There has always been diversity of offering in the fitness and gym sector – from ladies only gyms, luxury gyms, 24-hour gyms, to fully serviced health clubs. The big story of the last few years has been the rise of the budget gym and the coinciding demise of the mid-range gym.
2014 has seen established mid-range companies such as LA Fitness run into financial problems leading to significant restructuring of their businesses. Competition from budget gyms during the ‘age of austerity’ has given consumers an even wider choice of fitness provider, with considerably lower membership charges making savvy consumers question the value of their existing provider, and attracting reluctant gym-goers out of the woodwork.
Budget gym operators have almost sprung up out of nowhere – Xercise4Less, for example, had only nine gyms in 2013 and now have 24 with a further 17 opening soon. Even Sir Stelios is getting in on the act with his Easy brand creating easyGym, no doubt with its signature orange look.
So why are budget gyms so popular?
First there is cost. With membership contracts at around £10 – £20 per month, budget gyms are certainly cheaper than alternative providers such as David Lloyd or Virgin Active which charge much more. Yes, mid-range and high-end gyms usually have better facilities – it’s rare a budget gym has a pool or sauna for example – but not all consumers are happy to pay for ‘free’ facilities which they don’t want to, or don’t have the time to use.
Criticism in the past over long contract periods and dubious cancellation procedures have made consumers reluctant to even consider starting a costly membership in the first place. Many budget gyms offer contracts with no lock in period, and some offer pay-as-you-go membership which can be used at any of their branches, offering a huge degree of flexibility. While some consumers like the idea of being locked-in as a motivation to actually use the gym as often as possible, with changing work-life patterns, there is a need to cater to a growing army of consumers who demand greater flexibility and not being fleeced for payment when life sometimes takes over.
Many wonder how the gyms can offer membership at such low rates. The answer is simple – no frills. At some budget gyms, you pay for the basic membership and then can pay for the extras you want, rather than having them included whether you use them or not. Classes can be included or for an extra charge, and PTs are additional if you prefer something more one-to-one. You will have to bring (or pay for) your own drinks, and possibly for extras such as the use of hairdryers. Don’t expect fancy showers or to have towels provided – you may not even get a towel hook in your shower cubicle, or a lock for your locker! (hint – bring your own)
The model relies on large numbers. Cheap membership rates attract a huge number of cash-strapped consumers keen to save money on gym membership, and while many will attend frequently, some will not. The urge to cancel the membership is not so strong when it’s ‘only’ a few pounds a month. But as even the more expensive, luxurious clubs have not been very helpful when it comes to cancelling your contract, it’s still a lot less painful to be locked-in to £10 a month than £40. For customers who don’t want the fancy extras and just need a clean, no-hassle environment to work out, it’s not hard to see the attraction of budget gyms.
We don’t think that more expensive gyms have had their day – there are plenty of consumers who do want the extras and are willing to pay for more luxurious surroundings – but the growth of the budget gym sector has forced higher-end providers to look at their offering. For example, David Lloyd promote their multi-million pound investments across several of their clubs, having made significant improvements to fitness equipment, lounges, pools, and kids clubs.
We think that there is room for all types of fitness providers which cater for many different types of consumer preferences. Some people are prepared to pay for luxury, some like the friendliness and pay-as-you-go model of the local leisure centre, and others just want to work out with no fuss. Mid-range gyms will suffer, and have suffered as this last year has paid testament, unless they can compete on price, or compete on luxury. With consumers being squeezed financially for the foreseeable future budget gyms will continue to hold their deserved place in the fitness sector.