Major health clubs chains must redraw business models or wither away

  • Ray Algar, MD of Oxygen Consulting during business presentationNew report advises mid-market health clubs of urgent need to shake-up traditional business models
  • Warns of growing competition from all sides without growth in customer base
  • Recommends that clubs clearly define what they stand for
  • Advises clubs to avoid simple price-cutting to compete and instead re-think long term direction
  • Report published Friday December 11th, 2015


A new industry report analysing the evolution of the health club mid-market is to advise independent operators and the major chains that there is no longer a future in trying to be all things to all comers or in offering generic, mediocre fitness experiences. It warns that health clubs must urgently decide whether they fall into the “self service” or “supported customers” genres, with pursuing “both” no longer a realistic option. It also specifically warns full service, multi purpose clubs that the common tactic of simply cutting membership fees to compete with low-cost gyms, while otherwise carrying on much as before, is not a defendable strategy.

The “Health club industry mid-market report – investigating how brands are repositioning in an era of rising competition” is published at midday tomorrow (Friday December 11th, 2015). The report is the latest in a growing knowledge-base of health club sector studies, researched and written by respected industry analyst Ray Algar and released by Oxygen Consulting, the Brighton-based global fitness industry consultancy.

The 81 page report draws on seven years of close analysis into the fast-changing health club industry and six months of report-specific research in three of the most mature fitness markets – the UK, Germany and the US – together with interviews and case studies of such diverse brands as Anytime Fitness, Fitness First, GYMBOX, Active4Less, Town Sports International, My Sportlady and others, and a more in-depth study of successes and pitfalls for the US-founded international Curves network.

From this, Ray Algar’s report offers far-reaching conclusions and recommendations for mid-market players. It looks at how very few major developments in recent years – whether M&As, new brands or new concepts – have actually brought any significant volume of new customers to the industry, meaning that most innovations simply redistribute the same customer pool; meanwhile, the rise of low-cost gyms and specialist boutique studios has produced clearly defined, specific service providers that typical multi-purpose, mid-market clubs struggle to match, meaning not only an inevitable loss of share (and falling membership) to these new competitors but also a decline in club loyalty: increasingly, customers will regularly use more than one club to achieve specific goals and will show no lasting allegiance to a club simply because of its traditional geographic or multi-facility convenience.

Report author Ray Algar says: “I do not believe there is a long term strategy in  clubs, whether they be independents or chains, offering an array of generic fitness experiences. In a world awash with mediocre offerings, I believe that successful clubs will be those that commit to making their business remarkable in a chosen discipline that all their stakeholders can get truly passionate about. Too many clubs seem to be reducing their prices while continuing the same mix, which simply leaves the business in a financially vulnerably state. It also sends a confusing message to consumers in an age when they can instead choose exactly the club to match their specialist needs.

He continues: “And they now don’t just choose from clubs based around bricks and mortar; there’s a rising tide of alternatives, such as outdoor fitness classes, church hall Zumba classes and many more, which no club can any longer afford to ignore. The report shows just how much the alternatives, which I describe as ‘salami slicers’, can eat into membership levels.

Evolution means radically re-thinking and challenging business models … but only based on a genuine understanding of why customers are behaving as they are and only with a true conviction that the new business model is right, long term, and has the belief and trust of management, owners and other stakeholders. And in my view, for most clubs, it means standing at a fork in the road and deciding what type of business we want to be: are we going down the “self-service” or “supported” route, as we can no longer do both?

It’s a big question for any club and one which this report can go a long way in helping to resolve.

This first Health club industry mid-market report is published at noon, Friday December 11th, 2015. Unlike previous sector reports, it is free to access and download thanks to the support of Precor and REX Roundtables for Executives.

Download the full report

Download the full report from the Oxygen Knowledge Store.

Notes for editors

About Ray Algar and Oxygen Consulting

The report writer, Ray Algar, is managing director of Oxygen Consulting, a Brighton, UK, based company that provides compelling strategic business insight for organisations connected to the global health and fitness industry.

Ray is also a past chairman of Wave Leisure Trust, a social enterprise operating seven leisure centres in the South East of England. He was involved for more than six years and experienced its transition from a start-up to a highly influential leisure organisation making a significant social impact on the communities it serves.

In July 2013, Ray launched Gymtopia, an award-winning digital platform that shares stories and insights about how the global health and fitness industry is creating positive social impact.

Ray’s previous industry reports include:
• 2015 UK boutique fitness studio report
• 2014 Review of the UK Health and Fitness Industry and Outlook for 2015
• 2014 Fitness Sector Social Good Report
• 2013 Review of the UK Health and Fitness Industry and an Outlook for 2014
• 2012 UK Low-cost Gym Sector Report
• 2011 Global Low-cost Gym Sector Report
• 2011 European Health Club Industry Web and Social Media Report
• 2010 UK Low-cost Gym Sector Report

All these reports can be purchased from the Oxygen Consulting Knowledge Store

About Precor

Precor, headquartered in the United States, designs and manufactures premium end-to-end commercial and at-home fitness solutions. Precor delivers the personalised products, service experiences and resources operators need to grow their businesses, and the tools exercisers need to reach their fitness and lifestyle goals. Since 1980, Precor has been a pioneer in creating innovative fitness solutions for customers, including the EFX® Elliptical, Adaptive Motion Trainer® “AMT®” and Preva® Networked Fitness. Precor is part of Amer Sports Corporation, one of the world’s largest sports equipment companies, with internationally recognised sister brands that include Wilson, Atomic, Suunto, Salomon, Arc’teryx and Mavic.

About REX Roundtables for Executives

REX Roundtables for Executives™, a global organization that runs Executive Mastermind roundtables, is the leading executive development program for health club owners and executives. There are currently 10 REX groups in the United States, with two new REX groups starting within the next few months. There are also REX Roundtable groups in Italy, Europe and Australia. Over 175 very successful club owners and executives worldwide currently belong to REX. Each REX Roundtable is made up of 15 non-competitive club owners, CEOs and executives of leading health clubs together that share best practices worldwide to improve the performance of their business and the quality of their lives.