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5 September 2022

Tough decisions: Hit, stand, doubledown or split

Signs are starting to show that the fitness sector is beginning to feel the pain of increasing costs, and it is hitting small group personal gyms on multiple fronts.

Gym owners are finding themselving having to make some tough decisions. With the likelihood of a recession just around the corner, facilities are being hit on multiple fronts. Costs have risen to almost unfathomable heights, not only substantially increasing running costs, but triggering financial hardship for attendees.

Those who are taking action seem to be heading down one of two very different routes. The rest are presently just looking on, perhaps unsure of which path to take, or simply hoping that everything will be fine.

Yet all of this is happening whilst the general thirst for quality fitness services continues to rise.

Death by a thousand cuts

For wholly understandable reasons, the rocketing prices have sent many gym owners into a cost-slashing panic.

With the main source of cost increases being utilities such as electricity & gas, and these being largely untouchable in terms of usage reduction or supplier changes, the cuts are manifesting themselves as a broad number of smaller savings.  A few pounds here, a few pounds there.

Making a painful situation even worse is that, in many places, gyms are sacrificing elements of member service. At a time when members are acutely conscious of every penny of the money that they spend, now is not a good time for a reduction in service.

Some of the slightly desperate member attraction tactics of yesteryear are also making a reemergence. Suddenly, "x months free" is back on the cards, despite most gym owners having previously realised that these sorts of things massively de-value the offering.

"Unlimited" offerings are similarly cropping up once more, reducing the perceived value of the offering. This itself sits on the back of the open gym concept, all key elements in the "race to the bottom".

I truly fear that, for some gyms, all of this is going to amount to "death by a thousand cuts". Small, barely noticiable financial savings leading to loss of members, reputation, and leads - in turn, leading for far more significant financial hardship than would have been.

Doubling down

Conversely, at the other end of the spectrum, are the small group gyms that are doing the exact opposite. They are working to maximise member experience, adding even more value and doing so in a manner that is efficient; scaleable; and, most importantly, light on human resource cost.

At the same time, their membership fees are far higher than other gyms in their area.

This two-pronged approach ensures that members are not only engaged with their memberships, but emotionally feel that they are receiving more from the gym at the time where most other suppliers feel to be taking. Similarly, new members are paying an appropriate price point for the product they are being provided - enabling the facility to remain impressively profitable during trying times. Generally, the types of people able to afford higher fees are less effected by nationwide financial challenges.

A greater distinction is also taking place between large group and small group training.  The smart operator is capping small group sizes at 4, turning away from the compromised 6 or 8 size offering. SGPT is a limited, premium product that delivers the very highest level of of personal service and attention.

There is then a gap between SGPT and LGT, with large group being circa 15 members. Large group sessions are only scheduled knowing that attendance will be at least 12 members. The supply is consciously limited to prevent large group becoming a cheap alternative to small group, at times that are less popular.

Large group is charged at a lower price, providing options to those with greater constraints on their funds. Value compromising concepts such as open gym and "unlimited large group" are being canned-off to keep ensure the product differences are clear.

It is interesting that, at a time where some gyms are cutting back, others are investing to ride out the next few years and emerge successful. New gyms are continuing to open and, with their greater focus on Gen3SGPT concepts, there is a very real risk that they are going to steal the 'bread & butter' of the cost-cutters.

 

There are difficult times ahead across all industries, but particularly for those in the fitness space. Despite industry-wide arguments to the contrary, for many, spending money on health & fitness is still considered a "luxury". When faced with not being able to feed your kids, that is a wholly appreciable position.

With so many decent gym owners battening-down for a stormy ride, I just hope that they make the right decisions and that their 'gurus' aren't amongst the set that simply "wing it", playing with other people's businesses and lives.

Every business should operate efficiently, maybe even frugally, but penny pinching is almost invariably the beginning of the end.

Written by Chris Windram.

Alchemy

Alchemy provides the system, resources, and the practical advice & support that gym owners need to operate a profitable, "high ticket" membership, small-group training gym. Alchemy is the ultimate "SGPT toolkit".
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