Sector trends

Industry insights: health and fitness

The traditional membership-based model of the UK’s larger gyms is seeing competition from both low-cost chains and specialist ‘boutique’ studios.

One in seven people in Britain is a member of a gym. Last year there were a record 6,728 such premises in the UK market worth £4.7bn; the nation’s desire to get more exercise seems to be getting the fitness industry itself in pretty good shape.

Or is it? Clubs lose around half of their members each year, and recent research showed that one in five (21%) of those who join go only three times a year, at an average cost of £188 a visit. Almost one in 10 (9%) pay their fees, then never set foot in the gym at all.

As a result, thousands are being lured away from their memberships by increasingly popular low-cost gyms that offer a basic membership for around £20 a month. At the other end of the market are ‘boutique’ gyms – small fitness centres that may only teach one or two disciplines, but provide a highly attentive service often involving no contract at all.

“The fitness market is still growing at a very healthy rate,” says Geoff Bamber, CEO of London-based gym network Digme Fitness. “But we’re seeing a seismic shake-up, with low-cost gyms and boutique studios taking more and more business from the traditional middle market.”

And the industry is booming – the number of gym members grew 5.1% last year, according to the most recent State of the UK Fitness Industry Report, published annually by market analysts LeisureDB.

But the rise of budget chains such as PureGym (whose no-frills model has done away with traditional facilities such as cafes, saunas, and even reception areas) has certainly pulled the yoga mat from under many established businesses. Indeed, low-cost gyms have already muscled in on 35% of the market.

A personal touch

The popularity of boutique gyms, meanwhile, comes as a response to the perceived impersonality of the bigger chains, says Bamber. “The smaller gyms tapped into people’s desire for a sense of community and a more personal service, which they’re willing to pay a premium for,” he says. “Class numbers have been growing for a long time in gyms, with a rise in such groups as yoga, boxing and spinning. It was only a matter of time before these became so big and impersonal that entrepreneurs were going to develop purpose-built studios outside the traditional gym model that give a superior class experience, with more sense of community.”

Boutiques aren’t cheap – there’s rarely a membership fee but classes often cost around £20. However, their clients are prepared to pay that for the more personal service. Members of traditional gyms complain their “biggest hassle is staff not speaking to them”, according to a recent industry study by health club management software providers The Retention People (TRP).

“Boutique gyms make their members feel they truly belong to a community,” says Helen Fricker, senior leisure analyst at market researchers Mintel. “The reason they’re growing so rapidly is because they’re not getting this from health and fitness clubs. Larger gyms need to give their members the personal touch.”

Expertise vs everything

But besides that special attention, what are customers getting from premium-rate studios offering one or two specialist workouts that they’re not from huge membership gyms where they can do everything?

“Gyms by their nature are jacks-of-all-trades,” says Bamber, “with the inevitable result that they’re masters of none. It’s very tough to do everything well, whereas boutiques tend to be specialists within their field – yoga, HIIT [high-intensity interval training], barre, personal training, spinning. Also, gyms tend to be less able or willing to offer a service flexible enough to meet many people’s lifestyles and fitness needs – at a boutique you pay only for the equipment you use and the time you’re using it, not the 90% of the gym that you never set foot in.”

We’re seeing a seismic shake-up, with low-cost gyms and boutique studios taking more and more business from the traditional middle market

Geoff Bamber
CEO, Digme Fitness

Flexibility is the key to attracting clients, says Sophie Bickerdike, who co-founded Harrogate studio Go Yoga four years ago, and in 2016 launched spinning studio Go Revolution. And, she claims, her business model makes you fitter. “With a membership you’re always promising yourself you’ll go tomorrow,” she says, “but if you decide to pay for a specific class, you’ll make sure you turn up. You only pay for what you do – and it’s more likely to get you fitter.”

Healthy competition

A great opportunity for SMEs lies in the fact that while boutiques have had a leg-up from celebrity clients – Victoria Beckham apparently enjoys a regular Saturday morning workout in central London – ironically the one thing they really need to thrive, says Bamber, is competition. “Boutiques can’t exist successfully in isolation. No one will be persuaded to give up their traditional all-encompassing gym membership to go to only one boutique offering only one activity. If, however, that boutique is one of many in an ecosystem of studios that between them offer a complete alternative to the gym, business for all of them will continue to boom.

“There are now several clusters of boutiques in London and this is spreading throughout the UK,” he adds. “As it continues to gather momentum, it will continue to accelerate the shake-up in the industry – and the traditional gyms will have to look at their own models to keep their clients.”

The traditional gyms, like many of their members, should be mindful of their younger, leaner rivals. The TRP survey also found 47% of those questioned would consider cancelling their memberships if alternative exercise services were available. The well-known middle-market chains have already reacted in different ways – David Lloyd recently refurbished and rebranded, while Virgin Active has jettisoned many of its gyms to take on the boutiques with its exclusive Collection clubs. And, says Helen Fricker, there’s another way the more established chains can compete.

“Technology,” she says. “Virtual reality [VR] and immersive experiences at the gym can give participants an individual workout experience they won’t get elsewhere. A VR class can still maintain the community element but in a unique way. And these technologies enable gyms to provide content in multiple locations while freeing up instructors. The technology is there. Even little things, such as technology to notify instructors when a member enters the building, so they can greet them personally – all these things are possible.”

The opportunities

LeisureDB director David Minton is convinced there is room for everyone, including start-ups. “The number of gyms is on course to exceed 7,000 in the next year, and we expect total membership to top 10 million. Further growth will only be limited to the imagination of those pushing the boundaries.”

But Fricker is less confident that all businesses will survive. “The low-cost gyms and the boutiques are enjoying huge growth, she says. “But the middle guys who are neither very cheap nor very exclusive will struggle – and I think we’re going to see them disappear.”

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