Ray algar low-cost gym seminar Manchester UK October 2011

-COST GYM SECT
OW OR
L

AL

RE
OB

PO
2011 GL

RT
A STRATEGIC INVESTIGATION INTO A DISRUPTIVE NEW SEGMENT

Researched and written by Ray Algar, Oxygen Consulting UK in association with Precor

Tuesday, 25 October 11

oxygen-consulting/think-tank


Discuss why and how the low-cost gym
sector is growing internationally


Neutral perspective


50% lower
than
country average
price

Scope to Heavy
operate 24 technology
hours and web use
DEFINITION
LOW
COST GYM

Ability to operate Predominantly a
with a single gym-only
person proposition


Digital
infrastructure

Low
attendance Simplicity
MARKET
DRIVERS

Changing Affordability
consumer Consumer
sentiment
towards
clubs

“A budget market hotel is one in
which the rooms are small and
the furnishings minimal. The focus
is on the essentials”

Ian Games
Outus & Co


“Technology - Simple, easy
to use and intuitive interface
...you normally have a consumer
who can comfortably
interact with it”

Professor Evgeny Kaganaer
IESE Business School


“Low-cost options can be status
symbols for consumers who want
to ﬂaunt their ability
to get good deals”

Henry Mason, Head of Research
Trendwatching.com


“Over the past ten years,
markets have moved. They have
traded up and traded down. No
longer is it good enough to
deliver average quality to
average consumers”
Michael Silverstein Senior Partner
Boston Consulting Group


What do UK consumers think of the low-
cost gym experience?


FitSpace The Gym
members Group
ex-members


Text
FitSpace
Members


20%

80%

First gym Previous gym experience

How much do you agree with
the following statements?

0 = Strongly 5 = Strongly
disagree agree


How much do you agree with the following statements?

3.3

3.5
Average Response
3.9

3.9

4.1

Know ﬁrst name of staff team Has all facilities I need
Receive emails Staff available to provide free advice
Staff approachable



3.9 4.1 4.3 4.5
4.1

4

Average Response
4.2

4.2

4.5

Delivers on website promise Friendly atmosphere
Always feel safe Helping me to become healthier
Excellent value for money


How likely are you to recommend this gym?

0 = Not all all 10 = Deﬁnitely
likely recommend


How likely are you recommend FitSpace?

7.6 7.8 8 8.2
7.7

7.8

Average Response
7.9

8.1

8.2

Males Members with experience of other gyms
All members Members for whom FitSpace is ﬁrst gym
Females


Net Promoter Score

0-6 7-8 9-10
Detractor Passive Promoter


Net Promoter Score

0 10 20 30 40
19

22
NPS SCORE
28

37

37

Age group - 25-34 Males All members Females
Age segment - 16-24


Still a member in six months time?

7.6 7.85 8.1
7.7

7.8

Average Response 7.9

7.9

8.1

Males Members with previous gym experience
Member for more than one year All members
FitSpace is ﬁrst gym Females


Out of industry Net Promoter Scores

0 40 80

72

35
NPS
33

15

14

Apple - computers Subaru - cars Jumbo - supermarkets
Citybank - banks Sky - internet


Text
The Gym
Group
ex-members


17%

Males - 60%

83%

First gym Previous gym experience


How much do you agree with the
following statements?

0 = strongly
5 = strongly
disagree
agree


3.4

3.5

3.7
3.7

4
4

4.1

Staff available to provide free advice All the facilities I needed
Friendly atmopshere Helped me become healthier person
Always felt safe Email with advice
Provided eveything promised on website


How likely are you to recommend this gym?

0 = Not all 10 = Deﬁnitely
all likely recommend


How likely are you recommend The Gym?

7 8 9
7.4

7.5

Average Response 7.5

7.6

8.5

Members with previous club experience All members Males Females
The Gym was ﬁrst gym member joined


Net Promoter Score

0 10 20 30 40
4

20

NPS SCORE
21

22

36

Age group - 35-44 Males All ex members Females
Age segment - 16-24


Where are members now?

31%

Male 66%

69%

Joined a different gym Not joined another gym

How long a member?
More than one year
7%
Unsure
5% 0-3 months
27%

7-12 months
26%

4-6 months
35%


26% of this group had
experience of other gyms
0-3 months
27%


Shall we try OK, let’s go try
another gym?

...36% of this group
went on to join another gym

How likely to recommend to a friend - by club

Birmingham 7.9

8.5
Brighton 7.4
7.4

Liverpool 7.4
7.4

Males Females


“No frills, low-cost gym.
Especially important for
us students!”

Female member
The Gym, Birmingham

10/10


“The friendly atmosphere,
knowing you are safe and
not being judged by staff”

Female member
The Gym, Birmingham

10/10


“Cleanliness and amount of
equipment available”

Female member
The Gym, Birmingham

10/10


“There was a lack of staff. I
searched for 15 minutes before
ﬁnding staff. I cancelled after
going just once”

Male member
The Gym, Liverpool

2/10


“Provide more supervison
from staff”

Female member
The Gym, Brighton

6/10


“I would have liked a private
changing cubicle”

Male member
The Gym, Birmingham

5/10


Leading international low-cost gym brands - clubs
At September 2011

17

19

23

38

52

Kingdom of sports Fitinn Smart Fit Fit for free
Fitness24Seven


Leading international low-cost gym brands - clubs
At September 2011

54

70

80

141

447

Basic Fit Easy Fitness Clever Fit McFit Planet Fitness


Planet Fitness - club growth

387

309
22.5%
compound
258
annual growth
rate

2010 2009 2008


£61,000/
£160,000
existing
gym
15,000 to £160,000/
24,000 £500,000
square new
feet gym
Planet Fitness
Club

Membership Franchise
from business
£6.50/month model


How members rate Planet Fitness on Yelp

19 16 12 20 6

1 star 2 stars 3 stars 4 stars 5 stars


“I love Planet Fitness. Why?
Because I will never ﬁnd another
gym in NYC this cheap.
Seriously, I spend more on peanut
butter each month!”
Male member
Planet Fitness, New York


“This gym is WAY too
overcrowded and there is not
enough equipment to use so I
decided to buy and bring
some of my own”
Female member
Planet Fitness, New York


Planet Fitness - EBITDA margin (3 clubs)

39%

54%

42%

Club - 25th Percentile Club - 50th Percentile (median)
Club - 75th Percentile


123,332 likes

276 ‘likes’
per club


5,854 followers

Global 500 Franchise List

Planet Fitness
Year
Rank

2011 81

2010 157

2009 116


“To become the world’s largest
ﬁtness club company”

Michael Grondahl, CEO


Are low-cost gyms good

?
for the industry?


A compelling story
for consumers


Journalists are excited
by them


They are challenging clubs
to examine their
member proposition


“It has focussed me on our
speciﬁc proposition - Why become
a member of Holmes Place?”

Neil Burton, CEO Holmes Place Central/Eastern Europe


Some key questions

?

Do you see a low-cost
or a more
‘operationally intimate’

?
future for your business?


What is the underlying purpose
driving your business?

?

What do you want your business
to stand for?

?

What type of business are you
passionate about developing?

?

What will be your legacy to
this industry?

?

Steve Jobs
1955 - 2011


oxygen-consulting/think-tank

-COST GYM SECT
OW OR
L

AL

RE
OB

PO
2011 GL

RT
A STRATEGIC INVESTIGATION INTO A DISRUPTIVE NEW SEGMENT

Researched and written by Ray Algar, Oxygen Consulting UK in association with Precor


Ray algar low-cost gym seminar Manchester UK October 2011

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Ray algar low-cost gym seminar Manchester UK October 2011