Back in shape: Alternative services and recovering incomes strengthen industry revenue.
London, United Kingdom (PRWEB) August 06, 2013
The Gym & Fitness Centres industry has run into trouble during the past five years. During the decade prior, the industry went from strength to strength, as rising concern for health and supportive economic conditions underpinned strong growth in revenue and industry establishments. Since 2008-09, however, consumers have focused on economic concerns, with many choosing to cancel their gym membership and exercise independently at no cost.
According to IBISWorld industry analyst Steven Connell, “other gym goers have traded down to a new breed of budget gyms, which do not require long-term contracts and charge less by only offering basic services”. As a result, established players like Fitness First and LA Fitness have suffered from falling membership and been forced to sell or close gyms. Newer budget operators like The Gym and Pure Gym, meanwhile, have enjoyed strong growth, attracting investment to finance a strong expansion during the next five years. IBISWorld estimates industry revenue will contract at a compound annual rate of 0.5% over the five years through 2013-14. During 2013-14, industry revenue is forecast to grow by 1.8% to £2.3 billion.
Once-healthy profit margins have declined in the past five years, as weak economic conditions forced gyms to discount their services to maintain membership numbers. There are also signs that gyms are losing their appeal as a range of alternative fitness options emerge, including personal training and boot camps. IBISWorld estimates average industry profit margins decreased from over 10.5%% to 9.3% during the past five years.
The industry should return to modest growth during the next five years through 2018-19. Demand for gyms is expected to strengthen in line with the recovering economy, as improved consumer sentiment and rising disposable incomes encourage people to spend more freely on the industry's services. Continued concern with health and appearance should underpin demand for gyms and health clubs over the next five years. Connell adds, “consumer interest in alternative fitness activities, including themed group classes like Zumba, yoga, boot camp and mainstream sports should continue to grow, providing the industry with an opportunity to boost revenue growth.” The budget segment of the industry should continue to take market share from more established players.
The Gyms & Fitness Centres industry has a low level of market share concentration, as the top four players together are estimated to account for just over 20% of industry revenue in 2013-14. Despite the presence of several very large players, there are still a large number of small, independent gyms operating across the United Kingdom. These gyms serve their local areas, and tend to employ fewer than five people. The larger players in the industry have numerous locations throughout the United Kingdom, while small players are generally independently owned and operate in just one or two regions. There is a trend for larger companies to expand their operations to improve economies of scale.
Franchising of a brand has proven an effective method of expanding within the industry, and the growth of franchises has contributed to rising concentration. There have also been a few mergers and acquisitions between operators in recent years, indicating that the structure of the industry continues to change. The overall trend is to increase consolidation as the large companies buy smaller operations to expand their reach nationally, and open new branches. Major companies include Virgin Active, David Lloyd Leisure and Bannatyne Group.
For more information on the Gyms & Fitness Centres industry, including latest industry trends, statistics, analysis and market share information, purchase the full report from IBISWorld, the nation’s largest publisher of industry research.
IBISWorld industry Report Key Topics
Operators in this industry provide fitness facilities, specifically gyms and health clubs. These organisations typically provide services on a membership basis, and benefits include the use of exercise equipment and weights, personal training, group classes and other club facilities.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalisation & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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