1. Trends in UK Health & Fitness
Trends in Health & Fitness
Trends in UK Health & Fitness
Edexcel Pre-Release 2017

2. The past 10 years There have been 4 phases:
Pre-recession (consumer spending boom)
The recession 2008/9 and its ‘austerity’ aftermath
The 2012 Olympics – sport and fitness bonanza
The recent years/back to normal:

3. Pre-recession
The market was growing steadily; the private sector was still dominated by big, multi-sport leisure centres with high annual membership fees
In % of the population were members
.. And the value of the market (its ‘market size’) was £3.66bn
The average spend per member was about £430 a year

4. 2009 – 2012 The Recession
This was the first recession of the modern Health & Fitness era. Would membership be treated as a luxury – and cancelled? Or as a necessity – as a spending priority?
Market growth slowed in these years, but between 2009 and 2012 membership numbers rose by 3.6% and income by 2.4%
But the growth came from new-style, dedicated, low-membership-cost gyms

5. 2012 London Olympics
There may have been a slight acceleration in memberships around and after the 2012 London Olympics (but it’s not that clear
Before 2012, % population penetration was growing at 0.2% a year – but in the 3 following years it grew at more like 0.6% a year – helping the market size to grow faster too

6. Recent years
Quite fast growth in the number of new clubs and in market penetration.
The growth from 11.9% of the population belonging to a club in 2011 to 14.3% in 2016 is striking.
But there are clear signs that bigger clubs are struggling against the low-cost gyms. The average revenue per club member is not rising in line with inflation (in real terms)

7. Market growth, but average revenue falling

8. Trends in the number and size of UK health & fitness clubs
Number of clubs
% change
2008
5754
2011
5852
+1.7%
2012
5924
+1.2%
2013
6019
+1.6%
2014
6146
+2.1%
2015
6292
+2.4%
2016
6435
+2.3%

9. Trends in size: rapidly growing importance of low-cost gyms
% of all private sector clubs
% of all private sector revenue
% of all private sector membership
2013
6.0
14.0
2014
7.7
7.3
18.7
2015
9.0
10.0
24.0
2016
12.0
13.0
32.0
Source: State of UK Fitness Industry

10. Growth by takeover There are two main periods for takeovers:
during rapid market growth, as slow- growers make bids to avoid getting left behind
During the early stages of market decline, as falling capacity utilisation forces consolidation
In this market, the rapid growth of the low-cost sector creates the former pressure
While decline in the traditional, full-service sector creates the latter pressure

11. Takeovers & the low-cost sector
Pure Gym founded 2009 by a group of investors
By Feb 2012 it had made its first £1m of profit
By May 2013 it had 45 gyms and was bought by a private equity group which injected £50m to finance growth
In Feb 2014 Pure Gym and The Gym Group announce a merger
In July 2014 merger abandoned after CMA announces a more detailed inquiry into the plan
In May 2015 Pure Gym buys LA Fitness, a 45- strong chain. £20m is spent converting them

12. Takeovers & the full-service sector
The consolidation period has seen various mergers, often from a position of weakness.
2011: Esporta’s 55 clubs bought by Virgin for £77m
2015: Pure Gym buys LA Fitness for around £70m and converts them to a low-cost format
2016 Nuffield Health buys 35 Virgin Active Gyms
2016: DW Fitness buys Fitness First
But it’s probably true to say that not enough capacity has been taken out of the full service sector.