industry research
GROWTH POTENTIAL
The UK’s fitness industry is in good health, according to Mintel’s latest report – Health and Fitness Clubs - UK – which was published in June. Michael Oliver, senior leisure analyst for Mintel, reports on the findings and implications
W
ith squeezed incomes, recessionary pressure and less discretionary spend
than ever available to consumers, many sectors have had a tough time over the past couple of years. However, according to research for Mintel’s new Health And Fitness Clubs - UK report, the health and fitness clubs sector has weathered the economic storm reasonably well. While 2009 was a diffi cult year – at
the depths of recession with consumers deferring major one-off purchases amid concerns about their employment prospects – 2010 saw stronger growth in both member numbers and revenues, before 2011 brought reports of worsening trading conditions and performance. Based on accounts fi led at Companies
House, it is in fact the premium clubs – not the mid-market – that have been hardest hit. Indeed, many operators are experiencing fl at or only slightly reduced turnover in the past two years; the situation is certainly not as bad as some of the more pessimistic predictions suggested at the start of the recession. Overall the UK health and fi tness
clubs market continues to grow, but the
pattern of growth is hesitant, dictated by shifts in consumer confi dence and discretionary incomes.
rising prices The role of VAT should not be underestimated: in 2009, the market was probably saved from a big dip by the reduction in VAT in November 2008 – from 17.5 to 15 per cent – which made memberships relatively more affordable in the recession. When the rate went back up to 17.5 per cent in January 2010, the impact was mitigated by rising consumer confidence, particularly in the first part of 2010, as the economy moved back into growth. However, the January 2011 increase to 20 per cent hit consumers at a time when their household finances were under intense pressure from stalling earnings, rampant inflation and rising fuel and utility prices, so it’s likely to have dampened the rate of growth – even if, by value, the market will jump simply as a result of the higher rate of VAT. Club members have therefore been hit with a price increase in each of the past two years – unless, that is, clubs have chosen to absorb the increase.
But clubs have also been hit by rising
prices. Overheads increases – ranging from rises in the national minimum wage to higher utility and rent bills – are examples of pressures currently being exerted on health and fi tness club businesses which may make their mark.
market snapshot The UK market for health and fitness clubs has increased in value by 17.3 per cent between 2006 and 2011 to £2.66bn. Member numbers have increased by a slightly slower rate during this period, reflecting an increase in average yield per member. There are currently an estimated 5.33 million members of private health and fitness clubs in the UK – up 13.6 per cent since 2006. Meanwhile, although sports
participation rates declined in 2010, there has been an uplift in the proportion of adults who are members of sports clubs, suggesting a trend away from more insular, individual exercising towards structured, organised group activities. Although average yield per member
has risen, it’s nevertheless the area of secondary spend that’s shown the weakest growth during the past few years; membership and joining fees account for the largest share of health and fi tness club revenues (80 per cent) – a fi gure that’s risen over the past few years. The squeeze on household incomes has meant that, while people have recognised that
FIG 1: UK HEALTH AND FITNESS CLUBS MARKET SIZE TRENDS, 2006-16
THE MARKET 3,200
3,000 2,800 2,600 2,400 2,200 2,000
Taking classes out of the club could attract new users
54
BEST CASE (£M) 3,048
MINTEL FORECAST (£M) 2,922
WORST CASE (£M) 2,789
CONFIDENCE INTERVALS
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 EST.
ACTUAL Read Health Club Management online at
healthclubmanagement.co.uk/digital FORECAST september 2011 © cybertrek 2011
95% 90% 70% 50%
MARKET VALUE (£M)
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