1. A strategic look at the emergence of the
low-cost gym sector
FIA Seminar October 2010
Ray Algar

2. www.oxygen-blog.blogspot.com

3. My perspective
neutral
towards the
sector

4. MINIMUM OF
50% LOWER
THAN
INDUSTRY
PRICE
SCOPE TO HEAVY
OPERATE 24 TECHNOLOGY
HOURS AND WEB USE
MY
DEFINITION
OF A LOW-
COST GYM
ABILITY TO
OPERATE CLUB GYM-ONLY
WITH A SINGLE PROPOSITION
PERSON

5. SIMPLICITY
SUPPORTING
INFRA-
STRUCTURE AFFORDABILITY
MARKET
DRIVERS
CONSUMER
CONSUMERS ARE
SENTIMENT
CHANGING
TOWARDS CLUBS
SPORADIC
ATTENDANCE

6. SIMPLICITY
SUPPORTING
INFRA-
STRUCTURE AFFORDABILITY
MARKET
DRIVERS
CONSUMER
CONSUMERS ARE
SENTIMENT
CHANGING
TOWARDS CLUBS
SPORADIC
ATTENDANCE

7. I Care

12. Consumers now have
considerable experience
of low-cost services

13. “Fly for the price
of a pair of jeans”
13

14. “Spend a little, live a lot”
14

15. “More of our shoppers
are using us for their
whole shop instead of
top-up shopping”
Group MD Aldi UK & Ireland

16. 16

17. “Look good, pay less”
17

18. Think of a sector…you will
find low-cost

20. 300
million units
annually by
2013

21. “Quality up, cost down
… way down”

24. SIMPLICITY
SUPPORTING
INFRA-
STRUCTURE AFFORDABILITY
MARKET
DRIVERS
CONSUMER
CONSUMERS ARE
SENTIMENT
CHANGING
TOWARDS CLUBS
SPORADIC
ATTENDANCE

32. SIMPLICITY
SUPPORTING
INFRA-
STRUCTURE AFFORDABILITY
MARKET
DRIVERS
CONSUMER
CONSUMERS ARE
SENTIMENT
CHANGING
TOWARDS CLUBS
SPORADIC
ATTENDANCE

33. “I can join online – no pushy
sales staff to deal with!”

36. SIMPLICITY
SUPPORTING
INFRA-
STRUCTURE AFFORDABILITY
MARKET
DRIVERS
CONSUMER
CONSUMERS ARE
SENTIMENT
CHANGING
TOWARDS CLUBS
SPORADIC
ATTENDANCE

39. SIMPLICITY
SUPPORTING
INFRA-
STRUCTURE AFFORDABILITY
MARKET
DRIVERS
CONSUMER
CONSUMERS ARE
SENTIMENT
CHANGING
TOWARDS CLUBS
SPORADIC
ATTENDANCE

40. 40

41. Word of mouth
on steroids

42. Word of mouth
on steroids

43. SIMPLICITY
INFRA-
STRUCTURE AFFORDABILITY
MARKET
DRIVERS
CONSUMER
CONSUMERS ARE
SENTIMENT
CHANGING
TOWARDS CLUBS
SPORADIC
ATTENDANCE

46. “Why am I paying
for a club I
occasionally use ?”

47. “Why am I paying
£50 just to use
a treadmill?”

48. What do low-cost gym
consumers say?

49. “It is almost free”

50. “I have never been to a
gym that is £15 before. I
thought I would walk in
and find a lot of
broken equipment”

54. 54

55. 55

56. 56

57. 57

58. 58

61. McFit Financials 2007
Euros % turnover
(millions)
Turnover 86
Staff costs 3.4 3%
EBITDA 28 32%
Interest charge 0.1 -
Net assets 34
Clubs 88
61

65. “Perhaps the biggest
threat we face is that
someone from outside
our sector, with a huge
war chest of cash and
proven customer-centric
business model, will
build 1,000 shiny new
facilities, and offers
budget-busting
membership deals”
Fred Turok, Chairman, FIA
(statement from 2007)

68. Operational
excellence
Customer Product
intimacy leadership

69. budgetgymresearch.ning.com
oxygen-blog.blogspot.com
Google: “Ray Algar”