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U.K. Independent Clubs Need Laser Focus to Compete with Low-cost Gyms

The United States and the United Kingdom have a lot in common, from our shared language to our shared love of caffeinated beverages (be they coffee or tea). However, while we have a number of similarities, we also have many differences—especially when it comes to the health and fitness market.

Ask any American health club owner what poses the biggest threat to independent clubs and they will likely tell you the same thing: boutique fitness studios.

But if you ask a U.K. club owner the same question, chances are you’ll get a different answer: low-cost gyms.

The U.K. health club industry earns more revenue than any other country in Europe, according to the 2017 IHRSA Global Report. (Click to enlarge)

The Threat of Low-cost Gyms in the U.K.

“For the past 10 years, the recurring UK fitness industry story has been the emergence of low-cost gyms,” says Ray Algar, managing director of Oxygen Consulting. “They have captured the imagination of large parts of the general public and journalists who write enthusiastically about their simple-to-understand experience and low monthly fees.” 

The prevalence of low-cost gyms, combined with the rise of the boutique studio, has negatively impacted U.K. independent clubs.

“A few years ago, I began noticing that independent clubs comprised the majority of clubs that were going bust,” Algar says. “They were struggling to grow their membership and unable to increase prices, so the life was slowly squeezed out of the business.”

From Generalists to ‘Signature Experience Specialists’

Algar believes the decline of independent clubs was caused by two main factors: 

  • The rapid growth of low-cost brands since around 2008
  • Heightened consumer expectations, due to upgrades made to the leading private fitness clubs  

“Many of the U.K.’s independent clubs are seen as ‘generalists’ operating with mediocre infrastructure,” he says.

The solution: smaller independent clubs need to become “signature experience specialists.” 

“They must build a deep expertise in an area that they are deeply passionate about,” Algar says. “In other words, they learn from the strategy being pursued both by low-cost and boutique fitness operators which are to focus on delivering less while simultaneously raising the chosen experience to a substantially higher level.”

9.7 million members belong to U.K. health clubs, according to the 2017 IHRSA Global Report. (Click to enlarge)

The Case for Laser Focus 

These additional threats and the changing marketplace led to Algar launching Flourish, a one-day conference geared toward independent U.K. clubs. On June 15, 25 members of the independent sector met in Brighton, England to explore how smaller club operators can remain relevant.

The core framework organizers used for Flourish was based on the Greek parable: "The fox knows many things, but the hedgehog knows one big thing."

“We were building the argument that independents should have a laser-focus on a chosen remarkable signature experience,” Algar says.

Attendees heard from experts from both inside and outside of the industry, including Bradley Steenkamp, an entrepreneur who opened an independent café in a saturated coffee market. By focusing on taking artisan coffee to a new level—and often saying no to customer requests that would adversely affect the product experience—the company was ranked in the top 30 cafes in the U.K. within 18 months.

If independent clubs take the same approach, Algar reasons, they will better stand out among the increasing competition.

“As I witness how increasing numbers of consumers are now seeking out more specialised boutique operators, I am actually becoming more optimistic for those independents who are determined to sharpen their business focus and elevate the core signature experience—being small is becoming a strength rather than a weakness,” he says. “Would I drive past three other clubs to visit an independent ‘generalist’—absolutely not, but a best-in-class specialist where the passion for what they do is oozing from the walls—absolutely yes.”