OD4377 Indoor Climbing Walls Industry Report PDF

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Description

Rock on: Revenue will climb higher due to rising incomes and changing consumer preferences This report was provided to University of Illinois-Chicago (2129807291) by IBISWorld on 07 September 2018 in accordance with their license agreement with IBISWorld

IBISWorld Industry Report OD4377

Indoor Climbing Walls in the US June 2017

Rory Masterson

2

About this Industry

15 International Trade

27 Key Statistics

2

Industry Definition

16 Business Locations

27 Industry Data

2

Main Activities

2

Similar Industries

18 Competitive Landscape

2

Additional Resources

18 Market Share Concentration

3

Industry at a Glance

27 Annual Change

18 Key Success Factors

27 Key Ratios

28 Jargon & Glossary

18 Cost Structure Benchmarks 20 Basis of Competition

4

Industry Performance

21 Barriers to Entry

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Executive Summary

21 Industry Globalization

4

Key External Drivers

6

Current Performance

8

Industry Outlook

10 Industry Life Cycle

22 Major Companies 23 Operating Conditions 23 Capital Intensity

12 Products & Markets

24 Technology & Systems

12 Supply Chain

24 Revenue Volatility

12 Products & Services

25 Regulation & Policy

14 Demand Determinants

25 Industry Assistance

14 Major Markets

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Indoor Climbing Walls in the US June 2017

About this Industry Industry Definition

Companies in this industry maintain and operate climbing wall centers or indoor rock climbing centers. A climbing wall is

Main Activities

The primary activities of this industry are

an artificially constructed wall with grips for hands and feet, and it is usually used for indoor climbing.

Operating indoor climbing wall centers Operating indoor rock climbing centers

The major products and services in this industry are Day pass/punch card admission Lessons and Workshops Memberships Youth programs Other

Similar Industries

33992a Athletic & Sporting Goods Manufacturing in the US Following the design of sample products, operators in this industry buy raw materials and transform them into a range of sporting and athletic goods (except apparel and footwear). 33992b Gym & Exercise Equipment Manufacturing in the US This industry manufactures gym and exercise machines, including treadmills, exercise bikes, weights and other equipment for both home and fitness centers. 45111 Sporting Goods Stores in the US This industry retails new sporting goods, including bicycles, camping equipment, exercise and fitness equipment, apparel, footwear and other sporting goods and accessories. 71394 Gym, Health & Fitness Clubs in the US This industry operates fitness and recreational sports facilities that feature exercise and other active physical fitness conditioning or recreational sports activities.

Additional Resources

For additional information on this industry www.amga.com American Mountain Guides Association www.climbingwallindustry.org Climbing Wall Association www.ihrsa.org International Health, Racquet & Sportsclub Association www.outdoorindustry.org Outdoor Industry Association

Provided to: University of Illinois-Chicago (2129807291) | 07 September 2018

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Indoor Climbing Walls in the US June 2017

Industry at a Glance Indoor Climbing Walls in 2017

Key Statistics Snapshot

Revenue

Annual Growth 12-17

Annual Growth 17-22

Profit

Wages

Businesses

$402.9m 3.9% 0.7% $43.5m $107.2m 348 Per capita disposable income

Revenue vs. employment growth

Market Share

There are no major players in this industry

8

6 4

4

% change

% change

6

2 0

0 -2

-2 -4

Year 09

2

-4 11

13

Revenue

15

17

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21

23

Year

10

12

14

16

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20

22

Employment SOURCE: WWW.IBISWORLD.COM

p. 22

Products and services segmentation (2017)

4%

Key External Drivers

6%

Per capita disposable income

Lessons and Workshops

Youth programs

9%

Time spent on leisure and sports

Other

National unemployment rate Participation in sports

57%

External competition

Day pass/punch card admission

24%

Memberships

p. 4 SOURCE: WWW.IBISWORLD.COM

Industry Structure

Life Cycle Stage Revenue Volatility Capital Intensity

Growth Low Medium

Regulation Level

Light

Technology Change

Medium

Barriers to Entry

Medium

Industry Assistance

Low

Industry Globalization

Concentration Level

Low

Competition Level

FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 27

Provided to: University of Illinois-Chicago (2129807291) | 07 September 2018

Low Medium

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Industry Performance

Executive Summary | Key External Drivers | Current Performance Industry Outlook | Life Cycle Stage

The Indoor Climbing Walls industry has rebounded along with the overall economy, bolstered by rising per capita disposable income and falling unemployment. Companies in the Indoor Climbing Walls industry operate climbing wall centers or indoor rock climbing centers. Since the industry is heavily reliant on consumers, revenue tends to ebb and flow in response to fluctuations in per capita disposable income and employment levels. Disposable income levels increased and unemployment decreased over the five years to 2017; in response to this customers have started to

Executive Summary

once again make discretionary expenditures on recreational activities, replacing relatively low-cost recreational activities, such as hiking, with indoor wall climbing and indoor rock climbing. Therefore, indoor climbing wall establishments have leveraged their growing popularity and increasingly presented high-end offerings. As a result, industry revenue is expected to grow at an annualized rate of 3.9% to $402.9 million over the five years to 2017, lifted by an anticipated increase of 1.2% in 2017. The industry is increasingly becoming a fitness alternative to gyms and other

fitness centers. Consumers are shifting their preference from yoga, Pilates and various other exercises to indoor wall climbing. Additionally, consumers aged 25 and younger are lifting industry revenue higher, as they are more likely to participate in group events, such as birthday parties, climbing lessons and youth group activities. Furthermore, this market segment tends to have more available leisure time for sports and other recreational activities. Over the five years to 2022, the industry is expected to continue benefiting from rising disposable income and falling unemployment. One of the largest obstacles for the industry was the perceived risk of injury while participating in indoor wall climbing. Over the five years to 2022, improvements in safety equipment technology, such as automated belays, a device used by climbers and belayers to decrease the likelihood of a serious injury, are expected to propel revenue growth. These improvements will alleviate consumers’ concerns about injuries and as a result, the overall perception of indoor wall climbing being an extreme sport will shift and consumers will begin to view it as a mainstream activity. As a result, IBISWorld expects industry revenue to grow at an annualized rate of 0.7% to $417.8 million over the five years to 2022.

Per capita disposable income Changes in disposable income affect demand for recreational activities, such as indoor wall climbing. Typically, a rise in disposable income drives both demand and revenue. Per capita disposable income is expected to increase over 2017, presenting a potential opportunity for the industry.

Time spent on leisure and sports The total time spent on leisure and sports influences industry demand. The less time consumers have for leisure, the less likely a portion of that time will be allocated to visiting climbing wall facilities. The total time spent on leisure and sports is expected to decrease slowly over 2017, posing a potential threat to the industry.

Shifting consumer preferences and rising disposable income will benefit the industry

Key External Drivers

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Indoor Climbing Walls in the US June 2017

Industry Performance

Key External Drivers continued

National unemployment rate People who are unemployed are much less likely to spend on recreational activities such as indoor wall climbing. To this end, as the national unemployment rate falls, the industry is expected to benefit. The national unemployment rate is expected to decline over 2017. Participation in sports As more people begin to value physical fitness, indoor climbing walls will experience an increase in demand. Growth in sports and participation will

increase demand for membership in the Indoor Climbing Walls industry. Participation in sports is expected to increase slightly over 2017. External competition Indoor climbing wall facilities compete with gyms, health clubs, outdoor recreational space and other recreational and sports facilities for consumer leisure time. Many of these gyms and health clubs also offer substitute indoor recreational facilities. External competition is expected to increase over 2017. Time spent on leisure and sports

Per capita disposable income

5.4

hours per day per capita

6

% change

4 2 0 -2 -4

Year

5.3

5.2

5.1

5.0 10

12

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Year 08

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Industry Performance

Demand rebounds

The Indoor Climbing Walls industry has benefited from steady growth in recent years, recovering from prior lows. Since the industry relies heavily on consumers, it is highly cyclical and tends to ebb and flow with fluctuations in disposable income. For instance, as per capita disposable income rose 2.7% over, industry revenue grew 2.4% over the same year. As economic conditions such as unemployment and disposable income have continued to improve, consumers have increased their participation in indoor wall climbing. To this end, industry revenue is expected to grow at an annualized rate of 3.9% to $402.9 million, supported by a 1.2% increase over 2017. The industry operates climbing wall centers or indoor rock climbing centers. Operators typically require facilities with high ceilings and open spaces to incorporate a wall climbing structure. Traditionally, indoor wall climbing consists of a climber and a belayer. The climber and belayer are attached by a rope that is connected to a belay device.

As the climber ascends the wall, the belayer is present to reduce the chance of injury. In the instance of a fall, the belayer uses his or her weight to hold the rope, thereby stopping the climber from falling to the ground. Although serious injuries do not occur often, consumers tend to perceive indoor wall climbing as an extreme sport; however, this perception is slowly changing.

Over the five years to 2017, unemployment has declined, causing disposable income to grow substantially. As consumers had more funds available for discretionary use, they opted to participate in more affordable recreational activities, such as attending public parks, swimming pools and hiking. For example, per capita disposable income has gradually improved, increasing 2.4% and 2.7% in 2012 and 2014, respectively. As a result, industry revenue followed suit, increasing 2.0% and 2.4% over the same years. To this end, a shift in public perception is encouraging consumers to try indoor wall climbing. Traditionally viewed as an extreme sport by many consumers, indoor wall climbing is slowly becoming a

mainstream recreational activity as safety standards improve and positive word-ofmouth marketing alleviates injury concerns. Additionally, with higher quality wall structures and more experienced staff, consumers are more willing to try new fitness experiences. With the onset of renewed demand, industry participants are expanding operations. For instance, the number of industry establishments is expected to grow at an annualized rate of 4.9% to 453 over the five years to 2017. With the expansion in industry establishments, industry employment is also expected to increase. IBISWorld expects employment to rise at an annualized rate of 4.5% to 8,188 workers over the same five-year period.

Industry revenue 6 4

% change

Current Performance

2 0 -2 -4

Year 09

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Industry Performance

Join the club

Growing market

The industry offers several services to raise revenue, such as climbing wall admissions, kids programs, private lessons and even equipment rental. Consumers can typically participate in industry activities by becoming a member of an indoor climbing wall facility or by attending as a nonmember. Membership for an indoor climbing wall facility is typically offered on a monthly, annual or multivisit basis, whereas nonmembers can go whenever they please. Consumers that frequently participate in industry activities benefit from being a member, saving money over the long term because they are offered a discounted price. As disposable income rises and employment increases, the industry is expected to convert many nonmembers to members. By getting more contractual agreements, industry operators will increase their established customer base and will decrease revenue volatility.

Even with a membership at an indoor climbing wall facility, industry participants upsell services, such as equipment rentals and private or group lessons, to increase their bottom line. Customers that prefer one-on-one treatment with a certified climbing instructor opt for private lessons, which bode large profit margins. Moreover, group lessons result in even greater profit margins, as operators get more revenue for the same service. Equipment rentals is another additional revenue stream because members and nonmembers typically do not purchase climbing equipment themselves. As a result, they rent out the equipment for a small fee.

The industry caters to consumers of all ages, but primarily targets two segments: consumers aged 24 and younger and consumers aged 25 to 34. Similar to other recreational and sports activities, children and adolescents drive industry revenue primarily because these consumers typically have more leisure time. Moreover, industry operators gain much of their revenue from group

activities such as birthday parties, summer climbing camps, youth group activities and school field trips, in which children and adolescents are more inclined to take part. Additionally, industry operators typically rely on word-of-mouth advertising, which is more prominent in adolescents and college students because of their engagement in social media.

Operators will increase their established customer base, leading to less revenue volatility

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Industry Performance

Industry Outlook

Consumers are expected to continue to boost the Indoor Climbing Walls industry higher over the five years to 2022, bolstered by rising per capita disposable income and falling unemployment. As disposable income keeps increasing, consumers will be more likely to participate in recreational activities, such as indoor wall climbing. However, external competitors, including gyms and fitness centers, will also be vying for a piece of consumers’ rising disposable income, posing a potential threat to the industry. Nevertheless, improved safety standards will continue shifting the perception of indoor wall climbing from

External competition

As economic conditions continue to improve, other industries that focus on providing consumers with recreational services will be vying for a piece of consumers’ renewed disposable income. For instance, industry operators compete with gyms, health clubs, bowling alleys and other recreational and sports facilities for business. Moreover, gyms and health clubs also offer substitute indoor recreational facilities, such as swimming pools and tennis courts, which directly compete with industry facilities. In order to compete, industry operators, such as Rockreation Sport Climbing Centers, are expected to offer additional fitness services, such as yoga and Pilates. Industry participants will also be competing for consumers’ leisure time, which according to the Bureau of Labor Statistics’ Time Use Survey, is expected to

decrease over the five years to 2022. The less leisure time consumers have, the less likely they are to participate in sports activities such as indoor wall climbing. However, the slight fall in leisure time can be attributed to rising employment rates. Although the industry is expected to benefit from the falling unemployment rate, an increase in employment levels will reduce the amount of leisure time for consumers. Nevertheless, the benefit of a higher employment rate, and thus increased disposable income, is expected to outweigh the consequence of less leisure time.

Technological improvements in climbing equipment are expected to increasingly sway uneasy consumers to participate in indoor wall climbing. For example, automated climbing equipment, such as

automated belays, are being implemented into indoor climbing walls to alleviate safety concerns. Traditionally, indoor wall climbing consisted of a climber and a belayer. The

Technology an...