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Business expansion opportunities for fitness centres

Written by bego ·

There’s no denying that the fitness market in the UK is booming. Business expansion opportunities for fitness centres across the European continent are growing as the industry brought in a whopping 26.6 billion euros of profit in 2017 according to the European Health & Fitness Marketing report by Deloitte. Moreover, the number of fitness fans was stated to be steadily increasing with a documented 4% growth rate and 60 million new registrations in the past year. The UK region also ranked as the top-performing fitness centre market by revenue growth holding 19% market share (tied with Germany). With a client base consistently growing and almost 1/5th of the total market share in Europe, the gym business in the UK is setting itself up to be quite the lucrative operation for those who move quickly and strategically.

However, this favourable market context does not only represent an opportunity for fitness brand incumbents but also opens up the field for new players as well…

The health and fitness sector, a highly segmented market

The health and fitness industry is by no means cookie-cutter — the offer varies based on the pricing category that a fitness brand belongs to. So, what are the three market segments for gyms today according to pricing strategy and which one is disrupting the entire panorama?

  • Premium fitness centres: these high-end gyms are on the luxurious side where customers pay an elevated price but get to enjoy exclusive benefits — less wait times to use machines, smaller classes, spa treatments, comfortable changing rooms and bathrooms, etc. In this price category, clients get what they pay for with all of the bells and whistles included.
  • Mid-market health clubs: the gyms from this market segment are generally known for their “community feel” backed by a strong brand. This familiar environment provides a supportive experience where the staff plays a major role in the clients’ fitness journey by creating an intimate atmosphere. While some consider this segment to be in decline, other mid-market fitness centres, such as Anytime Fitness, are thriving as they have built a strong community behind their brand and give their clients the personal treatment they need to achieve their fitness goals.
  • Low-cost fitness clubs: these types of health clubs offer the best deals at the lowest prices. Members are generally not expected to pay annual contracts, enjoy top-of-the-line machines with the latest technology, 24-hour access and more. Gym chains such as PureGym with aggressive expansion plans are reaping the rewards of the “fitness mindshare” that is growing in popularity — strategically opening their centres in all of the right places with attractive prices and capitalising on the economy of scale business model.

The entrance of gym brands in the low-cost segment has taken the industry by storm. According to an article written by The Guardian, there are now more than 500 low-cost clubs in the UK which account for 15% of market value and more than a third of total membership. Does this rapid growth threaten the premium and mid-market segments? Not necessarily, but the strategies used to combat the low-cost phenomenon must be speedy and deliberate to ensure success.

Selective business expansion opportunities versus preponderance tactics

Expansion plans based on a “power-by-numbers” strategy no longer work in this highly competitive market. Placing a new centre on every corner and trying to gain market share by increasing the number of clubs is not a sustainable way to grow anymore. The cost of each failed centre runs the risk of making a brand go under even though the market continues evolving. This is why business expansion opportunities must be associated with a key location component, where new openings are chosen when the market conditions around a given area are favourable: the concentration of potential customers, number of competitors in the neighbourhood, etc. As many fitness brands have learned by now, growing in numbers does not always translate to growing in profits. This selective expansion strategy defined by target location factors is what will make the difference between a long-lasting expansion plan and one that results in high costs and little turnover.

So, how can brands from the health and fitness sector opt for a selective growth plan to expand their businesses sustainably? Some have turned their attention towards big data to identify new business expansion opportunities in this market. While each gym is different depending on the market segment and audience it targets, the benefits of big data in terms of location are the same. Tools such as Location Intelligence have harnessed the power of big data and applied smart location indicators that can be used in the development of an expansion plan. But what do we mean when we talk about “smart location indicators” and how can the fitness industry use these metrics to their advantage?

Location Intelligence for healthy fitness expansion plans

The first part of any successful expansion plan involves understanding a target audience — the people likely to buy a gym membership at a particular price point. Are they men and women between the ages of 30-40 with full-time jobs and families? Or, are they young university students who still live at home and are studying to get their degrees? Whichever the target audience, it’s important not only to know who they are but also where they are. This is where Location Intelligence can help. Once the target customer is defined, Location Intelligence technology can find the areas where there are high concentrations of this type of customer. In today’s fitness market, the demographic and sociological factors that make up the context surrounding a potential location matter more than ever.

Discover how Anytime Fitness uses Location Intelligence to find new locations with high concentrations of their target customers in this video:

Another external factor that contributes to a healthy gym expansion plan involves the level of footfall traffic a certain location receives. Location Intelligence technologies make calculating this metric easy through the processing of GPS data to measure the amount of footfall for different periods of time during the day. This kind of data has become a goldmine for fitness brands to know how many opportunities they will have to interact with potential customers in front of their establishments. Strategically picking a location with high amounts of footfall is extremely important to keep new gyms top-of-mind for consumers.

The net benefits of Location Intelligence for fitness brands

Big data in the fitness sector is growing in popularity, but the ability to make sense out of all this information and successfully apply it to an expansion strategy is where the true value lies. But as mentioned before, with the entrance new market players and the disruptive low-cost segment, it’s not just about the sheer quantity of new openings but also the quality of them that matters. Moreover, as business expansion opportunities in this industry are time sensitive, it’s important to move quickly during the rollout phase for maximum impact. Location Intelligence technology helps during this entire process as it dramatically decreases the market research period by pinpointing potential areas that replicate optimal target market conditions and key success criteria. This ability to rapidly turn data into actionable insights during the expansion phase is the net benefit that appeals most to fitness brands looking to grow both swiftly and strategically. Matching speed with efficiency when it comes to gym expansion is no longer an option, but a necessity… and Location Intelligence is what is making this a reality.

Would you like to find out how Location Intelligence can help make your gym expansion strategy both quick and sustainable? Get in touch by asking for a demo and one of our consultants will contact you shortly for a personalised demo.

Click here for a demo

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