Ray Algar looks at the emergence of the first true budget clubs in the UK, and considers what consequences they will have on the shape of the market.
I can vividly recall the discussion with the then chief executive of Holmes Place. “I’ve put together an exciting deal for a purpose-designed club to form part of a new development in Newbury. The numbers are good; what do you think?” After reflecting, he replied: “We can’t open in Newbury; the town already has a private health club.” A few years ago, that was the unwritten market rule; the first to enter, won. Why waste resources competing? Let’s just find our own town. How quickly the rules of the game change. Now clubs stand side-by-side and compete hard, and not just small clubs. Some towns now have two £13m+ health and racquet clubs within a mile of each other. ‘If the town is good enough for them, it’s good enough for us’, became the new mantra, as chains rushed to build a national estate. As competition intensified, one rule seemed to remain constant. Prosperous consumers joined the premium clubs, while those of moderate financial means frequented the ‘affordable’ private mid-market club or leisure centre. However, everyone is now well aware that the principle of neatly-defined homogeneous consumer segments is now in turmoil, causing marketers sleepless nights. Promiscuous buying behaviour is everywhere, where shopping at Lidl now suggests, more ‘smart’ and ‘savvy’, than skint.