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Health Club Management

Health Club Management

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IHRSA 2014: Health clubs under threat from march of microgyms, says Ray Algar

Traditional health clubs offering a broad selection of activities at a mid-range price are at serious risk of having their business ‘salami-sliced’ away by specialised competitors.

That was the view of respected industry analyst Ray Algar during his address at the IHRSA Europe Congress in Amsterdam yesterday afternoon (17 October).

He said activity providers must decide whether they wish to pursue the path of low-cost self-service gyms, which have been a big success story in recent years, or go-down the path of offering a high-quality support structure for their clients - as found in the new wave of microgyms - if they are to thrive in a changing marketplace.

The mid-market gyms charging an average of £42 a month in the UK may find that small chunks of their members will be lost to low-cost competitors and microgyms specialising in the activities they most prefer - such as yoga, functional training or group cycling - until the business is no longer viable, Algar added. Approximately 120 private gyms are closing in the UK every year as their business model becomes no longer feasible, he lamented.

The new price points which are forming, Algar said, are approximately £16 per month maximum for a low-cost operator (slightly more in London), while microgyms are able to charge between £20-30 per hour session for the unique experience that they offer. He stated that the talented trainers are a key part of the high price point for microgyms, describing them as ‘rockstars’ who are vital to building loyal communities around new aspirational brands, such as Psycle and Soul Cycle, in a way mid-market gyms haven’t managed.

He highlighted this by citing a quote from Fitness First CEO Andrew Cosslett, who on joining the company from the hospitality industry noted: “The gym industry might be great at fitness, but it has never been very good at connecting with customers.”

In response to these new competitors, traditional mid market giants such as Fitness First and David Lloyd are piloting their own microgym brands, while some industry observers believe that embedding these boutique concepts within existing health clubs could preserve their status as the traditional centre of active lifestyles.

Algar pointed out that, as with the initial wave of microgyms, many of the entrepreneurs behind boutique clubs are arriving from outside the health and fitness industry, bringing new ways of thinking. Whichever path traditional gyms choose to take, he concluded, they will need to be clear in their approach and embrace innovation if they are to succeed.

The focus on the emergence of microgyms served as an apt precursor to Algar’s forthcoming report on the sector - which is expected to be released in December.

Health Club Management will be in attendance for the duration of the event and (WiFi permitting) will be live reporting on key developments via the HCM website.

A preview of the event can be found in the September edition of HCM magazine on pp.26-27.

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Traditional health clubs offering a broad selection of activities at a mid-range price are at serious risk of having their business ‘salami-sliced’ away by specialised competitors.
HAF,FIT,IND,EVT,PHR
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News

IHRSA 2014: Health clubs under threat from march of microgyms, says Ray Algar

Traditional health clubs offering a broad selection of activities at a mid-range price are at serious risk of having their business ‘salami-sliced’ away by specialised competitors.

That was the view of respected industry analyst Ray Algar during his address at the IHRSA Europe Congress in Amsterdam yesterday afternoon (17 October).

He said activity providers must decide whether they wish to pursue the path of low-cost self-service gyms, which have been a big success story in recent years, or go-down the path of offering a high-quality support structure for their clients - as found in the new wave of microgyms - if they are to thrive in a changing marketplace.

The mid-market gyms charging an average of £42 a month in the UK may find that small chunks of their members will be lost to low-cost competitors and microgyms specialising in the activities they most prefer - such as yoga, functional training or group cycling - until the business is no longer viable, Algar added. Approximately 120 private gyms are closing in the UK every year as their business model becomes no longer feasible, he lamented.

The new price points which are forming, Algar said, are approximately £16 per month maximum for a low-cost operator (slightly more in London), while microgyms are able to charge between £20-30 per hour session for the unique experience that they offer. He stated that the talented trainers are a key part of the high price point for microgyms, describing them as ‘rockstars’ who are vital to building loyal communities around new aspirational brands, such as Psycle and Soul Cycle, in a way mid-market gyms haven’t managed.

He highlighted this by citing a quote from Fitness First CEO Andrew Cosslett, who on joining the company from the hospitality industry noted: “The gym industry might be great at fitness, but it has never been very good at connecting with customers.”

In response to these new competitors, traditional mid market giants such as Fitness First and David Lloyd are piloting their own microgym brands, while some industry observers believe that embedding these boutique concepts within existing health clubs could preserve their status as the traditional centre of active lifestyles.

Algar pointed out that, as with the initial wave of microgyms, many of the entrepreneurs behind boutique clubs are arriving from outside the health and fitness industry, bringing new ways of thinking. Whichever path traditional gyms choose to take, he concluded, they will need to be clear in their approach and embrace innovation if they are to succeed.

The focus on the emergence of microgyms served as an apt precursor to Algar’s forthcoming report on the sector - which is expected to be released in December.

Health Club Management will be in attendance for the duration of the event and (WiFi permitting) will be live reporting on key developments via the HCM website.

A preview of the event can be found in the September edition of HCM magazine on pp.26-27.

Sign up for FREE ezines & magazines
Traditional health clubs offering a broad selection of activities at a mid-range price are at serious risk of having their business ‘salami-sliced’ away by specialised competitors.
HAF,FIT,IND,EVT,PHR
934328_953695.jpg

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Features
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Retreats are where boutique fitness is at in 2020. High-end operators are now designing packages to take their communities to inspiring locations, in order to escape everyday life and immerse themselves in exercise, mindfulness and relaxation. Kath Hudson reports
Features
feature
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Features
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Features
Talking point
As we begin a new decade, will boutiques extend beyond the major cities? Will the budget boom continue? How will digital fitness impact the sector? Kath Hudson speaks to some of the industry’s big hitters to find out what 2020 could have in store
Features
Aqua Health
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Features
feature
Fusing great kit with tailored workouts and cutting edge technology, Technogym products create peak experiences for members
Features
People
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Alina & Anna Epeykina

Flexology: co-founders
Realising that people simply didn’t understand how beneficial stretching is for your health, we started thinking about how we could bring stretching to the wellness industry in the UK
People
One day, as our estate continues to grow, it might even be that we create an Evolution Wellness membership and app – a way of aggregating across the total portfolio, allowing people to consume any of our brands by using credits from their digital membership
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