The Great Reset That Never Was: The Fitness Sector in the Aftermath of the Covid-19 Pandemic

The COVID-19 pandemic has had a negative impact on small businesses, substantially accelerating business failure and adversely affecting financial viability. We consider these issues in the context of the fitness sector. The pandemic shifted patterns of human mobility, whereby the operating model of the fitness sector was suddenly negatively impacted by digital substitution. The sudden availability of digital exercising options raises questions about how digital substitution works in the manner by which consumers use fitness centers in the short and long term. We examine these issues using individual-level anonymized app usage and gym attendance data. We complement our individual-level analysis with aggregate analysis using foot traffic from Safegraph and combine this information with internet search data for fitness before and after the start of the pandemic. The mandated lockdowns and re-openings across states provide us with a natural experiment to examine the impact of digital substitution in the fitness sector both in the short-term and the long-term. By using staggered adoption of individual fitness app usage and gym attendance data based on GPS location, we can uniquely identify individual substitution patterns for about 17 months. We find that while there was a large digital substitution in the short term, this substitution waned after December 2020. Similarly, we show that gym attendance dropped at an aggregate level with increased search intensity for fitness-related keywords until December 2020, and then this association mostly disappears in the beginning of 2021. We find that the digital displacement is driven by the proximity to fitness centers, franchise arrangements in the fitness sector, and local political conditions. Our results highlight that fitness and wellness are highly localized and sensitive to local variations in public health and well-being. We find evidence that fitness apps substituted in person visits to gyms when people had access to high-speed internet.