Pay-as-you-go gyms increase in popularity over longer contracts

On a sunny midweek afternoon, there are just two personal trainers instructing clients to lunge and lift in the small studio run by No1 Fitness near London Bridge.

"It's like a family gym, everyone knows everyone," says Harry Thomas, 27, who founded the business six years ago.

No1 Fitness, which charges clients as much as £3,515 for a 12-week programme of training, has just 260 members at its three studios. But Mr Thomas estimates that 30 more have joined in the past three weeks, since the business was listed on ClassPass, a US start-up that charges a flat fee to let users sample a series of studios.

The intermediary website, which was launched in London last month, is among a wave of new businesses changing the face of the £2.7bn market for health and fitness clubs at a time when consumers are demanding variety, flexibility and economy in their workout regimes.

"New technology puts the power into the users' hands," says David Minton, director at The Leisure Database Company. "We just haven't been in that position before and what we are finding is that the consumers love it."

His comments came as Sir Richard Branson sold almost 80 per cent of his Virgin Active gym business this week to Brait, the investment group that is backed by South African retail billionaire Christo Wiese. Including debt, the deal values Virgin Active at £1.3bn.

With the UK economy returning to growth, groups in the leisure industry are eager to tap into additional consumer spending. But the UK's consumers are now demanding either thrifty options or fun specialist workouts, challenging the models offered by traditional gyms, such as Virgin Active and LA Fitness, which have long signed members up on long-term contracts to single clubs.

Some 32 per cent of gym users in the UK prefer to pay per visit, according to Mintel, while 39 per cent would like to pay a flat annual fee and 22 per cent would like to pay only for the facilities they use.

Yet the internet and social media are helping consumers become better informed, and new businesses are acting as middlemen, linking users with a range of small studios. Homegrown start-ups, such as Payasugym, allow consumers to buy shorter-term entry to studios around London at steep discounts, while passes to some of the UK's biggest gyms, such as LA Fitness, regularly feature on Groupon, the deals site.

"In a lot of sectors we can make more intelligent choices about how and where we spend our money," says Humphrey Cobbold, chief executive of Pure Gym, a budget operator that claims to be the country's biggest gym, with more than 500,000 members across the country. "That does manifest itself in people having more control over their expenditure."

Alongside frugality, flexible fitness options are also offering variety and entertainment, as social media drives the workout trend.

Far from the oversized grey gyms of the past, British consumers now pick from a range of fitness fads, from celebrity endorsed Barry's Bootcamp, originally a US craze, to early morning fitness raves, such as Morning Gloryville, which began in August 2013 and allows crowds to dance off the calories.

"In urban areas, where lifestyles are fast and furious, the two elements are the flexibility and the variety," says Jamie Ward, who founded Payasugym. "People want experience as they are working out."

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>While fending off competition from new budget options, which offer no-frills gyms open 24 hours a day, traditional mid-market outfits such as Fitness First are also trying to cater to the new demands of the UK consumer - although many in the industry dismiss the new online start-ups.

"We don't see them as competition at all, they're really small," says Fitness First's Mark Hutcheon.

Hoping to move into the premium segment, the group is investing £86m in rebranding and hiring some 250 personal trainers, and it now offers one-, three- and six-month memberships. Plans for new sites include athletics tracks and virtual reality areas, where exercise can feel like acting out a video game.

"There is so much happening around the gym industry," Mr Hutcheon says. "It's forcing the gym sector and the owners in it to radically change the model."

Martin Long, chief executive of LA Fitness, says: "We're not a slumbering giant that is ignorant. There's no way an industry can stand still; there will always be new fads."

Only 14 per cent of UK gym users believe it is worth joining a well-known gym group for the experience it provides, according to Mintel.

The researchers point out that large-scale gym operators have opened few new sites during the past two years and average revenue per member has been flat, at £40 in 2009 and £42 in 2014 - but these groups still command most of the market.

"I don't think the big gyms are going to die off," says Luke Mohr, founder of Go Mammoth, which runs sports leagues and fitness classes. "The market is just going to become slightly broader."

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