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A look at why consumers
love low-cost gyms
Ray Algar Oxygen Consulting
Leisure Property Forum
London
December 2009
www.oxygen-blog.blogspot.com
 2
50% lower
                       than
                     average
                    price point


Ability to                                 Heavy
operate                                  technology
24 hours                                     use
                DEFINITION
                OF A LOW-
                 COST GYM




         Club
      operated by
                                   Gym-only
        single
                                  proposition
        person
1995 launch:
“Fly for the price of a pair of jeans”
 4
Primark Bristol store – 100,000
square feet of low-cost clothing
  5
Campaign: “Everything is Premier,
except the price”                   6
“Spend a little, live a lot” campaign   7
SIMPLICITY



                                        LOW
INCONSPICUOUS
 CONSUMPTION                          BARRIER
                   MARKET             TO ENTRY


                   DRIVERS

     DIMINISHING
                                DISAPPOINTING
        VALUE                     EXPERIENCE
SIMPLICITY



                                        LOW
INCONSPICUOUS
 CONSUMPTION                          BARRIER
                                      TO ENTRY
                   MARKET
                   DRIVERS

     DIMINISHING
                                DISAPPOINTING
        VALUE                     EXPERIENCE
Geiz ist geil which translates to:
“It’s cool to be stingy!”
SIMPLICITY



                                        LOW
INCONSPICUOUS
 CONSUMPTION                          BARRIER
                                      TO ENTRY
                   MARKET
                   DRIVERS

     DIMINISHING
                                DISAPPOINTING
        VALUE                     EXPERIENCE
SIMPLICITY



                                        LOW
INCONSPICUOUS
 CONSUMPTION                          BARRIER
                   MARKET             TO ENTRY


                   DRIVERS

     DIMINISHING
                                DISAPPOINTING
        VALUE                     EXPERIENCE
17
SIMPLICITY



                                        LOW
INCONSPICUOUS
 CONSUMPTION                          BARRIER
                   MARKET             TO ENTRY


                   DRIVERS

     DIMINISHING
                                DISAPPOINTING
        VALUE                     EXPERIENCE
19
20
21
22
23
24
SIMPLICITY



                                        LOW
INCONSPICUOUS
 CONSUMPTION                          BARRIER
                                      TO ENTRY
                   DRIVERS


     DIMINISHING
                                DISAPPOINTING
        VALUE                     EXPERIENCE
Declining attendance
“Why am I paying for a club
I hardly ever use?”
“Why am I paying £50 a month
just to use a treadmill? ”
30
31
32
33
36
37
38
39
Towns with 100,000 population
 40
Edge of town
 41
1,700 – 2,500 m2
 42
43
44
45
McFit charge €0.50 cents to use
showers – pay only for what you use
McFit sponsors Berlin Love Parade
which has driven brand awareness    47
Klitschko brothers act as
brand ambassadors           48
McFit v Fitness First
          German Club Openings
                                                   101

Fitness First                                          109

                                                       107


                                                       108

       McFit                                      96

                                            83

                0     20     40        60    80        100   120

                    Jun-09        Jun-08    Jun-07
49
McFit v Fitness First
                 Germany 2007-2009

                           280,000
Fitness                    275,000
 First
                           279,000


                                                                             780,000

     McFit                                                    630,000
                                                  520,000

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

                      Jun-09              Jun-08             Jun-07
50
McFit Financials 2007
                    Euros       %
                  (millions) turnover
Turnover             86
Staff costs          3.4        3%
EBITDA               28         24%
Interest charge      0.1         -
Net assets           34
Clubs                      88
 51
German Market Structure -
          Leading brands
         (number of clubs)
                   34
                                358


           695




     Low-cost (budget)   Mid-Market   Premium
52
53
Enjoyed this presentation? I am available for
insightful presentations, workshops and
consulting assignments:
Contact me at:
ray@oxygen-consulting.co.uk
Telephone: +44 7747 69 88 55
LinkedIn: http://uk.linkedin.com/in/rayalgar
Google: “Ray Algar”

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Why consumers love low-cost (budget) gyms

  • 1. A look at why consumers love low-cost gyms Ray Algar Oxygen Consulting Leisure Property Forum London December 2009
  • 3. 50% lower than average price point Ability to Heavy operate technology 24 hours use DEFINITION OF A LOW- COST GYM Club operated by Gym-only single proposition person
  • 4. 1995 launch: “Fly for the price of a pair of jeans” 4
  • 5. Primark Bristol store – 100,000 square feet of low-cost clothing 5
  • 6. Campaign: “Everything is Premier, except the price” 6
  • 7. “Spend a little, live a lot” campaign 7
  • 8. SIMPLICITY LOW INCONSPICUOUS CONSUMPTION BARRIER MARKET TO ENTRY DRIVERS DIMINISHING DISAPPOINTING VALUE EXPERIENCE
  • 9. SIMPLICITY LOW INCONSPICUOUS CONSUMPTION BARRIER TO ENTRY MARKET DRIVERS DIMINISHING DISAPPOINTING VALUE EXPERIENCE
  • 10.
  • 11. Geiz ist geil which translates to: “It’s cool to be stingy!”
  • 12. SIMPLICITY LOW INCONSPICUOUS CONSUMPTION BARRIER TO ENTRY MARKET DRIVERS DIMINISHING DISAPPOINTING VALUE EXPERIENCE
  • 13.
  • 14.
  • 15.
  • 16. SIMPLICITY LOW INCONSPICUOUS CONSUMPTION BARRIER MARKET TO ENTRY DRIVERS DIMINISHING DISAPPOINTING VALUE EXPERIENCE
  • 17. 17
  • 18. SIMPLICITY LOW INCONSPICUOUS CONSUMPTION BARRIER MARKET TO ENTRY DRIVERS DIMINISHING DISAPPOINTING VALUE EXPERIENCE
  • 19. 19
  • 20. 20
  • 21. 21
  • 22. 22
  • 23. 23
  • 24. 24
  • 25. SIMPLICITY LOW INCONSPICUOUS CONSUMPTION BARRIER TO ENTRY DRIVERS DIMINISHING DISAPPOINTING VALUE EXPERIENCE
  • 27. “Why am I paying for a club I hardly ever use?”
  • 28. “Why am I paying £50 a month just to use a treadmill? ”
  • 29.
  • 30. 30
  • 31. 31
  • 32. 32
  • 33. 33
  • 34.
  • 35.
  • 36. 36
  • 37. 37
  • 38. 38
  • 39. 39
  • 40. Towns with 100,000 population 40
  • 43. 43
  • 44. 44
  • 45. 45
  • 46. 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 47
  • 48. Klitschko brothers act as brand ambassadors 48
  • 49. McFit v Fitness First German Club Openings 101 Fitness First 109 107 108 McFit 96 83 0 20 40 60 80 100 120 Jun-09 Jun-08 Jun-07 49
  • 50. McFit v Fitness First Germany 2007-2009 280,000 Fitness 275,000 First 279,000 780,000 McFit 630,000 520,000 0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 Jun-09 Jun-08 Jun-07 50
  • 51. McFit Financials 2007 Euros % (millions) turnover Turnover 86 Staff costs 3.4 3% EBITDA 28 24% Interest charge 0.1 - Net assets 34 Clubs 88 51
  • 52. German Market Structure - Leading brands (number of clubs) 34 358 695 Low-cost (budget) Mid-Market Premium 52
  • 53. 53
  • 54. Enjoyed this presentation? I am available for insightful presentations, workshops and consulting assignments: Contact me at: ray@oxygen-consulting.co.uk Telephone: +44 7747 69 88 55 LinkedIn: http://uk.linkedin.com/in/rayalgar Google: “Ray Algar”