GET HCM
magazine
Sign up for the FREE digital edition of HCM magazine and also get the HCM ezine and breaking news email alerts.
Not right now, thanksclose this window
Fisikal
Fisikal
Fisikal
Follow Health Club Management on Twitter Like Health Club Management on Facebook Join the discussion with Health Club Management on LinkedIn Follow Health Club Management on Instagram
UNITING THE WORLD OF FITNESS
Health Club Management

Health Club Management

features

Talking point: The mid-market

For the past decade, since the advent of low-cost clubs, there’s been talk of the mid-market disappearing. These clubs are still hanging on, but for how much longer? Kath Hudson reports

By Kath Hudson | Published in Health Club Management 2016 issue 10
Creating a ‘club within a club’ is one way for mid-market operators to build a USP / PHOTO: SHUTTERSTOCK.COM
Creating a ‘club within a club’ is one way for mid-market operators to build a USP / PHOTO: SHUTTERSTOCK.COM

As low-cost brands such as Pure Gym and The Gym Group launched and then expanded across the UK, offering clean, spacious self-service gyms, open around the clock, without contracts and for half the price of a standard private health club membership, brands like Fitness First and LA fitness – which were still locking members in with contracts – started to feel the pinch.

Yes they offered more facilities, but for those who only used the gym, this didn’t really matter.

Despite bringing in management from the hospitality sector, investing in research and creating some innovative new formats such as BEAT and a High Performance Club in Australia, Fitness First – formerly the leading global health club chain – couldn’t turn things around fast enough. The UK estate has just been sold to DW Fitness; some of the clubs will be sold on to other operators and presumably rebranded.

Another of the UK industry’s original brands, LA fitness – which occupied the mid-market space, in spite of launching a handful of higher-end LAX clubs in London – was sold to Pure Gym in 2015.

Meanwhile, mid-market operator Bannatyne’s is now heading upmarket, aiming to reposition itself as a premium operator by placing more focus on the customer journey and improving synergies with its spa and hotel brands.

Virgin Active has also adjusted its strategy, selling 35 clubs – one-third of its estate – to Nuffield, so it can invest in and focus on its high-end Collection clubs, family clubs and racquets clubs.

Does all this activity mean the mid-market is finally disappearing, or can operators in this segment of the market evolve to survive? We ask the experts…

Ray Algar,

Managing director,

Oxygen Consulting

Ray Algar
Ray Algar

Mid-market clubs were very slow to respond when low-cost gyms entered the market and disrupted the status quo. Now, unless they can offer something more compelling, it will only be a matter of time before more of these generic health clubs start to close.  

In the last couple of years, we’ve seen a disproportionate number of mid-market independents close as membership stagnated, membership prices remained flat and insufficient funds were generated to reinvest into refreshing the experience.

The low-cost and premium markets are both well defined, but historically the mid-market brands have deliberately been more generic. Neither one thing or the other. Could the former management team of LA fitness clearly define what was distinctive about their clubs?

The remaining legacy brands need to take stock and now jettison things which no longer serve them, or their members, and rediscover their core excellence. Similar offerings may be good enough when there’s significant geographic distance between clubs, but can be disastrous as the distance between health clubs shortens.

Mid-market clubs need to become experts, and build a reputation, in an area they really care about. Active4Less in Stevenage is an interesting example of a small town independent club which became low-cost, found it couldn’t compete with the purpose-built low-cost chains, and is now heading back to mid-market. Its USP is group exercise and it’s presenting itself as a gym with personality, where the character of the owner and staff shine through.

Meanwhile, an example of a mid-market brand that’s thriving is Anytime Fitness. The model is sometimes mistaken as a low-cost brand, with its 24/7 opening hours, but the operator clearly sees its future sitting between premium and low-cost offerings.

Anytime Fitness has confidence in its brand story: small, convenient neighbourhood gyms, with a personal and intimate atmosphere. And with its clubs having fewer than 900 members, it has the potential to provide a very supportive membership experience.

"Historically, the mid-market brands have deliberately been generic. Could the former management team of LA fitness clearly define what was distinctive about their clubs? "– Ray Algar

Michael Clark,

Owner,

Creative Fitness UK

Michael Clark
Michael Clark

As an industry, I think we can obsess too much about what we call our market segments, when ultimately most consumers don’t understand the nuances between budget or mid-market. They just see a gym, and then question why one costs £20 and another £60 or more.

Unless it’s a premium or destination club, most consumers will categorise the remainder of gyms as much the same and, as consumer research continues to tell us, they will choose to the join the most convenient one for them. If they have a choice when it comes to convenience, with two or more clubs in similar striking distance, then price becomes more of a factor. This tilts the tables in favour of the budget operators.

That said, big box mid-market clubs do have numerous offensive strategies available to them to counter the cost differential. One is to address the ongoing consumer frustration of having to pay for all the club’s services and facilities when they only use one or two areas. This can be achieved by breaking out popular formats – for example, some group exercise genres – into a boutique-style ‘club within a club’, with a separate pay as you go fee structure.

However, it’s essential that a concept like this is executed immaculately – ideally with a heightened look, feel, sound, touch and potentially a separate entrance. The price and differentiation of the offering must be clear, so members are willing to sign up to it, and so it’s able to attract a new type of consumer.

Another option is to pursue virtual membership, by engaging with technology to reach all those consumers who want to be more active but either don’t have access to gyms, or don’t feel the gym is for them. By offering virtual memberships and live-streamed pay per view events, operators could make members of people without them ever walking through their doors.

Going forward, I feel it will be all about how mid-market operators can articulate their differentiation and how they can attract new markets using technology and other services. A good location alone won’t be enough to stop consumers comparing on price and choosing what they see as a cheaper like-for-like option.

"We obsess too much about market segments, when ultimately most consumers just see a gym, and then question why one costs £20 and another £60 or more" – Michael Clark

Richard Millman,

CEO,

Total Fitness

Richard Millman
Richard Millman

We’re continuing to see a bifurcation of the marketplace in terms of proposition, consumers and price, and we look likely to be entering another round of acquisitions and consolidation. At one end are the low-cost clubs, which attract a younger, urban, more transient market and a high percentage of gym first-timers. They have a smaller footprint, with dry facilities, some group exercise and a monthly membership of around £20.

The full-service clubs have a broader range of facilities and product offering, along with higher customer service levels, and appeal to a more settled, mature and suburban market, with memberships of £45 and upwards in our geography in the north of England.

 Total Fitness sits in the full-service category and, when a low-cost club opens near us, we typically lose a few hundred members – mainly the younger male members and some younger females. In response, we’ve strategically defocused our sales and marketing approach from those types of consumers, focusing instead on winning them back in a few years’ time when they mature.

 Mid-market clubs generally have a smaller footprint than full-service clubs, so can be limited in how much they can change their proposition. However, it’s important they don’t stand still: they have to make the call one way or the other. They need a clear strategy and proposition for the consumer, differentiating on quality of product and service. They need to find their point of difference, both as a chain and as individual clubs.

Going upmarket – as some mid-market operators are trying or have tried to do – presents a marketing challenge. It’s easier to do if you have just one club than a chain, because to successfully make this move, operators must really understand their local marketplace – what their USP is locally – and how to capture new groups of customers. There are still lots of new audiences out there, provided clubs can define their proposition and find something unique to offer their particular geographic and consumer market.

Total Fitness is a full-service brand that appeals to a more mature, suburban market
Total Fitness is a full-service brand that appeals to a more mature, suburban market
Sign up here to get HCM's weekly ezine and every issue of HCM magazine free on digital.
https://www.leisureopportunities.co.uk/images/166643_683226.jpg
How much longer can mid-market health clubs hang on?
Kath Hudson, Journalist Ray Algar, Managing director, Oxygen Consulting Michael Clark, Owner, Creative Fitness UK Richard Millman, CEO, Total Fitness,Low cost fitness, mid market fitness, Pure Gym, the Gym Group, Fitness First, LA Fitness, Bannatyne, Virgin Active, Nuffield, Ray Algar, Oxygen Consulting, Anytime Fitness, Michael Clark, Creative Fitness UK, virtual membership, Richard Millman, Total Fitness,
HCM magazine
As Elevate returns to the market, we talk to director Lucy Findlay about how the event has come together
HCM magazine
The sharp increase in energy prices has left some operators reeling, but there’s reason to be optimistic if we can learn from other sectors, while moving to a low carbon future
HCM magazine
Energy is top of the agenda for two major reasons – cost and decarbonisation. With these two on a collision course, our experts share their views
HCM Magazine
HCM People
The Intelligent Movement initiative was in large part inspired by my own movement practice, as I’ve been training in the Ido Portal method
HCM Magazine
Sponsored
The body composition specialists are showing no signs of slowing down, with new leadership and launches for 2022
HCM Magazine
Interview
With brands such as Fitness First, Goodlife, Zap Fitness and Jetts operating across Asia Pacific, Fitness and Lifestyle Group has long been a tech innovator, as Kate Cracknell discovers
HCM Magazine
HCM People
Despite industry challenges, there’s a fresh air of positivity
HCM Magazine
Research
Bryce Hastings, head of research at Les Mills, explains the latest research into exercise motivation, giving tips on how to engage hard-to-reach members
HCM Magazine
HCM People
Choose consistent over perfect. That’s the long game. It’s never too late to pivot to that mindset
HCM Magazine
Postbag
As HCM passed its 300th edition milestone, readers shared their thoughts and feelings on HCM’s contribution to the industry in a very special postbag
HCM Magazine
Latest News
HCM understands researchers are moving closer to creating a pill to mimic some of the ...
Latest News
Establishing new data and insight services and strengthening relationships with both government and the NHS ...
Latest News
More than one in five (27 per cent) Americans belonged to a health club or ...
Latest News
Ultimate Performance (UP) – the private gym chain and PT business – has opened a ...
Latest News
Luxury hotel chain Mandarin Oriental has launched a new brand called Intelligent Movement to deliver ...
Latest News
Boutique fitness chain 1Rebel opens the doors to its tenth club today (Monday 27 June ...
Latest News
A new report by Deloitte, outlining the social and economic value of the global health ...
Latest News
Barry’s has entered the world of retail, opening a studio in the new Flannels flagship ...
Featured supplier news
Featured supplier news: Fitness industry to gather at Sibec Europe-UK in Portugal this September
Questex’s iconic event Sibec Europe-UK – known as Europe’s leading hosted buyer event for the fitness industry – will take place from 27-30 September at the Anantara Vilamoura Algarve Resort, in Portugal.
Featured supplier news
Featured supplier news: It’s nearly time for Elevate 2022!
It’s now just days to go until your leading trade show for the fitness, physical activity and sports therapy industry kicks off in London!
Featured operator news
Featured operator news: New £42m Moorways Sports Village to open on 21 May
Everyone Active will open Moorways Sports Village to the public on Saturday 21 May with a grand opening weekend – in time for the half term holidays.
Featured operator news
Featured operator news: Everyone Active to launch new exercise classes to reduce gender gap
As part of their work to break down the barriers that deter women and girls from participating in sport and physical activity, Everyone Active has teamed up with EMD UK to launch new exercise classes linked to the This Girl Can campaign.
Video Gallery
Total Vibration Solutions / Floors 4 Gyms / TVS Sports Surfaces
Mindbody, Inc
Sport Alliance GmbH
Company profiles
Company profile: We Work Well Inc
We Work Well is a global premier hosted buyer event company, connecting high-level executives from ...
Company profiles
Company profile: Crown Sports Lockers
Crown Sports Lockers has designed, crafted and fitted bespoke timber furniture for spas, hotels and ...
Supplier Showcases
Supplier showcase - Pulse Fitness: trusted partner
Catalogue Gallery
Click on a catalogue to view it online
Directory
Lockers/interior design
Safe Space Lockers Ltd: Lockers/interior design
Fitness equipment
A Panatta Sport Srl: Fitness equipment
Skincare
Sothys: Skincare
Wearable technology solutions
MyZone: Wearable technology solutions
On demand
Fitness On Demand: On demand
Management software
Premier Software Solutions: Management software
Flooring
Total Vibration Solutions / TVS Sports Surfaces: Flooring
Whole body cryotherapy
Art of Cryo: Whole body cryotherapy
Spa software
SpaBooker: Spa software
Salt therapy products
Himalayan Source: Salt therapy products
Property & Tenders
Pendine Sands, Carmarthenshire
Carmarthenshire County Council
Property & Tenders
Runcorn
Halton Borough Council
Property & Tenders
Diary dates
30-30 Jun 2022
The ICC, Birmingham, Birmingham , United Kingdom
Diary dates
12-13 Sep 2022
Wyndham Lake Buena Vista Disney Springs® Resort, Lake Buena Vista, United States
Diary dates
25-28 Oct 2022
Messe Stuttgart, Germany
Diary dates
25-28 Oct 2022
Ibiza, Ibiza, Spain
Diary dates
01-07 Dec 2022
tbc, Dunedin, New Zealand
Diary dates
17-18 Mar 2023
Tobacco Dock, London, United Kingdom
Diary dates

features

Talking point: The mid-market

For the past decade, since the advent of low-cost clubs, there’s been talk of the mid-market disappearing. These clubs are still hanging on, but for how much longer? Kath Hudson reports

By Kath Hudson | Published in Health Club Management 2016 issue 10
Creating a ‘club within a club’ is one way for mid-market operators to build a USP / PHOTO: SHUTTERSTOCK.COM
Creating a ‘club within a club’ is one way for mid-market operators to build a USP / PHOTO: SHUTTERSTOCK.COM

As low-cost brands such as Pure Gym and The Gym Group launched and then expanded across the UK, offering clean, spacious self-service gyms, open around the clock, without contracts and for half the price of a standard private health club membership, brands like Fitness First and LA fitness – which were still locking members in with contracts – started to feel the pinch.

Yes they offered more facilities, but for those who only used the gym, this didn’t really matter.

Despite bringing in management from the hospitality sector, investing in research and creating some innovative new formats such as BEAT and a High Performance Club in Australia, Fitness First – formerly the leading global health club chain – couldn’t turn things around fast enough. The UK estate has just been sold to DW Fitness; some of the clubs will be sold on to other operators and presumably rebranded.

Another of the UK industry’s original brands, LA fitness – which occupied the mid-market space, in spite of launching a handful of higher-end LAX clubs in London – was sold to Pure Gym in 2015.

Meanwhile, mid-market operator Bannatyne’s is now heading upmarket, aiming to reposition itself as a premium operator by placing more focus on the customer journey and improving synergies with its spa and hotel brands.

Virgin Active has also adjusted its strategy, selling 35 clubs – one-third of its estate – to Nuffield, so it can invest in and focus on its high-end Collection clubs, family clubs and racquets clubs.

Does all this activity mean the mid-market is finally disappearing, or can operators in this segment of the market evolve to survive? We ask the experts…

Ray Algar,

Managing director,

Oxygen Consulting

Ray Algar
Ray Algar

Mid-market clubs were very slow to respond when low-cost gyms entered the market and disrupted the status quo. Now, unless they can offer something more compelling, it will only be a matter of time before more of these generic health clubs start to close.  

In the last couple of years, we’ve seen a disproportionate number of mid-market independents close as membership stagnated, membership prices remained flat and insufficient funds were generated to reinvest into refreshing the experience.

The low-cost and premium markets are both well defined, but historically the mid-market brands have deliberately been more generic. Neither one thing or the other. Could the former management team of LA fitness clearly define what was distinctive about their clubs?

The remaining legacy brands need to take stock and now jettison things which no longer serve them, or their members, and rediscover their core excellence. Similar offerings may be good enough when there’s significant geographic distance between clubs, but can be disastrous as the distance between health clubs shortens.

Mid-market clubs need to become experts, and build a reputation, in an area they really care about. Active4Less in Stevenage is an interesting example of a small town independent club which became low-cost, found it couldn’t compete with the purpose-built low-cost chains, and is now heading back to mid-market. Its USP is group exercise and it’s presenting itself as a gym with personality, where the character of the owner and staff shine through.

Meanwhile, an example of a mid-market brand that’s thriving is Anytime Fitness. The model is sometimes mistaken as a low-cost brand, with its 24/7 opening hours, but the operator clearly sees its future sitting between premium and low-cost offerings.

Anytime Fitness has confidence in its brand story: small, convenient neighbourhood gyms, with a personal and intimate atmosphere. And with its clubs having fewer than 900 members, it has the potential to provide a very supportive membership experience.

"Historically, the mid-market brands have deliberately been generic. Could the former management team of LA fitness clearly define what was distinctive about their clubs? "– Ray Algar

Michael Clark,

Owner,

Creative Fitness UK

Michael Clark
Michael Clark

As an industry, I think we can obsess too much about what we call our market segments, when ultimately most consumers don’t understand the nuances between budget or mid-market. They just see a gym, and then question why one costs £20 and another £60 or more.

Unless it’s a premium or destination club, most consumers will categorise the remainder of gyms as much the same and, as consumer research continues to tell us, they will choose to the join the most convenient one for them. If they have a choice when it comes to convenience, with two or more clubs in similar striking distance, then price becomes more of a factor. This tilts the tables in favour of the budget operators.

That said, big box mid-market clubs do have numerous offensive strategies available to them to counter the cost differential. One is to address the ongoing consumer frustration of having to pay for all the club’s services and facilities when they only use one or two areas. This can be achieved by breaking out popular formats – for example, some group exercise genres – into a boutique-style ‘club within a club’, with a separate pay as you go fee structure.

However, it’s essential that a concept like this is executed immaculately – ideally with a heightened look, feel, sound, touch and potentially a separate entrance. The price and differentiation of the offering must be clear, so members are willing to sign up to it, and so it’s able to attract a new type of consumer.

Another option is to pursue virtual membership, by engaging with technology to reach all those consumers who want to be more active but either don’t have access to gyms, or don’t feel the gym is for them. By offering virtual memberships and live-streamed pay per view events, operators could make members of people without them ever walking through their doors.

Going forward, I feel it will be all about how mid-market operators can articulate their differentiation and how they can attract new markets using technology and other services. A good location alone won’t be enough to stop consumers comparing on price and choosing what they see as a cheaper like-for-like option.

"We obsess too much about market segments, when ultimately most consumers just see a gym, and then question why one costs £20 and another £60 or more" – Michael Clark

Richard Millman,

CEO,

Total Fitness

Richard Millman
Richard Millman

We’re continuing to see a bifurcation of the marketplace in terms of proposition, consumers and price, and we look likely to be entering another round of acquisitions and consolidation. At one end are the low-cost clubs, which attract a younger, urban, more transient market and a high percentage of gym first-timers. They have a smaller footprint, with dry facilities, some group exercise and a monthly membership of around £20.

The full-service clubs have a broader range of facilities and product offering, along with higher customer service levels, and appeal to a more settled, mature and suburban market, with memberships of £45 and upwards in our geography in the north of England.

 Total Fitness sits in the full-service category and, when a low-cost club opens near us, we typically lose a few hundred members – mainly the younger male members and some younger females. In response, we’ve strategically defocused our sales and marketing approach from those types of consumers, focusing instead on winning them back in a few years’ time when they mature.

 Mid-market clubs generally have a smaller footprint than full-service clubs, so can be limited in how much they can change their proposition. However, it’s important they don’t stand still: they have to make the call one way or the other. They need a clear strategy and proposition for the consumer, differentiating on quality of product and service. They need to find their point of difference, both as a chain and as individual clubs.

Going upmarket – as some mid-market operators are trying or have tried to do – presents a marketing challenge. It’s easier to do if you have just one club than a chain, because to successfully make this move, operators must really understand their local marketplace – what their USP is locally – and how to capture new groups of customers. There are still lots of new audiences out there, provided clubs can define their proposition and find something unique to offer their particular geographic and consumer market.

Total Fitness is a full-service brand that appeals to a more mature, suburban market
Total Fitness is a full-service brand that appeals to a more mature, suburban market
Sign up here to get HCM's weekly ezine and every issue of HCM magazine free on digital.
https://www.leisureopportunities.co.uk/images/166643_683226.jpg
How much longer can mid-market health clubs hang on?
Kath Hudson, Journalist Ray Algar, Managing director, Oxygen Consulting Michael Clark, Owner, Creative Fitness UK Richard Millman, CEO, Total Fitness,Low cost fitness, mid market fitness, Pure Gym, the Gym Group, Fitness First, LA Fitness, Bannatyne, Virgin Active, Nuffield, Ray Algar, Oxygen Consulting, Anytime Fitness, Michael Clark, Creative Fitness UK, virtual membership, Richard Millman, Total Fitness,
Latest News
HCM understands researchers are moving closer to creating a pill to mimic some of the ...
Latest News
Establishing new data and insight services and strengthening relationships with both government and the NHS ...
Latest News
More than one in five (27 per cent) Americans belonged to a health club or ...
Latest News
Ultimate Performance (UP) – the private gym chain and PT business – has opened a ...
Latest News
Luxury hotel chain Mandarin Oriental has launched a new brand called Intelligent Movement to deliver ...
Latest News
Boutique fitness chain 1Rebel opens the doors to its tenth club today (Monday 27 June ...
Latest News
A new report by Deloitte, outlining the social and economic value of the global health ...
Latest News
Barry’s has entered the world of retail, opening a studio in the new Flannels flagship ...
Latest News
The London 2012 Olympic legacy investment designed to improve physical education at primary schools has ...
Latest News
A special task force has been established to boost physical activity opportunities for people with ...
Latest News
F45 will be launching its first studio in a hotel in Q3 2022, following a ...
Featured supplier news
Featured supplier news: Fitness industry to gather at Sibec Europe-UK in Portugal this September
Questex’s iconic event Sibec Europe-UK – known as Europe’s leading hosted buyer event for the fitness industry – will take place from 27-30 September at the Anantara Vilamoura Algarve Resort, in Portugal.
Featured supplier news
Featured supplier news: It’s nearly time for Elevate 2022!
It’s now just days to go until your leading trade show for the fitness, physical activity and sports therapy industry kicks off in London!
Featured operator news
Featured operator news: New £42m Moorways Sports Village to open on 21 May
Everyone Active will open Moorways Sports Village to the public on Saturday 21 May with a grand opening weekend – in time for the half term holidays.
Featured operator news
Featured operator news: Everyone Active to launch new exercise classes to reduce gender gap
As part of their work to break down the barriers that deter women and girls from participating in sport and physical activity, Everyone Active has teamed up with EMD UK to launch new exercise classes linked to the This Girl Can campaign.
Video Gallery
Total Vibration Solutions / Floors 4 Gyms / TVS Sports Surfaces
Mindbody, Inc
Sport Alliance GmbH
Company profiles
Company profile: We Work Well Inc
We Work Well is a global premier hosted buyer event company, connecting high-level executives from ...
Company profiles
Company profile: Crown Sports Lockers
Crown Sports Lockers has designed, crafted and fitted bespoke timber furniture for spas, hotels and ...
Supplier Showcases
Supplier showcase - Pulse Fitness: trusted partner
Catalogue Gallery
Click on a catalogue to view it online
Directory
Lockers/interior design
Safe Space Lockers Ltd: Lockers/interior design
Fitness equipment
A Panatta Sport Srl: Fitness equipment
Skincare
Sothys: Skincare
Wearable technology solutions
MyZone: Wearable technology solutions
On demand
Fitness On Demand: On demand
Management software
Premier Software Solutions: Management software
Flooring
Total Vibration Solutions / TVS Sports Surfaces: Flooring
Whole body cryotherapy
Art of Cryo: Whole body cryotherapy
Spa software
SpaBooker: Spa software
Salt therapy products
Himalayan Source: Salt therapy products
Property & Tenders
Pendine Sands, Carmarthenshire
Carmarthenshire County Council
Property & Tenders
Runcorn
Halton Borough Council
Property & Tenders
Diary dates
30-30 Jun 2022
The ICC, Birmingham, Birmingham , United Kingdom
Diary dates
12-13 Sep 2022
Wyndham Lake Buena Vista Disney Springs® Resort, Lake Buena Vista, United States
Diary dates
25-28 Oct 2022
Messe Stuttgart, Germany
Diary dates
25-28 Oct 2022
Ibiza, Ibiza, Spain
Diary dates
01-07 Dec 2022
tbc, Dunedin, New Zealand
Diary dates
17-18 Mar 2023
Tobacco Dock, London, United Kingdom
Diary dates
Search news, features & products:
Find a supplier:
Fisikal
Fisikal
Partner sites