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Entries in potential (1)

Monday
Aug022010

International Opportunities

Alan Leach and Jasmin Kirstein discuss emerging international markets:

Q: “Which international markets have the best growth potential? And, what is a good method to research international markets?”

A: When looking at potential international markets for, investigate:

  • Health Club Penetration Rates.
  • Employment rates.
  • Economic factors
  • Demographic profile

Health Club Penetration Rates
The fitness club industry in the US has a 14% penetration rate. Countries with low penetration rates can provide massive opportunities for growth.

Look at Easter Europe. Penetration rates are exceptionally small.

  • Poland has 38 Million people. Penetration rate is less than 1%.
  • Czech Republic has 10 million. Penetration is 1.5%.
  • Hungary has 10 Million. Penetration is only 2%.
  • Russia has 143 Million. Penetration is 5.4%.
  • Slovakia has 5.5 Million. Penetration is less than 1%.
  • Turkey has 75 Million. Penetration is less than 2%.

Unemployment Rates
Unemployment rates affect membership sales. In the US unemployment is 9.5%.

  • Poland is 12.8%
  • The Czech Republic is only 8.7%
  • Hungary is 11%
  • Russia is 7.3%
  • Turkey is 14%

Russia has a 143 Million people, a penetration rate of only 5.5%, and an unemployment rate of only 7.3%. Could be an attractive market with great growth potential. Maybe this is why their average monthly dues are $100 a month.

Demographic Profile
Look for countries with the right demographic profile. Ideally...

  • People between the age of 25 to 44
  • High income earners
  • College educated

Wages/Income
Wages in eastern European countries can be extremely low. This can mean inexpensive labor costs, but it can also make it difficult get high membership fees.

In The UK and Ireland, minimum wages are $1,600 a month. In Poland and Czech Republic its about $350.

List of Good Methods to Start Looking at International Markets

  • IHRSA European Market Report
  • IHRSA’s Guide to The Health Club Industry for Lenders and Investors
  • IHRSA’s profiles of success
  • CIA world fact book and website
  • Economist Intelligence Unit

Alan Leach, Director of Sales & Marketing
West Wood Leopardstown
alan.leach@westwood.ie
www.westwood.ie

A: Fitness industry hopes to double size in developing countries like India and China. Organized players in the fitness industry in those countries are expecting to grow in the coming years despite the economic slowdown as they take up the responsibility of developing the market by creating awareness about better health practices.

Unlike the developed world, where the top five players occupy 50 to 60 per cent of the industry, in India it is around 10 per cent, so there is a huge potential to enter these markets.

Despite a rapid growth in awareness levels during the past four years, only 1.5 per cent of the urban population regularly do workout. The national average is even less at 0.1 per cent.

The industry has just a few companies who have the capacity to scale up their operations. There is a need to spread awareness about fitness through seminars and workshops and to promote the culture of working-out as part of their business development.

However, the better idea is to expand the franchise and partnership routes, giving opportunities to local players to scale up their operations. Further, associations with organized players will also help these gyms to access latest equipment, knowledge and provide value-added services to meet the needs of an ever-growing working class. Further research on international markets requires getting in touch with locals and already successful entrepreneurs. 

Jasmin Kirstein, Owner
My Sportlady Fitness
jasminkirstein@my-sportlady.de
www.my-sportlady.de