advisors