The new year always drives well-intentioned yet poorly sustained get-fit-quick schemes. That leads multi-asset fund manager Will McIntosh-Whyte to wonder about the durability of subscription service customers in a downturn.

Gym sign on the pavement

They are back. Bright-eyed and bushy-tailed. Full of new-year enthusiasm at the thought of the new healthy, happier versions of themselves. We’ve all seen them – we’ve all been one – Johnny-come-Januaries.

Or at least they were back. As we enter the second half of January the local gym is already much quieter as the dark, alcohol-free (and meat-free?) evenings weigh on the soul. The draw of the sofa and the latest box-set only gets stronger after Blue Monday.

Interestingly, there weren’t quite as many Johnnies (or Janeys) in my gym this year. Perhaps the supposed health and wellness craze isn’t as prevalent as some commentators claim? I’d argue rather that traditional gyms like mine, with their 12-month contracts, are being disrupted. And not necessarily by the ‘high-tech’ US sporting goods companies with their snazzy £2,000 exercise bikes, iPads strapped to the front, charging you £40 per month for the privilege of taking online classes. Most people simply want flexible gym memberships. Why sign up for 12 months when you know you’re a bit busy in February, on holiday in March and then summer is nearly here...

So if I was trying to invest in a health and wellness theme, which option would I choose? The subscription gym, the flexible gym, or the tech exercise bike company? Well, the answer is probably none. The subscription gym is being disrupted; the flexible gym may be enjoying growth, but it can’t rely on those earnings continuing even a month from now; and I struggle to see genuine barriers to entry for rival exercise bike companies. Equally, I remember vividly my dad’s ’90s rowing machine gathering dust in the garage. It’s probably still there now.

There are two principles highlighted by this theoretical investment choice. Firstly, as an investor you may be onto a fantastic investment theme, but that doesn’t mean there’s always a sure fire way of playing it or picking the winners. Secondly, beware the subscription revenue story. Of course, recurring revenues are appealing to companies and investors (who will pay up for the privilege). Less so for consumers – I’m sure many of us have fallen foul of subscriptions we signed up to and forgot to cancel, even though we stopped going to that gym sometime in 2017. But nowadays the volume of subscriptions that people are accumulating has mushroomed: Netflix, Fitness First, Spotify, iCloud, Audible, Headspace, Playstation Plus, Dollar Shave Club, Zipcar, Candy Crush, Amazon Prime, NowTV, CreditExpert, HelloFresh and Oddbox, And lest we forget MoviePass, which would ‘buy’ you a free cinema ticket every day for the compelling cost of $9.95 a month (it bought the tickets full price); who wouldn’t subscribe to that!  As you might suspect, that didn’t end well.

At the end of day, there’s only so much wallet share to go around. While we all know the structural difficulties retail faces, perhaps part of its problem has been that, as the smart phone opened up our wallets to so many other avenues (gaming, taxis, food delivery, ecommerce, gambling, along with the aforementioned), people simply have less money to go out and spend on the physical high street. Or don’t need to – it’s all there in their pocket.

Often we hear the argument that consumers won’t cancel these subscriptions because “they are only £5/£10 a month”. But they soon add up and when people go through lean times, the purse strings get tightened. When that happens, not a few subscriptions will have to fall by the wayside, which is why I’m wary of overpaying for fair-weather subscription services that might find themselves dispensable when times get tough.

So I’m binning off the gym for a night on the sofa, and will be getting out my banking app to check for rogue subscriptions!