November 28, 2018
Just one of the trends we have been tracking over this year at LDC is the increasing focus on all things health and wellbeing, which continues to have a profound impact on the market. For example, in May this year, the ONS released 2017 data on alcohol consumption in the UK which indicated a rise in the number of people that claimed to be teetotal in 16-24, 25-44 and 45-64 age groups. (Source: ONS, May 2018). In line with these figures, we recently released data revealing a significant decrease in the number of pubs, a trend most likely to be linked to the changes in drinking behaviour outlined by the ONS.
Coupled with this decrease in drinking, we have been tracking other UK market trends focused towards health and wellbeing, including noticeable increases in numbers of beauty salons (+160 units in H1 2018), barbers (+349 units in H1 2018), and vegan restaurants (+9 units in H1 2018), across GB retail destinations. Another sector which seems to be overcoming the market challenges is gyms. According to Statista, there are around 118,000 people working in the health and fitness market in the UK, and in 2017, the revenue of all health clubs was over £4.2 million ($5.6 million) - the second highest of all European countries.
Total revenue for the gym industry for the top 5 European countries in 2017 (in million U.S. dollars)
Figure 1: Top five European countries by gym revenue, 2017. (Source: Stastista)
This figure is expected to steadily increase by 2020 as consumer habits change and the need to look and feel good comes to the forefront of more and more people’s lives. Recent campaigns focused around fighting obesity and the implementation of the sugar tax have all brought wellness into the foreground. Whether you are into cardio, weights, or skipping the hard bit and going straight to the sauna (you know who you are!) the popularity of heading to the gym seems to be infectious. This has led to growth in no-frills gyms that offer more flexible terms than some of the traditional gyms with better accessibility including 24-hour access.
Image conscious Britain
Over the past 12 months, LDC recorded an increase of 154 gyms spread across high street, retail park, shopping centre and ‘out of town’ locations. Within this figure, it is worth mentioning that the independent gym market is performing especially well, with a net increase of 117 gyms over the 12-month period from November 2017 – November 2018.
Increases in numbers of gyms by location type
Figure 2: Percentage increase in numbers of gyms from November 17 – November 18, split by location type across GB. (Source: LDC)
Looking to regional analysis, there is some variance in the regions that are seeing growth, for example, the South, the Midlands and Scotland are all seeing increases in numbers of gyms. Wales was the only area to see a significant decrease due to a fall in the number of independently run gyms and a lack of growth from the national chains due to saturation in the main cities Cardiff, Swansea, Wrexham and Colwyn Bay.
Changes to numbers of gyms by GB region/nation
Figure 3: Percentage change in numbers of gyms from November 17 – November 18, split by GB region/nation. (Source: LDC)
If we look at locations that have the highest concentration of gyms compared to population, it probably won’t surprise you to hear that Central London comes in first place with an average of 1,205 people per gym. This equates to 83 gyms per 100,000 people across Central London. Epworth was a surprise 2nd place; a town located in Lincolnshire just outside of Scunthorpe which has two gyms serving a 3km catchment population of under 7,800.
Locations with the highest density of gyms per head
Figure 4: Top 10 town/cities by the number of people per gym across GB (Source: LDC)
The strongest brands
Low-cost, 24-hour gym brand Snap Fitness was the fastest growing chain over the past 12 months, racking up an impressive net increase of 32.4%, fuelled by a franchise model. Growth was focused mainly in London, however their estate spans as far west as Taunton and as far north as Aberdeen. Some of the smaller, ‘niche’ brands have also seen impressive growth, such as Triyoga, 9Round and GymBox who provide a ‘unique’ gym experience with resident DJs and offer the latest classes. The Gym, PureGym and Anytime Fitness continued to grow their estates, as the top three gyms by size jostle for the top market position.
Top 10 growing gym brands by estate growth in the last 12 months
Figure 5: Top 10 fastest growing gym brands across GB. November 2017 – November 2018). (Source: LDC)
PureGym is a no-frills fitness brand which focuses on offering affordable 24-hour gym access. It is now Britain’s largest chain by membership, being the first brand to reach a hefty 1 million members. PureGym was founded in 2009 and since has embarked on an ambitious expansion plan, one which has shown no sign of slowing down with plans announced by the brand to reach 300 gyms by 2020. This figure was recently boosted by the acquisition of London-based chain Soho gyms in June this year. The operating model works well for this brand, who use technology to decrease required staffing levels and reduce costs, which then can be passed onto the consumer. As with many of the other brands discussed, PureGym provide low-cost, no frills membership without the need to be tied into a lengthy contract.
The Gym Group
PureGym’s main rival, The Gym Group was founded in 2008 and won the ‘Budget Gym of the Year Award’ at the National Fitness Awards in 2011. Since then, they have grown their estate to 124 across GB with a sizeable expansion of 26.5% in the past 12 months. Spread across the country, this gym is looking for market domination and provides customers with flexible, low-cost, 24-hour access to their gym network, with no need for a contract. This, it seems is the winning formula.
In a period of doom and gloom in the market, it’s fantastic when we can talk about a sector which is performing really well. A seismic shift in consumer behaviour is still taking place, which revolves around healthy living and the importance of looking after your body and your mind. The gym market is one that we expect will see continued growth, as demand increases for flexible, convenient and low-cost facilities.
As a regular gym goer myself, I can vouch for the importance of convenience and flexibility for consumers. My gym routine often will focus around snatching a quick workout when I have the time (and the motivation!). It is for this reason that flexibility is key and consumers want to be able to visit a low-cost gym at a convenient time (even if that is 2am!) in a location that is easy to access. What will be interesting as we move into 2019 and beyond will be which of these low-cost brands will take the lion’s share of the market. The larger players may look to consolidate their market share and acquire other brands to create synergies, e.g. the acquisition of Soho Gyms by PureGym. Will there be sufficient demand for all brands to flex their muscles? Or will we quickly reach saturation point, resulting in brands sinking, rather than swimming? Let’s hope this is a market that stays fit and healthy for the long-term.