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

2011 European Health Club Industry Web And Social Media Report

Getting to work with smart people is something we all love - at least I do. Ray Algar is the kind of collaborative thinker that makes me get up in the morning knowing there is a greater purpose for working in the fitness industry (not the one of today necessarily but the one emerging for the future).

His recent report, the 2011 European Health Club Industry Web And Social Media Report , is another example of the great collaborations he engages in. The report is an excellent read for anyone in the fitness industry. I'll touch on some of the report's findings and more during my presentation at IHRSA on Wednesday morning this year (2011). Two sections from the report are included below and you can obtain the report in its entirety here . (Thanks Ray for allowing me to contribute). Please do read it.

So what do you think ? How do you think the new dynamics of collaboration and communication via technology platforms is going to impact the fitness and wellness business ? Please contact me Bryan O'Rourke and share your views. What do you make of Ray's research and my thoughts and comments below ?



















Fitness Industry - Low Cost Model Growth Continues

Things are heating up in health club global development and it seems low cost models are making most of the development moves. As Ray Algar's research on the UK market has reflected, there is a squeeze going on in health clubs and it isn't isolated to the UK. Ray's group Oxygen Consulting has some keen insights on this trend.

I recommend you check out Silverstein's book on consumer trends in trading up and trading down. What Algar's graphic above reflects is happening in all consumer markets and its impact on health and fitness is just starting.

Tell me, Bryan O'Rourke, what do you think of Algar's research and the market Bifurcation trend ? Here is a recap of recent developments in the global health club market.


Fresh Fitness, a new budget concept, has been launched in Denmark by Rasmus E. Ingerslev, founder of, with SATS as a co-investor. The new chain offers monthly fees of DKK 99 (€13), reduced costs by excluding all luxury and free services. Many of the fitness classes, such as yoga and spinning, will have no live instructor but will be conducted with the help of video. The company will open the first two fitness centres in Copenhagen, but aims to become the cheapest fitness chain in Denmark.

Budget club operator Pure Gym opened a new site in Smethwick, West Midlands. The new gym will be open to users 24 hours a day, offering users full access for a £15 monthly payment and a £20 joining fee. There are currently six additional sites in the pipeline, with Aberdeen, Belfast and Derby among prospective Pure Gym locations.

United States

Crunch Fitness announced the appointment of Keith Worts, current COO, as its new president. The company also announced that they have started to offer franchise business opportunities as part of their expansion programme. The first franchise is due to open in Autumn 2011 in California and more than 50 franchise locations are also underway in the US and internationally.

Town Sports International released Q2 2010 results, with revenues for Q2 2010 down 5.2% from the same period last year and LFL revenues down 4.2%. Memberships also decreased by 3.8% compared to June 2009. Membership attrition averaged 3.3% per month in Q2 2010 compared to 3.7% per month in Q2 2009. Capital expenditure has been scaled back, with FY 2010 expenditure expected to be $26-28 million, down from $49.3 million spent in 2009.

Asia and Elsewhere

Anytime Fitness announced a number of deals that will see the chain expand into Benelux and Japan, as well as into the UK and Ireland. A master franchise agreement has been signed with Petro Hameleers of the Netherlands, with plans for 150 clubs in Belgium, the Netherlands and Luxembourg over the next 10 years. The company also announced plans to open 300 new clubs in Japan over the next 10 years, where a consortium led by Toru Yamazaki, former CEO of Megalos (the fifth largest health club chain in Japan), has taken on the master franchise. Fast Fitness Japan, will now do business as Anytime Fitness Japan. Anytime Fitness expects to open its 2,000th club by the end of next year.

The énergie Group has appointed Nathan Gardiner as its new general manager for the Middle East. He will relocate from Dubai, where he worked for Fitness First, and will join the énergie team in Doha, Qatar where énergie is currently planning to open a number of clubs. Gardiner started his career in the fitness industry in 2001 with Fitness Exchange. He has also worked for LivingWell Health Clubs and Fitness First.

Evo Fitness Personal Training - an independent, personal training-only facility in Cape Town, South Africa - is scheduled to open this month. Evo Fitness has aligned itself with adidas with an eye to joint involvement in projects going forward.

Australian fitness chain, Genesis Health Clubs, is to open three sites in Sydney. The company, owned by the Melbourne-based Belgravia Group, already owns 38 clubs in Victoria, New South Wales, Queensland, South Australia and Tasmania.

Vivafit, the women-only fitness chain, has signed its first master franchise deal to expand the brand into India. The master franchisee, Manisha Ahlawat, will open the first Indian Vivafit in Delhi in October 2010. The aim is to reach 25 new centres in 2011, and to open more than 1,000 gyms across India over the next 10 years. In the European marketplace, the brand plans to extend its presence to countries such as Italy and Germany.