Exercise Equipment

Exercise Equipment
Industry Overview
U.S. fitness-equipment manufacturers serve two enduser markets in the $10 billion industry: consumer and
institutional (which includes health clubs, apartment
and condominium complexes, and hotels). The
consumer market is by far the largest of the two
markets; over 80% of manufacturers’ shipments of
exercise equipment is for home use.
The industry has experienced significant growth since
the 1990s, though specialty retailers have declined in
number and face tough competition from sporting goods
stores and mass merchants (Sporting Goods
Manufacturers Association, or SGMA, “Recreation
Market Report,” 2005 Edition; “Marketing Ideas,”
Norbert J. Kuk & Associates, February 2004).
In recent years, millions of consumers decided that
having exercise equipment at home was important and
made room in their bedrooms, dens and basements for
exercise machines. The most popular piece of
equipment in home gyms is the treadmill. An estimated
11.6 million Americans report that their indoor exercise
routine includes either walking or running on a treadmill.
In addition to treadmills, home gyms, exercise cycles,
and free weights are very popular. Elliptical machines,
also called cross-trainers, have surged in popularity -though they still represent less than 6% of the total
equipment market (Consumer Reports, January 2005).
Fitness-equipment specialty stores sell primarily top-ofthe line equipment, while mass merchants and general
sporting goods stores sell many of the lower- and midpriced lines. There has been a significant amount of
erosion of specialty fitness-equipment retailers’ share of
the market. Specifically, Sears easily leads retail sales
of treadmills, and its merger with Kmart only increased
that lead (Sporting Goods Business, June 2005).
Sears sells more fitness equipment than any other
retailer in the U.S., and the merger of Gart Sports and
Sports Authority resulted in expanded treadmill and
elliptical equipment offerings at general line sporting
goods stores. But higher-income and more athletic
consumers still shop primarily at specialty fitnessequipment retailers. The models they carry tend to be
heavier and more durable -- and more expensive -than the units sold by mass merchants (National
Sporting Goods Association or NSGA, June 2004).
The influence department stores, Sears in particular, in
the sale of treadmills indicates how much ground other
retailers must make up if they are to take a larger share
of the most popular piece of fitness equipment. The
following chart illustrates this point:
Home Exercise Equipment
In Wholesale Dollars and % Market Share,
By Type of Equipment
$1.05 billion
Home gyms - 9.9%
cycles - 6.0%
$840 million
Retail Treadmill Sales: $2.8 Billion
(% of Dollar Volume, by Type of Retailer)
Free weights - 6.0%
trainers - 5.7%
Benches - 5.0%
Ab machines - 4.8%
Ski machines - 2.8%
* Other includes stair-climbing machines, aero gliders and other equipment.
Source: SGMA Recreation Market Report, 2005 Edition.
Department stores
(primarily Sears)
$1.38 billion
Full-line sporting goods
$449 million
Fitness equipment
$352 million
Other* - $619 million
*Includes mass merchandisers, warehouse clubs, Internet sales, etc.
Source: NSGA, June 2005 press release.
Issues and Trends
Retailers and direct marketers of home-exercise
equipment -- many of which sell equipment through
infomercials -- have benefited from manufacturers’
increased development of products for home use. The
reasons consumers buy exercise equipment include:
Improved health
Weight loss
Privacy in working out
The downturn in the economy in 2001 interrupted a
long-term pattern of growth in the exercise-equipment
industry, according to the 2002 and 2003 “State of the
Industry Reports” published by the SGMA. Sales
rebounded in 2002, increasing by an estimated 7%.
Sales remained relatively flat in 2003, but a healthy 4%
increase for 2004 mirrored the strengthening U.S.
economy (SGMA, “State of the Industry,” 2005).
Growth in the industry has been driven by an increased
awareness of the benefits of exercise and the dangers of
sedentary lifestyles. The U.S. Surgeon General’s office
has consistently issued reports urging Americans to
become more physically active, and many have listened.
Many consumers, wanting to spend more time at home
with family, are also interested in looking and feeling
better and are working out more at home. According to
data gathered by the National Sporting Goods
Association and Money magazine (February 2005), their
purchases of fitness equipment have increased steadily,
and are forecast to rise to $5.1 billion in 2005 (at the
retail level).
An estimated 33% of all U.S. households own and use
exercise equipment. This broad category includes yoga
and pilates mats, hand weights, barbells and exercise
equipment like treadmills and stationary bikes. Everstressed for time, equipment for home use balances
consumers’ need for activity with their desire for
convenience (Atlanta Journal-Constitution, January 10,
2004). The American Council on Exercise, the largest
nonprofit fitness certification and education provider in
the world, lists a few helpful tips before buying fitness
equipment, such as making sure of versatility, checking
on size in relation to home space, making sure
maintenance is straightforward, insuring ease of use will
not be a problem and covering all safety concerns.
Women, in particular, have embraced the “exercise at
home” concept. Between 1987 and 2002, the number
of women participating in home exercise routines
increased by 113%. One of those taking advantage of
that trend is Donna Savage, the President and CEO of
Fitness EM. Her company, which licenses the Danskin
name and offers equipment designed with women in
mind, has grown by leaps and bounds (Sporting Goods
Business, January 1, 2004 and March 5, 2005).
The Outlook for Home Exercise Equipment
Resistance trainers -- Nautilus’s Bowflex or ICON’s
CrossBar, for example -- still sell well, but sales were
down slightly in 2004.
Stair steppers, or stair climbers, are a home-fitness
trend that continues to grow. They are simple to use
and small enough to store out of sight.
Demographics seem to favor the fitness industry over
the long run. Americans aged 55 and older have come
to enjoy exercise (or at least participate in it) in
extraordinary numbers, and are the fastest-growing
segment of new health-club members. They also
represent nearly one-quarter of the households in the
U.S. in which exercise equipment is owned and used.
Sales of elliptical trainers are going strong. They were
introduced to the retail channel a few years ago, and
sales have been impressive; in many regions, sales of
elliptical machines are on par with sales of stationary
cycles. Sales increased nearly 20% in 2004.
Many exercise equipment dealers have hired personal
trainers as sales reps. Their knowledge of how the
use of exercise equipment affects different parts of
the body helps make customers comfortable purchasing high-ticket machines. Dealers emphasize that most
personal trainers must be coached to develop their
sales skills and should be trained by manufacturers on
product characteristics. Both Omni Fitness and Fitness
Experience have personal trainers on staff.
Used exercise equipment is a growing market, with
2004 sales of $855 million. It’s a niche that many
independent dealers have found to be profitable.
Manufacturers are introducing equipment that is far
more technologically advanced than ever, keeping
consumers’ interest level high. Marathon-friendly
treadmills, for example, have features such as on-deck
computers with built-in 26.2-mile “course,” with a 15%
incline. Or video and DVD workouts can play on the
screen. On other models, data from heart monitors
helps marathoners set training goals; there are also
customized units for runners with long legs, allowing
them to take longer strides.
Sources: Health and Fitness Business, January 2004, July 2004; The
Wall Street Journal, October 8, 2004, October 1-2, 2005; Money Magazine, February 2005; Sporting Goods Business, July 11, 2005, NSGA
press release, June 2005.
Top 4 U.S. Specialty Equipment Retailers
Gym Source, based in New York, New York, has 26
stores and $40 million in 2004 sales.
LA Gym Equipment, based in Arleta, California,
has 13 stores and $26 million in 2004 sales.
Omni Fitness, based in Moonachie, New Jersey,
has 46 stores and $28 million in 2004 sales.
Fitness Holdings, based in Torrance, California
(which also owns and operates Busy Body), has 44
stores and $68 million in 2004 sales.
Source: Sporting Goods Business, June 2005.
In the advertising that is placed by fitness-equipment
stores, there are several factors that are mentioned to
motivate people to call or visit, or to make them feel
comfortable doing business with the store. Some can be
categorized as “confidence factors,” and some as
“convenience factors,” examples of which follow.
Confidence Factors Mentioned In Ads
Size of Inventory - Selection
Years in Business
Complete Service Center
Certified Technicians
"All Fitness Questions Answered"
Spa-Quality Equipment
Experienced Staff
Treadmill Specialty
"Try Before You Buy"
Factory-Authorized Service
"Our Only Business"
Source: 2004 Comparative Ad Analysis Survey, Norbert J. Kuk & Associates.
Convenience Factors Mentioned In Ads
Large Display/Showroom
Free Delivery and Set-Up
Multiple Locations
Open 7 Days
Large Selection in Stock
Ample Parking
Toll-Free Telephone Number
Free Consultation
Website Promos
In-Home Service/Repair
Free Brochure/Catalog
Some of the new marathon-friendly treadmills that hit the
shelves in the Fall of 2005 are NordicTrack’s Apex,
priced at $1,999 to $3,299, and the T518 LC by Nautilus,
which retails for $3,200 (The Wall Street Journal,
October 1-2, 2005).
Average prices for some popular types of exercise
equipment range from $400 to $700 for exercise
spinners, $300 to $500 for high-end dumbell sets, and
$750 to $1,500 for home gyms with in-place weights.
Critical Success Factors
Among the factors that exercise equipment retailers
said they consider to be critical for success in the
industry are many that relate to good customer service.
These include making sure the customer is comfortable
with the equipment purchase, following up to make sure
customers encounter no problems, honoring warranties
when something breaks down, and selling customers
what they want to buy, “not what is in stock that you
can sell to them.”
Other key factors in the formula for success follow:
CSFs for Exercise-Equipment Stores
Source: 2004 Comparative Ad Analysis Survey, Norbert J. Kuk & Associates.
Value of Products and
Services in the Industry
Articles in Consumer Reports and Health Magazine
(both January 2005) provided a sampling of prices for
some of the equipment that was tested by their staff
Life Fitness Treadmill T3i
Horizon Fitness Elite 5.1T
Schwinn 418 Elliptical Trainer
Reebok Elliptical Crosstrainer
Parabody GS6 Weight System
Concept2 Indoor Rower Model D
Thorough knowledge of all products carried
and what they are capable of doing, to help
troubleshoot if something malfunctions after
Timely delivery of equipment once it is ordered.
Carrying products with the latest technology,
to differentiate from mass merchandisers,
which typically carry less sophisticated
Stocking a wide variety of products in addition
to equipment, to attract a wider audience and
provide opportunities to “upsell.”
Industry Resources
Sporti ng Goods Busi ness
770 Broadway
New York, NY 10003
www.sporti nggoodsbusi ness.com
200 Castlewood D ri ve
North Palm Beach, FL 33408
1601 Feehanvi lle D ri ve, # 300
Mt. Prospect, IL 60056
Sporti ng Goods D ealer
22 Paterson Avenue
Mi dland Park, NJ 07432
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