Add value: Fitness First included free personal training, rather than dropping the joining fee
of pricing boundaries between market segments in an attempt to capture ‘aspirational customers’ from the segment below or disenchanted
members from the segment above. But the 2010 PPC reports showed a clear price delineation between private sector operators, with a huge jump between each of the gym types from budget and value to mid-price and premium clubs. While it’s natural to expect a distinct
separation at the extremities of the pricing spectrum – from premium to budget – it was surprising to see there’s also a discernible gap in the middle of the market. Mid-range clubs including Virgin Active and LA Fitness charge an average fee of £55 a month, whereas ‘value mid- range’ clubs including Total Fitness and Fitness First charge around £38 a month. The exception to this rule is Nuffi eld
Health & Wellbeing Centres, which are charging £60–£65 a month – around £10 more than other mid-market operators. Presumably this refl ects the broader proposition that Nuffi eld brings to the business. Given the increasing number of Boomers for whom maintaining good health is a now a key reason for exercising, this ‘health’ part of the health and fi tness industry looks set to grow.
ALL ABOUT THE BUDGET The average budget club fee is just £15 –£20 a month, or even £10 a month with an annual contract. This is significantly (50–60 per cent) below the average monthly fee in the middle of the market. If the promised roll-outs materialise – and there’s no reason to think they won’t – low-cost clubs will become an irresistible force over the next couple of
june 2011 © cybertrek 2011
years and could lead to a levelling down of prices across the entire industry (see p31). However, says Hart: “While budget
clubs clearly present a competitive threat to our market, we should not underestimate the value of full-service clubs. The need to increase activity levels in the UK is not going away, and being able to offer a broad range of activity options is key to maintaining motivation and so adherence. Budget clubs currently don’t offer this and full-service clubs need to use this differentiation to maintain their place in the competitive hierarchy.”
A NEW PRICE POINT The PPC reports indicated that £40 a month will become a key price as mid-range clubs look to compete on value against the burgeoning budget club market. Many mid-range clubs are on or just below that mark at the moment: along with publicly run ‘value’ facilities like trusts and contract-managed centres, we currently have Fitness First, DW Sports and Total Fitness in this bracket. Whether this is sustainable remains
to be seen. It’s easy to assume that this is the most vulnerable segment of the
marketplace, but in an economy that shows no signs of recovering, these sites are likely to be the fi rst port of call for cash-strapped consumers looking for a gym – until, that is, a budget club arrives in the area, after which all bets are off. Clubs looking to compete with those
in the budget arena should look at their language, advises Aitken. “Avoid using words such as ‘affordable’ or ‘lowest price around’ – they give customers the impression they’re forfeiting something and it’ll focus their mind on price as opposed to what you can do for them,” she says. “Your language should demonstrate value, clearly state what customers will get for their money and include results-orientated words.” Price not quality is, it seems, the arena
in which most operators will compete during the next couple of years at least. “But ultimately,” says Hart, “customer satisfaction will be determined by the achievement of members’ personal goals. And all clubs should focus on that objective so members see the value they’re getting, rather than just the cost.”
healthclub@leisuremedia.com mike hill
Read Health Club Management online at
healthclubmanagement.co.uk/digital 61
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