Man first made a machine to make his task easy. And then some more. But gradually his tasks became so easy that he had to make a machine to make him tough! Perhaps, this is too simplistic a way to explain how gym equipment came into being. But the fact remains that with virtually everything getting done using machines, the modern man needs gym equipment to stay fit. And this bizarre need of the modern man has created a very profitable business opportunity. Are you game?

Sachin Manawaria | @TheDollarBiz

Lack of time to go to a gym is prompting a large number of fitness conscious people to buy treadmills and stationary bike at home. Similarly, large number of big corporations have incorporated fitness routines to ensure that employees stay healthy and invigorated. Explaining this trend, Deepak Kevadia, owner of Saiworks, a Mumbai-based gym equipment dealer says, “Many companies have started setting up gyms in their premises. This is one of the main reasons for the market for imported gym and fitness equipment growing by leaps and bounds over the last decade.

Running to nowhere

Because of their user-friendliness, treadmills continue to be the most popular in the entire range of fitness equipment. They are followed by stationary bikes because of their suitability for every age group. Elliptical cross trainers too are slowly catching up with stationary bikes, especially among the youth. These comprise the three broad categories of equipment more conspicuous in the home segment, while cardio vascular equipment are more preferred by corporations, health clubs and full-fledged gyms.  “Cardio has always been a favourite with traditional gym goers, with treadmills being a compulsory fixture in any gym. However, with fitness experts focusing on weight training and the importance of building muscle to increase metabolism and lose weight more efficiently, strength training has also become extremely popular. People have realised that strength training is as important, if not more, as cardio,” Srilekha Reddy, Marketing Director of Snap Fitness, tells The Dollar Business. However, despite growing demand, there are hardly any recognised fitness equipment manufacturers in India. This has resulted in increased need for imports from countries like USA, Taiwan and, of course, China. “We prefer imported equipment because we believe their quality is superior. We would rather go with branded names that are tried and tested than experiment with new players,” adds Srilekha. 

The reason is you

The FY2013 Annual Report of Talwalkars Better Value Fitness Ltd. – India’s most well-known fitness chain – has a very interesting first couple of pages. The first page of the report reads: “The Bad News – There is a possibility that 98% of those reading this cannot touch their feet when standing, cannot get beyond five when doing push-ups and cannot run three storeys without panting for five minutes thereafter.” But then the following page reads: “The Good News – Talwalkars has built an entire business to reverse this grim reality.” While one is not sure from where the company get the figure of 98% from, it indeed manages to make a point. The point that while until the 1990s a gym was frequented only by professional sportsmen, people in the show business and occasionally a common man, the scenario has now turned on its head. A mixture of unhealthy lifestyles, growing health consciousness, and the need to ‘look good,’ together with more money in the wallet, has ensured that those catering to these needs, like Talwalkars, are laughing their way to the bank. According to those in the business, the fitness industry is growing at an annual rate of about 25% and is split in the ratio of 7:3 between institutional and home demand. While in the home segment, demand is mostly for cardio equipment, institutional demand is almost split down the middle, with a slight tilt towards strength equipment. 

Far and wide

The market for gym and fitness equipment is not just growing in metros as one would expect, but also in non-metros. In fact, industry insiders feel the real growth in coming years will come from smaller towns. “Till five years back, we used to set up 5-6 gyms in a year especially in tier I cities. But today, we get 12-15 orders a year – a majority of them from tier II and III towns in western and southern parts of the country,” says Kevadia. Srilekha of Snap Fitness is also of the opinion that favourable demographics will ensure secular growth in the sector over the next 3-5 years. “These factors, coupled with a paradigm shift towards preventive wellness, will be the key drivers and tier II and III towns will lead this wave,” she added. Construction boom – virtually every housing society today has a gym – and urbanisation will also result in more demand for gym equipment, feel those in the know. Moreover, the Indian fitness industry is highly under penetrated as compared to that in the developed world and this can only lead to more demand as we start playing catchup. According to a PwC-FICCI study, less than 5% of India’s urban population goes to a gym or has equipment at home. This also indicates that there’s massive scope for growth in this segment. 

Too heavy to sail

On the flip side, issues that hinder the growth of the sector are two pronged: lack of skilled manpower and extremely high rentals, especially in the metros. According to industry experts, rentals alone account for about 50-60% of the total revenue of a gym. This is one of the primary reasons for several fitness chains shifting focus to non-metros in order to remain healthy - profitably.

Number game

Import of gym and fitness equipment had grown at a scorching CAGR of 26.15% between FY2004 and FY2012, but has now taken a bit of a breather. The main reason for this small fall in imports in the last two financial years can probably be attributed to a very weak rupee and an overall slowdown in the economy. In fact, when one looks at the countries from which India imports gym equipment, there are no real surprises. Accounting for 53% of India’s imports in FY2014, China continues to be the dominant player even in this category, followed by United States, Taiwan, Italy and United Kingdom.

Not the final stretch

There’s no doubt that science and technology is making our lives easier by the day. Virtually everything that we need today is just a phone call or a click away. And as society moves from that with needs to one with wants, people will have and will spend more time on grooming themselves. And herein lies an opportunity to rake in the moolah! We know you would not like to miss the bus. Would you?

 “Indian gym market is still in its infancy and will take at least five years to evolve”

Sampat Rai, Director, Fitness World, gives The Dollar Business an insider’s view of India’s fragmented gym equipment business

TDB: Give us an idea of Indian gyequipment manufacturers. Why can’t they compete with Chinese manufacturers?

Sampat Rai (SR): Indian gym equipment manufacturing is miniscule. There are no popular domestic brands except for one or two. Some small time manufacturers are trying their hand at low quality equipment. The primary reason being that fitness equipment is not just metal and plastic. It has to be highly accurate in bio-mechanics. Otherwise the users would badly injure themselves. These injuries may sometimes cause damaged muscles which could last a lifetime. India cannot compete with China at this juncture as it and Taiwan manufacture very large quantities. They also have a very significant international presence. High volumes help these countries manufacture at a much lower cost.

TDB: Where is the key demand coming from for your industry – the home segment or the corporate segment?

SR: The home segment is growing at almost 20% per annum since people in cities are finding it difficult to walk or run on city roads. Today, there are fewer parks and the pollution takes a toll on the health. Therefore, people are increasingly opting for home equipment. The corporate segment comprises of large gym chains, large companies, hotels, colleges etc. The government is also emerging as a major buyer as it is setting up gyms across the country to motivate people to adapt a healthy lifestyle, and also with the objective of producing more world class athletes who have to be trained on excellent equipment.

TDB: How do you see demand for gym and fitness equipment going forward?

SR: To set up a gym, both cardio and strength equipment are required. The demand for these equipment are growing at a fast pace. Today, tier II cities are also coming up with gyms in large numbers. The key drivers are the fact that people have become extremely health conscious. Bollywood, with all its muscular stars, is also motivating the young generation.

TDB: What is the gym penetration level in India? And how do you see it five years down the line?

SR: The Indian gym market is still in its infancy. Therefore, gym penetration levels are not uniform. I think it will take about five years for the market to evolve and become more organised, with the population having access to gyms in an equitable manner.

TDB: How has been your growth in the last few years?

SR: Despite the economic slowdown, our company has been able to retain its growth during the last three years. And now, there’s some excitement in the air. With people getting more confident about the economy, sales of fitness equipment is bound to grow much faster than the previous years. Fitness World has a strong presence in the home segment and we represent top international brands like NAUTILUS, WaterRower, Body-Solid and Steelflex. Our greatest advantage is that we are one of the most professional and well-structured companies in India, dealing with branded gym and fitness equipment.

TDB: What are your expansion plans in the near future? Which are the segments you will focus on going forward?

SR: In India, the commercial segment is picking up speed. Therefore, our major thrust is on this segment – be it private or government. On the other hand, our national presence automatically gives us the advantage of increased sales in the home segment.

TDB: How has the industry dynamics changed in recent times?

SR: The fitness market has the same basic fundamentals as any other consumer durable. More features, higher reliability and introduction of new products are strengthening this fast changing market. Technology is also playing the part of being a game changer. Broadband connectivity is enabling machines to store data for individuals, which can be accessed from anywhere.