industry research
A COMMODITY MARKET?
Leisure-net Solutions conducted price and promotion comparisons throughout 2010 – the year that the industry fi nally started to feel the full effect of recession. Managing director Mike Hill reports on some of the key fi ndings
I In a bid to monitor
promotions, campaigns and membership costs at health clubs and leisure centres across the country, Leisure-net
Solutions launched its monthly price and promotions comparison report (PPC) in Q1 2010. The service set out to scrutinise private, local authority and leisure trust sites, analysing the sector’s key sales drivers to provide a price index and clear market intelligence for the industry going forward.
REDUCING DUES There are telltale signs that some operators (mainly at the value end of the market) are overtly discounting dues, traditionally the holy grail of revenue streams, to secure sales. Now the first cracks have begun to appear, it may not be long before operators declare ‘open season’ on monthly dues and create a full price war.
“In these tough economic times,
entering into a price war will ultimately damage the overall product offer, as operators will be forced to cut membership benefi ts and service quality to keep prices down,” says Jeff Hart, managing director of Freedom Leisure. “The solution is to educate the marketplace to increase customer understanding of the differences between clubs, and that it’s not all about the cheapest price.”
The PPC report also indicates that ‘12
months for the price of 10’ promotions (or similar offers) are becoming increasingly popular, thus reducing the year’s membership income by 15 per cent or so. Traditionally, the extra months have been tagged on to the end of the fi rst year, delaying the fi nancial impact and encouraging the member to stay longer – hopefully resulting in a second year of membership. One has to wonder if offers we’ve seen recently, like
‘fi rst two months free’, are driven by the fact that increasingly savvy consumers now want – indeed, expect – a cheaper rate, and they want it now.
RIP JOINING FEES? Another revenue stream consistently being sacrificed is joining fees, which a number of operators are aggressively discounting almost continuously. It’s probably fair to say that, however they’re packaged, upfront payments are largely there to be traded off as an incentive to join now, and the PPC reports seem to suggest that the industry is short of alternative ideas of how to attract price-savvy consumers yet still maintain its margins. This lack of promotional creativity was,
in the PPC sample, broken only by Fitness First. Having personal trainers give free sessions to members is not a new idea, but Fitness First offered complimentary PT as an incentive to join at some sites to differentiate from the swathe of ‘no joining fee’ offers and create a little added value at the point of sale. “Operators can’t let fear stop them
from maintaining upfront fees and even raising prices,” says Lesley Aitken, FitPro international sales trainer. “Now’s the time to test new price options. Try two different price offerings on your website, or create a minimum of two premium packages with extras which cost more than current memberships – perhaps including add-ons such as an extra PT session or a massage. By bundling up, you make more money and it sweetens the deal for the customer by saving them money in the long run.”
CLEAR PRICE DELINEATION In a competitive, commoditised marketplace, one might expect a blurring
For the purposes of the survey, the private sector is segmented as:
Premium clubs: £80 or more a month Mid-range clubs: £50–70 a month Value clubs: £30–50 a month Budget clubs: Under £20 a month
Competition: Budget clubs such as Pure Gym are tempting other clubs to slash prices to compete
60 Read Health Club Management online at
healthclubmanagement.co.uk/digital
The public sector is segmented by local authority, public sector (contract managed) and leisure trusts.
june 2011 © cybertrek 2011
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