Figures correct as at September 2010 In my opinion, developing a new
concept by acquiring new locations specifi cally designed for purpose – the model adopted by the likes of The Gym Group – is likely to be the best way forward for the low-cost sector.
location, location, location So where to locate? To the best of our knowledge, little research is currently being undertaken into the profile of the low-cost sector membership – research that could help identify areas that are most likely to be suitable for such developments. I therefore anticipate that mistakes will be made as existing competition, combined with new competition, may prove to be unsustainable. With clubs typically seeking 5,000–6,000 members and with around 4 to 6 per cent of members leaving every month, it’s essential that there is a very dense population in the area from which to draw, with relatively
LOW-COST OPERATORS: DEVELOPMENT PIPELINE Operator No of New developments
sites
The Gym Group 8 Three opening in the next four months Fitspace
nuyuu 5 None confi rmed
énergie Fit4Less 4 No information provided Fitness 4 Less Springslite
Xercise 4 Less Gym 4All 8 Two to three new sites opening within the next 12 months
Pure Gym 7 Opening another three to four sites by end of this year. Hope to have 25 in total by end of 2011 – up to 45 in next three years
Average
monthly fee £15.99
£14 - £17
£14.99 £19.99 £16.99
3 Two opening by Autumn 2010. Looking for many more suitable sites £14.99 3 No information provided
£14.95
1 One opening in October 2010. Two more opening next year and three planned to open in 2012
1 Three more sites opening by end of this year
weak competition, if these low-cost gyms are going to maintain such high levels of gym membership. David Minton of the Leisure Database
Company comments: “During the rapid growth of the health and fi tness sector during the mid-1990s to mid-2000, it became fundamental to most companies to undertake membership profi ling
£14.99 £14.99
and demographic research in order to establish whether or not sites would be suitable. This is going to become important to the low-cost sector if high levels of failing clubs are to be avoided.” Certainly gut instinct is no match
for good quality research when such high levels of capital investment are required – up to £1m per club.
impact of the low-cost operators So just how far and how fast is the low-cost sector likely to grow? The health and fitness industry has
typically seen up to three-quarters of members using clubs infrequently, so, by definition, they receive poor value for money. It’s not therefore surprising that a low-cost offering will be very attractive given the current economic climate. It seems to be a widespread view that “the mid-market will come under increasing pressure,” as expressed by Peter Roberts of Pure Gym. Indeed, the mid-market is usually
the sector that’s most affected when there’s a slowdown in the economy and pressure on consumer spending. However, the key issue here is how wide the defi nition of that sector becomes. One would usually expect the winners to be the high quality and relatively expensive racquets clubs
november/december 2010 © cybertrek 2010 Read Health Club Management online at
healthclubmanagement.co.uk/digital 55
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