Health and fitness operators must redefine the boundaries of their market and embrace innovation if they are to survive and thrive in an increasingly competitive sector, says Ray Algar.
Delivering his keynote address at LIW 2015 in Birmingham, the fitness industry analyst issued a call to arms for entrepreneurs to redefine the sector.
Citing examples such as the start of the mid-market with the launch of Fitness First in 1993 and the arrival of the budget sector in the UK in the mid-noughties (a concept started in Germany in the late 90s), Algar said the time is ripe for a great leap forward. Otherwise, he warned, the industry will continue to ‘squabble’ over the same 13 per cent of the adult population that are gym members.
“True entrepreneurs are unrestricted in their mission and redefine the boundaries they operate in to open up the market,” said Algar, suggesting innovation is the key to creating more opportunities.
Building on a previous
lecture outlining how traditional mid-range clubs are having their business ‘salami-sliced’ away by specialised competitors, he noted how mid-market gyms are suffering the most from the increasingly competitive fitness market space.
Algar reiterated his view that the pathways of the gym industry are forking between self-service and supported propositions, best exemplified by the polarisation minimally-staffed budget gyms and premium boutique clubs. Mid-market gyms are finding themselves caught in the middle of this split, with a proposition which fits neither category.
Another issue, Algar noted, is that the concept of consumer loyalty to a single gym brand is disappearing, with boutique gyms able to charge sizeable pay-as-you-go prices for premium one-off experiences. Third party platforms like ClassPass have made it easier than ever for consumers to experience new clubs and are in step with the predilections of the millennial market. He said one way traditional mid-market clubs are seeking to counter this is to cut prices, holding up the example of Sports Direct charging £19.99 for former LA fitness clubs that previously charged £40+.
“A decade ago people were in love with legacy clubs, now it feels with the ever-cheaper memberships that we’re almost given them away,” said Algar.
He concluded that to succeed in a challenging market, brands must embrace innovation and strive to raise the bar. There is no longer room for mediocrity and middling, he said. Brands have to really stand for something, presenting a clear identity and belief in their purpose if they want to thrive.
