I was recently invited by Health Club Management magazine to comment on the following question:
Will budget health club chains change the face of the industry?
Yes and this is why. Consumers have been enjoying budget goods and services for over a decade; EasyJet is already twelve years old. Consumers have now flown, shopped and slept with budget providers and decided it was not a one-night stand. Budget no longer implies ‘inferior’ and consumers now ask: why do I need to pay more? Exercisers who simply need a well-equipped gym now have an option, which is 70% below the national average price. Globally, the lowest rate I have found is £5 per month at Planet Fitness in the United States. The industry has had plenty of time to prepare for the arrival of budget clubs as both McFit in Germany and Planet Fitness are now a decade old.
I predict at least 175 budget clubs in the UK by 2010 and unfortunately many existing mediocre health clubs will fail. They will fail because they have morphed into a virtual commodity, do nothing extraordinary and are dismissive of the threat that many members will defect as soon as a budget club comes to town. The group most at risk are gym-only members attending once weekly. If nothing extraordinary is going on during their visit, then anything over £14 per month looks expensive. However, here is the opportunity. Budget clubs can dramatically grow a local market, but they are not in the personalised service business; they are in the self-service, equipment hire business. To differentiate from the budget sector, clubs need to start intelligently harnessing their staff to provide a substantial leap in value for members. The industry will inevitably feel shaken and stirred when a disruptive new business model appears, but treat it as a wake-up call to really evaluate what your business stands for. Also, suppliers will see new opportunities. For example, budget clubs are fanatical about optimising equipment use and reducing asset-down time. New technologies such as Precor’s InSite system that allows remote sensing of equipment is a powerful weapon in their arsenal, but why are the low-cost budget providers always leading the way in embracing new innovations? So, start preparing for the inevitable arrival of budget clubs to your neighbourhood and use it as a catalyst to fundamentally overhaul the member proposition.