MARKET ANALYSIS
The rapid number of entrants into the budget sector has fuelled competition
Jacques de Bruin
COO Pure Gym
P
enetration rates across the UK health and fitness market will remain stable at their current levels, averaging
between 12 and 13 per cent, for the foreseeable future. The mid-level and high-end sectors
of the market will remain fairly consistent in their current penetration levels, with the potential for a very
slight decline in membership numbers as the budget operators continue to grow over the next 12 to 24 months. Any decline will be minimal, though, with the businesses operating in these sectors offl oading the poorest performing clubs and consolidating into fewer, but more profi table, clubs. The major shift within the industry will be the number of operators within
the budget sector of the market. Lower fi nancial outputs and operating costs have reduced barriers for entry into the affordable sector, which in turn has rapidly increased the number of operators within this sector – and consequently competition levels. With expected overall market
penetration levels remaining stable, the affordable sector cannot sustain the continued growth across different operators for a long-term period. The next 12 to 24 months will be a critical time for budget operators as the affordable sector begins to consolidate. During this consolidation stage,
business success within the affordable sector will be determined by two factors: differentiation through innovation, and the successful entry into new markets and locations, specifi cally London. Budget operators who correctly
The next 12–24 months could see consolidation within the affordable sector 84 Read Health Club Management online at
healthclubmanagement.co.uk/digital
identify the changes in consumer demand and strategically tailor a business model to meet more niche requirements, while still following a budget operating model, will continue to expand their membership base by creating a new market for the affordable sector to operate in. Crucial to this success is early entry into new market opportunities. Microgyms that meet consumer demands are central to this niche offering, as they will allow fi nancially viable diversifi cation into markets that have no affordable operator presence.
January 2015 © Cybertrek 2015
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