Athleisure M&A and Funding : Investors eyeing e-commerce athleisure brands underpinned by community-driven marketing strategies

The global fitness market size is set to reach $65.7bn by 2033, growing at a 5.5% CAGR. This growth has accelerated in recent years, as consumers are prioritising physical health even more post-pandemic. But, there is a much deeper factor at play here. The best athleisure brands, across price points, are fostering strong communities, and this underpins a loyal base of repeat customers, driving sales significantly. Investors are looking to gain a share of this (gluten-free sugar-free) pie. 

 

GYMSHARK: LEADING MARKETING TRENDS – FROM INFLUENCER MARKETING TO COMMUNITY-FIRST STORES

Fitness Gurus: Gymshark has always been ahead of the curve in its marketing strategy. Before “influencer marketing” even entered the common lexicon, Francis devised a “Fitness YouTuber” marketing tactic. These YouTubers “only” had 50k to 100k subscribers, and so big brands at the time took little notice, preferring to focus on gifting items to celebrities with much larger public influence. However, Francis saw the high value in these niche content creators. Although their following appeared “small” versus celebrities’ reach, these 50k to 100k followers were loyal and all had one thing in common: fitness. Followers valued these Fitness YouTubers’ genuine opinions on their favourite fitness gear, much more so than a celebrity’s paid endorsement of their 100th favourite brand of “insert-next-gifted-item-and-paid-for-ad-here”. Through only spending even c.£30 on each YouTuber initially, sales rocketed; the Return on Investment was colossal. 

Interactive, community stores and events: How is Gymshark continuing to make waves? The brand is revolutionising the bricks-and-mortar concept, expanding from an online only model into one which includes a community-first physical presence. July 2024 saw the opening of their Westfield store, and their FY24 Annual Report highlighted their plan to, “strategically invest in its well-documented omnichannel expansion, with stores confirmed in London, New York, Dubai, Amsterdam, Manchester, Bicester, and a New York City headquarters to drive its US business.” 

Although retail sales represented only c.3% of total FY24 sales, this is not to negate the importance of this channel, the impact of which is not fully represented in the retail sales figure, and so is not the right metric to use. 

Their flagship Regent St store hosts a wide range of free workout classes in “The Sweat Room”, and a “Gymshark Regent Street Run Club”, a 5k run every Tuesday around London, both of which bring fitness to life and foster a loyal community who feel a part of a movement. In store, the “Pro Bench” offers free 1-2-1 sessions with qualified fitness experts to provide personalised fitness insight, adding to the brand’s credibility. The Joe and the Juice Bar encourages customers to stay longer, thus increasing the average basket value. Together, these stores help to foster the Gymshark community, adding to the positive brand identity and driving repeat sales. 

Inclusive sportwear: Product personalisation and customisation is driving sales across the broader consumer sector. Gymshark have gone a step further. Noel Mack, Gymshark’s Chief Brand Officer exclaimed that, “Our mannequins are real people from our community or ambassador roster.” The 3D printed mannequins “ensure that everyone can see themselves at Gymshark”, creating an inclusive space and clothes to cater to a variety of people. Through catering to real people, Gymshark is grabbing a large proportion of the mainstream fitness market, particularly from the likes of Adidas and Nike. Indeed, for Q3 FY25, Nike’s revenues were down 9% year on year.  

Investment: In 2020, General Atlantic invested in Gymshark, taking a 21% stake, and valuing the fitness firm at >£1bn. Simultaneously, founder Ben Francis increased his stake to >70%. The investment was designed to assist Gymshark in its international expansion journey, particularly to North America. Indeed, in FY24 sales surpassed the £600m mark, with the US making up 16% of this total. General Atlantic’s investment is reaping its rewards. In FY24, orders increased by 20.1%, whilst adj. EBITDA increased to £17.5m, up from £8.6m in FY23. 

What’s next for the community-led athleisure brand? Something revolutionary, and something that its competitors haven’t done before, that’s for sure. 

 

ADANOLA: COMMUNITY POWERED SALES, BALANCING QUALITY & PRICE

Founded by Josh and Hyrum Cook in 2015, Adanola is one of the UK’s fastest growing athleisure brands and, for FY24, revenues almost doubled to £57.1m, up 105% from £27.8m in FY23, whilst pre-tax profits more than doubled to £18.9m. In contrast, Lululemon’s recent results show an increase in revenue of a lower, 9%, year on year. It feels as though Adanola has suddenly exploded over the past few years, but what sets it apart from the Lululemons and Alo Yogas of the world, and why are Gen Z crazy for it? 

Luxury Yet Inclusive Athleisure: Adanola has reimagined the iconic phrase, “You can’t sit with us” into a statement of inclusivity. Their pieces exude effortless luxury, but, inviting you into a community where everyone is an “It girl” and welcome. Everyone gets a seat. Whilst Alo Yoga focuses on elusive products and physique, Adanola creates high quality pieces at a main market price point. Adanola’s iconic “Ultimate Leggings”, which can be seen in pilates and yoga classes across London, launched in 2020, providing high quality butter-soft athleisure at a market accessible price point of £40. With Lululemon and Alo Yoga charging over £100 for their signature leggings, Adanola was able to steal significant market share of Gen Z and Zillenials, without compromising on quality. 

Social Media Driven Sales: Adanola has now become a cult, with their iconic lettering splashed on sweaters, and Gen-Z vying for their next item to showcase in their “Pilates Princess” fit checks, and be reposted on Adanola’s feed. They sell 45 branded sweatshirts per hour, whilst their styles without a logo have a lower sell-through. It’s clear that consumers are valuing the community created by brands, and not just the product itself.

Event Driven Sales: Adanola host numerous events with their customers, in collaboration with leading instructors and wellness brands. One such event was hosted at Shoreditch’s One Hundred Hotel, led by celebrity-favourite pilates instructor Bryony Deery, with iced matcha lattes served by Matcha Union. Customers want to be part of these events, and be reposted on Adanola’s socials, and part of this “it crowd”. These community events generate positive brand capital, and repeat customers. 

Growth: Niran Chana took the CEO reigns in June 2024 to strategise the brand’s next phase of growth, using his experience as Gymshark’s Chief Commercial Officer and working with Ben Francis to grow the Birmingham-based fitness brand from £5m to £500m. Meanwhile, founder Hyrum Cook is focussing on product and community, pioneering a social-first marketing strategy.  It will be interesting to see what other innovative events the brand has up its sleeves.

 

ALO: COMMUNITY CENTERED CULT 

Founded by Danny Harris and Marco DeGeorge in 2007, Alo’s presence in the athleisure space has skyrocketed, with revenues doubling over the last 2 years, and up tenfold since 2020. It is likely to have significantly pushed the revenues of its parent company, Color Image Apparel, up to c. $2bn in FY24. 

Event Driven Sales: What’s driving sales? Alo, (short for “Air, Land, Ocean”), not only sells premium athleisure, it sells a lifestyle. It placed a strong emphasis on events in its Alo stores long before its rivals, hosting yoga classes in its “Sanctuaries”, as well as wellness-focused events to engage its local communities. Indeed, the next few weeks are set to see a “Vitamin-C glow wellness walk” in LA, and a “Wellness Routine” talk in the Chicago sanctuary. In the UK, Kelly Marks has been leading Alo’s events, with events such as Sunrise yoga at Selfridges, followed by breakfast on the Alto rooftop. 

According to the Business of Fashion, back in 2023, Alo was seeking new investment, which is likely to have valued the athleisure brand at c. $10bn, and at a much higher multiple than its publicly traded competitor Lululemon. This isn’t a surprise, given that Lululemon is now taking a leaf out of Alo’s book and has started to introduce its own run clubs and events. As we reiterate, customers value the community created, and it drives repeat sales. 

Exclusive Wellness Studios: Further, in line with creating an elusive lifestyle brand, Danny and Marco have opened an exclusive invite-only Alo gym in New York. From celebrities and influencers, to high profile clientele, the Alo gym is a luxurious wellness heaven for its cult followers, who sport their luxury pieces whilst working out with the industry’s top instructors. The last year and a half alone has seen the US brand opening its first 4 stores in the UK, and it will be interesting to see whether Alo emanates its luxury US strategy into the UK, through opening a London Alo gym, driving sales further. These gyms create a strong Alo community, adding to the positive brand identity and driving repeat customer sales. 

Through hosting events, creating interactive store spaces and studios, and deploying new community-driven social media marketing strategies, the best athleisure brands are fostering strong communities. This underpins positive brand identity and drives repeat sales. This is true across mass market athleisure and luxury athleisure. Investors are looking for nimble, innovative players, and it will be interesting to see what’s next for these 3 market-shaping brands in terms of both marketing and strategic plans.  

 

Sources

 

Notes

Adanola is not only capitalising on the Tik Tok “clean girl” aesthetic, but creating it. 

  • Manchester distribution centre
  • Kendall jenner
  • Manchester-based athleisure label
  • New 13,000 sqft HQ 

Indeed, as we discussed in our Beauty M&A and Funding post, the most successful brands are creating loyal repeat customer bases through a double-pronged digital-physical strategy. [expand on this. Events. Pop ups trips. ]

Shift in consumer lifestyle choices, valuing health and wellness. 

What can other brands learn from? Consumers value community and genuine opinions. Consumers aren’t purchasing products solely for form and function they are buying products for the access to a community. 

Indeed, competitors are slowly taking notice. E.g Lululemon now does run clubs. 

Fostering a strong community through classes, events and exclusive gym access, Alo has positioned itself as a premium athleisure brand, driving revenues and commanding a strong market presence.