Five trends in UK's health and fitness market

16 May 2019 Consultancy.uk

Digitalisation and rapidly changing customer expectations are transforming the consumer goods and leisure sectors. Amid this, the UK’s health and fitness industry is rapidly shifting its footing to make the most of this opportunity, and according to new analysis, it is succeeding.

recent study on the trends sweeping through the consumer sector by CIL Consultants cited gyms and fitness providers as being one of the leading sectors when it comes into cashing in on a new, tribally aligned generation of consumers. Customers are happy to express a preference for companies, groups or values, and 57% of consumers would buy own-branded clothing from their fitness provider.

Now, a further analysis from CIL has found that this was only the tip of the iceberg in a rapidly changing industry. Following another year of continued growth, the UK health and fitness industry provides attractive investment opportunities. The market is worth around £5 billion and has grown 20% over the last five years – with potential for further improvements in the future, thanks to five key trends.

On-going polarisation

First, the structure of the UK health and fitness industry is evolving to better reflect consumer preferences. As with the retail sector, where Aldi and Lidl are eating into the market share, CIL asserted that low-cost gyms will continue to challenge the industry’s key incumbents. At the same time, the current London-focused dynamic of boutique, class-based studios and more upmarket offers retain the potential to properly expand outside of London if the strategy is right – meaning that the middle-ground option is becoming something of an endangered species.

Illustrative UK health and fitness competitor map by number of sites

Liam McGuinness, CIL’s Head of Consumer, Retail and Leisure, explained, “We have identified upwards of 25 locations across the UK that could accommodate new or more premium propositions. However, while structural change is occurring and much of the industry commentary has focused on the rise of the low-cost segment, it is interesting to note that mid-market remains the largest category by sites. The segment itself, though, is transforming, shifting towards the premium end of the market.”

Differentiation of low-cost options

“As the low-cost segment becomes increasingly competitive,” McGuinness added, “operators are striving for differentiation. Beyond further lowering price, the training offer and technology are both effective ways of creating better consumer experiences.”

An example of this is Energie, which launched a new group-based training concept called the YARD in 2017. This contrasts with Xercise4less, which has a timetable of over 30 classes more typically expected of a premium offer. Amid this differentiation in a crowded budget fitness sector, others will have to follow suit in order to keep pace, and attract new members.

Social fitness

CIL’s study suggests that as customers are increasingly prioritising social experiences, gyms cannot afford not to capitalise on this. The current crop of fitness customers are more motivated in a group, while around half also use it as a method of combating social alienation, meeting new people and socialising. Across all types of gym, the research found 40% of consumers consider the social scene an important part of their selection process, something which grows to 50% for premium gym-goers and nearly 60% for those who attend classes.

Why gym goers attend fitness classes

McGuinness expanded, “It’s not just about meeting people and socialising – the key factor is people are more motivated working out in a group. Outside of gyms, CrossFit continues to boom, participation in adventure races like Tough Mudder has grown, events like the weekly Park Run go from strength to strength and park-based operators… remain popular. Standout operators will leverage the social fitness trend in their proposition.

Franchising bolsters smaller outfits

“Franchise business models have been a key driver of growth in the US and we expect this trend to become more apparent in the UK,” McGuinness said.

Backing that up, CIL’s study showed that big-box type operations and or boutiques have become part of a new franchise operation drive in the US – permeating the country to the extent they hold 15% of the market. This differs in the UK, where such franchises account for a lower 5%, but with the likes of Energie, Anytime Fitness and Snap Fitness having already made headway in the market. At the same time, CIL asserted, London has seen an influx of Australian-founded F45 studios, suggesting franchising has a great deal of room to grow into.

Digital aggregators

As seen across a plethora of other industries, digital aggregation now plays a major role in fitness providers winning over new clients. Platforms such as ClassPass and PayAsUGym have seen impressive growth over the last few years, with both attracting a series of investments from institutional funds. Each of these platforms offers consumers a pick and mix and on-demand approach to accessing a gym, something which enables individuals in the UK’s stagnant consumer market to buy in, feeling sure they will get the most out of their money.

Concluding, McGuinness said, “Such platforms should become more commonplace over 2019 – our research suggests that only 5% of the current UK gym-going population subscribes. However, there remain concerns about the economic sustainability of such models and the viability in the UK to scale operations outside of London. We believe the traditional gym model will remain the strongest channel.”


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