Leisure suits

June 21st is expected to mark the beginning of "a summer of fun” when lockdown restrictions are due to end and spending on leisure activities is expected to surge.

Over the next six months, Britons are forecast to spend over £23bn on leisure activities and holidays in the UK. This will provide a much-needed uplift and rejuvenation to the economy, and planned events such as the Euros and music festivals will have a positive impact on other parts of the economy, including retail.

However, whilst we expect to see a significant upturn in engagement and spend this summer, what can we envisage beyond? Whilst the expected growth in leisure activity could be sustained, there are certain factors that may determine the long-term future and direction of the leisure activities sector.

Digital/at-home penetration
The pandemic has pushed the bounds of what is possible and available in the home. From online pub quizzes to the rise of home fitness (e.g. Peloton and Fiit) to watching movie premieres and wine tasting; many activities that would have taken place elsewhere have been brought into the home, and have the potential to stay there.

Inevitably there are some activities (e.g. bowling and indoor climbing) that are less conducive to occurring in the home, though the same could previously have been said of other activities – how many could foresee users investing £2k+ in equipment and monthly class fees of £40+ for an at home spin studio? Advances in technology, the flexibility of when and how quickly a user can engage in an activity and potential long-term savings all highlight significant user advantages and indicate potential development and growth of the at home leisure market.

Functionality vs. experience
The disruption to and challenges facing the leisure activities sector are not dissimilar to those facing retail. Increased use of online has seen physical retail polarise to a degree between efficiency / functionality / convenience or experience, demanding physical space has a clear, compelling proposition if it is to maintain its relevance and user base. Key to determining the potential success, size and growth of the at home leisure market will be the degree to which the proposition and/or experience can or cannot be replicated or bettered in the home.

The gym sector provides an interesting case study: one hypothesis could suggest users taking full advantage of a David Lloyd Clubs, pool, tennis courts, creche, lounge, café, gym and community may struggle to replicate this at home and therefore continue their membership. A user of a value gym proposition, typically utilising an offer close to a place of residence or work, may struggle to replicate the advantages it provides in combination with low fees and membership flexibility and similarly remain a member; the user of a niche spin/yoga/Zumba operator may find the benefits of in home outweigh those offered by this existing proposition.  

Clearly, a one-size-fits-all approach is not applicable; an appropriate assessment of the addressable market will identify catchments that can or cannot sustain an axe throwing arena or an adult ball pit, not all will. And with constantly changing consumer tastes (such as localisation) combined with new entrants, the ability to understand the local market as well as national and global ones becomes key.

Changing consumer demand/perceptions
An exciting consideration is the assessment of consumer wants and needs and how they plan on engaging with leisure activities in the future. Many will be eager to get back into "regular life" post lockdown, however "regular" may mean something entirely different post-Covid. With changing views on hygiene, social interactions, and public spaces more generally, the demand for certain leisure activities may never revert to where they were beforehand. And even if demand for leisure activities reverts to 100% of what it was pre-lockdown or grows beyond, with venues such as nightclubs and cinemas struggling as they are, the question of when becomes crucial.

Though the willingness to get out and about and socialise is broadly accepted, the ability to regularly do so is less-clear cut. While the government furlough scheme has supported jobs in the UK for over a year now, it is expected to end in late September this year. The impact of this could be stark with 4.7 million jobs still being supported at the end of February 2021, and economists predicting a surge in unemployment at the end of the scheme. Whilst in the shorter term, pent-up demand from savings built up, mainly by richer households, could help prop sector performance up, high long-term rates of unemployment could put a dampener of any gains made.

Tejas Panchal