why consumers love low-cost (budget) gyms

A look at why consumers love low-cost gymsRay Algar Oxygen ConsultingLeisure Property ForumLondonDecember 2009

2www.oxygen-blog.blogspot.com

DEFINITION

50% lower

than

average

price point

Heavy

technology

use

Ability to

operate

24 hoursDEFINITION OF A LOW-COST GYM

Gym-only

proposition

Club

operated by

single

person

4

1995 launch: “Fly for the price of a pair of jeans”

5

Primark Bristol store – 100,000 square feet of low-cost clothing

6

Campaign: “Everything is Premier, except the price”

7“Spend a little, live a lot” campaign

MARKET

SIMPLICITY

LOW

BARRIER

TO ENTRY

INCONSPICUOUS

CONSUMPTION

MARKET

DRIVERS

DISAPPOINTING

EXPERIENCE

DIMINISHING

VALUE

MARKET

SIMPLICITY

LOW

BARRIER

TO ENTRY

INCONSPICUOUS

CONSUMPTION

MARKET

DRIVERS

DISAPPOINTING

EXPERIENCE

DIMINISHING

VALUE

Geiz ist geil which translates to:“It’s cool to be stingy!”

MARKET

SIMPLICITY

LOW

BARRIER

TO ENTRY

INCONSPICUOUS

CONSUMPTION

MARKET

DRIVERS

DISAPPOINTING

EXPERIENCE

DIMINISHING

VALUE

MARKET

SIMPLICITY

LOW

BARRIER

TO ENTRY

INCONSPICUOUS

CONSUMPTION

MARKET

DRIVERS

DISAPPOINTING

EXPERIENCE

DIMINISHING

VALUE

17

MARKET

SIMPLICITY

LOW

BARRIER

TO ENTRY

INCONSPICUOUS

CONSUMPTION

MARKET

DRIVERS

DISAPPOINTING

EXPERIENCE

DIMINISHING

VALUE

19

20

21

22

23

24

DRIVERS

SIMPLICITY

LOW

BARRIER

TO ENTRY

INCONSPICUOUS

CONSUMPTION

DRIVERS

DISAPPOINTING

EXPERIENCE

DIMINISHING

VALUE

Declining attendance

“Why am I paying for a clubI hardly ever use?”

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

30

31

32

33

36

37

38

39

40

Towns with 100,000 population

41

Edge of town

42

1,700 – 2,500 m2

43

44

45

McFit charge €0.50 cents to use showers – pay only for what you use

47

McFit sponsors Berlin Love Parade which has driven brand awareness

48

Klitschko brothers act as brand ambassadors

Fitness First

107

109

101

McFit v Fitness FirstGerman Club Openings

49

0 20 40 60 80 100 120

McFit

83

96

108

Jun-09 Jun-08 Jun-07

Fitness First

279,000

275,000

280,000

McFit v Fitness First Germany 2007-2009

50

0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000

McFit

520,000

630,000

780,000

Jun-09 Jun-08 Jun-07

McFit Financials 2007

Euros(millions)

% turnover

Turnover 86

Staff costs 3.4 3%

51

EBITDA 28 24%

Interest charge 0.1 -

Net assets 34

Clubs 88

358

34

German Market Structure -

Leading brands

(number of clubs)

52

695

Low-cost (budget) Mid-Market Premium

53

Enjoyed this presentation? I am available for Enjoyed this presentation? I am available for insightful presentations, workshops and consulting assignments: Contact me at: ray@oxygen-consulting.co.ukTelephone: +44 7747 69 88 55LinkedIn: http://uk.linkedin.com/in/rayalgarGoogle: “Ray Algar”