The German health and fitness market

The German health and fitness market is the second largest in Europe and it ’s still growing – but what does the future hold?

There are many different facets of the German health and fitness market. It has four different trade associations and generated total sales of just € 3.16bn in 2002 (Source: DSSV), which is less than Porsche AG’s annual turnover.

Until now, there hasn’t been any accurate data of the total size of this market. However, since 1999, Deloitte & Touche has been engaged in this market segment and committed to increasing its transparency by issuing several studies about the current and future market situation.

Deloitte & Touche also provides consulting and auditing services to some of the largest fitness operators in Germany. Therefore, this article aims to give the reader a general overview of the German fitness market, the main players and potential trends.

overall market

The health and fitness industry in Germany, as the second largest in Europe, has experienced continuous growth over the last 10 years.

Overall membership increased by 155 per cent from 1992 to 2002, with a yearly average growth rate of 11 per cent (CAGR). Therefore, at the end of 2002, approximately 5.1m people in Germany were a member of a fitness club, accounting for 6.2 per cent of the total population.

Furthermore, the number of clubs increased from 4,750 in 1992 to 6,500 in 2002, an increase of 36.8 per cent, or a yearly average growth rate of 3.5 per cent (CAGR).

On the one hand, the strong growth reflects the increasing professionalism of the clubs in their operations and their ability to attract new members. On the other hand, it reflects a more general increase in the population’s awareness of the health and fitness market.

However, analysis of the growth over the last three years shows the pace tapering off. The number of clubs remained consistent at approximately 6,500 and although membership increased by 7.5 per cent in 2000 and 8.3 per cent in 2001, this slowed down to a 2.6 per cent increase in 2002.

selected operators

Since 2001, Deloitte & Touche has been issuing a quarterly newsletter with the most recent figures of selected health club operators in the German health and fitness industry.

The large fitness operators (non-franchise and franchise) are growing much faster than the overall market. However, even they have experienced a slower growth rate in the last three years. Whereas the membership of larger operators grew by approximately 41 per cent in 2000, and 34 per cent in 2001, this growth dropped to 22 per cent in 2002. This decline comes hand in hand with significant downward adjustments to their budgeted growth.

The top four players in Germany account for approximately 75 per cent of the total membership of the selected non-franchise studios. The largest fitness operators in Germany are experiencing increased growth in membership figures despite the overall economic downturn. The outlook for 2003 is mostly optimistic and focuses on growth through new club openings or through growth in membership at existing clubs.

In recent years, the German health and fitness market has experienced market consolidation, expressed through the growth of the selected studio operators, which continues to be well above the market average.

Furthermore, growth is generated through existing clubs. This goes hand in hand with a further increase in the average number of members per studio. The trend is exhibited by large clubs, with an average of 1,500sq m to 2,500sq m, with a few clubs over 10,000 sq m. However, the market share of the five largest fitness operators in Germany was only approximately 7 per cent in 2000, less than the market share of the five largest fitness clubs in the UK of approximately 25 per cent. By the year 2005, we forecast the market share in Germany and the UK for the top five players to be approximately 16 per cent and 25 per cent respectively.

trends forecast

We predict that the larger fitness operators will increase their share of the German health and fitness market and, in the long run, consolidation will continue to push the smaller, single site fitness clubs out of the German market. Large fitness operations are well-managed and employ professional staff, and the image of fitness clubs attracting only ‘Schwarzenegger wannabes’ is long gone. The new clubs are clean, equipped with the most recent cardiovascular and resistance machines and attract a totally different type of member.

New requirements relating to bank loans are also making it harder for smaller fitness operators to access external capital, exacerbating what is already a difficult situation for them. Without access to appropriate financing, smaller operators are often poorly managed and cannot effectively compete with the chains. Unable to invest in new equipment and professional staff, often their only solution is to close.

Another important trend in the coming year will be the development of more premium and country clubs in Germany. Clubs in this sector are usually are very large (more than 2000sq m) and most have 25m swimming pools, tennis courts and sometimes even golf courses, targeting the upper-middle to upper class members. In our study ‘The German Health & Fitness Market in the Year 2005’, we forecast that the market share of premium and country clubs will increase from 3 per cent in 2001 to 9 per cent in 2005.

The German health club market will continue to grow and we predict that further consolidation in the industry will be driven by the large operators.

For further information, please contact Karsten Hollasch, head of the health and fitness competence center of Deloitte & Touche in Germany. Details: khollasch@deloitte.de