A few weeks ago, Robert Kim was considering spending close to $3,000 on a camera and sound equipment to create more sophisticated personal-training videos for his clients. When the Ontario government forced his Toronto-based gym, Auxiliary Fitness, to shut down for the second time in six months, he quickly decided against it.

The gym’s membership numbers had been shrinking since the pandemic hit, despite Kim reducing his monthly fees from $200 for in-person training to $60 for virtual training. Spending thousands on tech gear “was too big of an investment for me to make right now, and for the clients, you just don’t get that same experience,” he told The Logic. 

Independent fitness businesses like Kim’s are grappling with an existential crisis: as the second wave of the pandemic compels governments to reimpose partial lockdowns, the in-person neighbourhood appeal they rely on to help them compete not only against the large chains, but increasingly against fast-growing fitness-technology companies like Peloton and Sweat—is gone.

The pandemic has forced independents to move their workouts outdoors as long as the weather permits, or to go the virtual route, pitting them against an emerging fitness-tech category whose champions are flush with tens of millions of dollars in capital they’re using to create highly sophisticated virtual experiences. 

Some independents that invested in a digital strategy before the pandemic found the first shutdown relatively manageable. Melody Benhamou, owner of Montreal-based Idolem Yoga, told The Logic her studio switched effortlessly to virtual sessions within days of the Quebec’s government-imposed lockdown in March. “We managed to keep almost all our clients online,” she said.

However, moving the classes online brought Idolem into direct competition with the fitness tech startups, which meant a hit to Idolem’s bottom line. “Instead of charging $100 a month, we had to remain competitive with the big online players out there and charge only $20 a month,” Benhamou said. She also observed that many of her clients grew exhausted with virtual training over time, and when her chain of studios was forced to shut down again in early October, only 20 per cent of her customers returned to the online classes. She’s now part of a group of around 200 fitness-studio owners—the Centres d’activités physiques du Québec—threatening to reopen this week in defiance of the Quebec government’s order they remain closed.

Many small brick-and-mortar businesses playing catchup on digital have found it as expensive as it is time-consuming. Sean Maingot, owner of Toronto-based gym Body By Chosen, started creating online workouts for his clients during the pandemic, but found they couldn’t effectively replicate the in-person training they would get from him. “You need cameras, tripods, lighting, good sound, and you need to film the workout from at least three different angles. Then you need to put all of that together, get a video editor to make it look good,” he told The Logic. 

A recent survey conducted by the Toronto Region Board of Trade found that almost half of business owners (46 per cent) did not have either the money or the expertise to implement digital solutions. Seventy-five per cent of those surveyed believed that expanding their digital offerings was essential to remaining open, but more than half still felt “lost” when it came to understanding digital tools. 

Like Kim and Benhamou, Maingot cut prices for virtual workouts. In the first few weeks of the pandemic back in April, his clients “stuck around,” putting up with the occasional logistical hiccup that comes with streaming. But over time, Body By Chosen’s membership numbers started dropping, and Maingot discovered a number of his clients had signed up for workout apps like Sweat and Playbook. 

“They came to Body By Chosen for the community. It wasn’t just working out; it was the other people they met in bootcamp classes. The feel of the gym, the motivation you got when your trainer is right there in front of you. That’s hard to do right now,” he said. 

Indeed, in-person gym use appears to have plummeted since the start of the pandemic, regardless of whether their doors remained open or not. A September survey from RunRepeat, a website that reviews running shoes, found that only about 31 per cent of Canadian gym members had returned to their gyms since lockdowns. Sixty per cent had cancelled or were considering cancelling their memberships, and consumer confidence in gyms had sharply declined since March, with 22 per cent fewer members returning to their gyms than expected six months earlier. 

Meanwhile, companies in the fitness tech space have seen their popularity skyrocket during lockdown.

Peloton, which initially started as a company selling physical equipment for high-intensity cycling workouts, began offering a variety of other equipment-less workouts through its app in 2018—a digital membership now costs just US$12.99 per month and gives users access to over 50 different workout options, at different levels of difficulty. The fitness company ended its most recent quarter with more than 1.09 million connected-fitness subscribers, up 113 per cent from a year earlier, and about 3.1 million total. 

Playbook, an app that trainers can use to create videos, raised US$9.3 million in a Series A funding round this month that included investors like Porsche Ventures and philanthropist Michael Ovitz. 

Established fitness players are competing more aggressively in the space, too. The Nike Training Club app, for example, used to offer a small number of workouts for free with the option of accessing additional workouts for US$14.99 per month. Nike recently opted to make those free as well, in a bid to head off the upstarts. 

“We have believed for a long time that fitness-tech is going to be a very big category,” said Jed Katz, one of the earliest individual investors in Peloton and founder of Javelin Venture Partners, a San Francisco-based VC firm. “The pandemic has turbocharged a trend that already existed—a giant number of people will either be doing all or some of their exercise at home, and not going back to gyms at all,” he told The Logic. 

The proliferation of venture-backed fitness tech startups doesn’t necessarily spell the end for independent gyms and fitness studios. Kim points out that one of the only reasons he is still able to stay afloat is customer loyalty—clients who personally like him and his training style, and do not necessarily trust other workout experiences. 

Katz, too, believes there will always be a market for people who want that “craft” gym experience. 

“Some people want a highly produced Peloton-style video where you don’t know the instructor and there are thousands of people in your class. Others want just 20 people, where the instructor knows your name,” he said. From an investment perspective, Katz believes there is opportunity in companies that can provide the technology and software to help smaller gym owners go online. 

One such company is Moxie, a Florida-based software startup whose platform for fitness instructors helps them handle scheduling, payments and uploading video workouts in one virtual space. Moxie also provides the option for trainers to use its own platform to upload workout videos. The company’s services are only available for U.S.-based instructors, though CEO and founder Jason Goldberg told The Logic that there are plans to expand to Canada. 

In the meantime, at least in Ontario, small-business owners that have struggled with digital solutions have access to a government-backed non-profit called Digital Main Street,  which provides businesses with social media help, website support and marketing consultation. 

It also offers grants of up to $2,500, which owners can apply for every year to implement a digital strategy. So far, over 7,000 businesses have accessed Digital Main Street’s grants, although very few of them have been in the fitness space, according to managing lead Darryl Julott. 

“Businesses need to figure out for themselves if it is worth it to invest in digital solutions. They could do it on a small scale at least until the pandemic ends, but I think they need to take note of the long-term shift in how people are going to consume any product,” said Julott. “Things might not be the same when we emerge from this.”

One of the few fitness clients that sought Digital Main Street’s services is Cambridge, Ont.-based Atlas Yoga Studio. Owner Denise Davis-Gaines used her $2,500 grant to completely redesign Atlas’s website, implementing a savvier online payment solution, and producing 50 high-quality yoga videos. “I would have had to earn maybe $25,000 in revenue to spend $2,500 because my margins are so thin,” said Davis-Gaines. She claims the revamp and social media marketing help has brought her clients from as far as Iowa and parts of B.C.

Neither Maingot nor Kim had heard of Digital Main Street’s grant program. And Maingot is skeptical—as a former trainer to musical artist The Weeknd, he’s a well-known entity in the Toronto fitness community, and wholeheartedly believes Body By Chosen has strong enough brand recognition to survive. “I’m not sure how much $2,500 can really help in the long term. We could rent some equipment a few times and make a bunch of videos, but I don’t see that as a solution to getting our membership numbers up right now,” said Maingot. “We’re just going to try and ride this one out.”