The Disruptive Low Cost Health Club - Thoughts On Ray Algar's Global Report

Oxygen Consulting 2011 Global Low Cost Gym Sector Report

At IHRSA and via Skype calls during the past year or more, I've had the chance to collaborate with colleague Ray Algar , principal of the firm Oxygen Consulting, about the changing health club market. I first mentioned Ray's research in December of 2009 and have subsequently shared my views on the changing marketplace and club business models since. I'm a fan of Ray's work and his report is included above. Many thanks to him for his kind acknowledgements of my contributions throughout. Visit his web site to share your views on the report here.

So what are gym or health club competitors to do as a result of the trends Ray's report and my research have outlined ? While many things can be identified, I am advising operators to focus on two key issues. The first I borrowed from leading marketing expert Denise Lee Yohn who says "Customer Experience Is Marketing". When it comes to how health clubs are going to survive the disruption of Low Cost High Value competitors, operators better get their hands around creating differentiating experiences or as Denise puts it "Operationalizing the Brand." The reason that low cost models are increasingly taking market share is that the general experiences members receive are not special or memorable and therefore price is becoming an overriding driver of choice.

The second thing to focus on is innovation. Health club brands desperately need to innovate by blending the digital and physical customer experience simply and seemlessly. Our culture is becoming digital and members seek experiences digitally and physically 24/7. The era of Digital Darwinism, when evolving consumer behavior resulting from advancing technology and a changing society are moving faster than competitors can adapt to it, is here today. The term was coined by author Brian Solis and is a concept health cub and gym executives should pay close attention to. Competitors that can figure out ways to elegantly blend personal and digital experiences well will create a competitive advantage.

So what do you think about Ray Algar's research report and the disruptive nature of the low cost high value health club and gym market ? Please share your thoughts with me, Bryan O'Rourke. Thanks again Ray for another great piece of research.

About the author Bryan O’Rourke:

Bryan O’Rourke is a health club industry expert, technologist, financier, shareholder and executive in several fitness and health club business service companies. He is also a partner in The Health Club For Women and Chairman of the Medical Fitness Association’s Education Committee. To learn more contact Bryan here today .

Comments

[Ray Algar]

Hi Bryan

Thanks for your comments on my new report.

I do hope that when people read my report that they understand that low-cost is just one of several strategic paths they can pursue.

I have just returned from the IHRSA Europe conference and had the opportunity to visit clubs that were creating amazing experiences for members at prices between $125 - $420 per month - no 'race to the bottom' in these clubs

Ray

[Jared]

good article Bryan. I think this is true. Self-proclaimed "state of the art" facilities are everywhere offering little to no signicant emotional experience for the membership - so, low priced memberships begin popping up all over the place and taking root. You're right! When there is no experience offering value, price becomes more and more of a factor. It's a problem for those of us who want our work to be seen as a true value, but until more of this industry insists upon excellence in our client interactions we'll continue to see this trend. Why would it stop when there is nothing differentiating the "state of the art club from the discount club......especially considering the little things like the fact that the discount clubs tend to have better hours of operation and/or be 24/7 with no contracts etc. Full-service facilities got caught being complacent and are just going to need to get to work.

[laser scar removal]

Fantastic article Bryan!I do hope that when people read my report that they understand that low-cost is just one of several strategic paths they can pursue.