Retail giant Sports Direct sent shockwaves through the gym industry late last year, when Health Club Management (HCM) revealed the company’s plans to take on the low-cost sector with an earth-shattering price plan.
The company’s burgeoning health club arm – Sports Direct Fitness – announced it would offer memberships from as little as £5 a month and embed new health clubs in its retail stores as part of plans to build up a 200-club empire.
In addition to the 12-month, gym-only memberships being offered at £5 a month (plus a £10 joining fee), the aggressive price plan for the new model will see gym and exercise class combos available for £8 a month.
Embracing the ethos on which Sports Direct founder Mike Ashley built his retail empire, gym memberships will be sold at this low rate in a bid to capture market share and foster rapid growth.
Head of sales and products Mel Crossland told HCM: “We’re expecting large amounts of additional spend from gym users, because of the convenience of the on-site store for impulse buys and the fact that they’re the exact target market for Sports Direct products.
“The stores will also be busy in their own right, so the gyms will benefit from increased footfall. We’re following the Sports Direct model of focusing on becoming the biggest.”
Crossland added that, despite the ultra low-cost strategy, the gym chain will avoid other traits of the growing low-cost sector, such as minimal staffing. “We want our gyms to have a personal touch – we won’t follow the budget model and do everything in pods,” she said. “We want to have a rapport with our members, so for every visit, staff will be there to say ‘hi’ and ‘goodbye’.”
Precor will be the main supplier to the new gyms, with the contract for free weights and functional training kit under discussion at the time of going to print.
Sparking debate
Sports Direct Fitness made an initial splash into the market by acquiring 23 former LA fitness sites. In addition, the new model of offering Sports Direct gym and retail outlets side-by-side was introduced with the launch of an Aintree site in mid-December, with openings in Keighley and St Helens hot on its heels. Four more new-builds – two in southern England, one in Wales and one in Scotland – are going through planning.
The masterplan for the new gym model was revealed to club general managers in November. The two-day conference presented the chain’s vision moving forward, as well as the potential awards available to staff through the company’s highly publicised bonus structure.
This conference coincided with the official announcement of Sports Direct Fitness to the national press. The move garnered a swarm of headlines, but proved unpopular with investors as Sports Direct shares fell 2.7 per cent on the day of the announcement (11 November) amid fears the move would lead to less investment and focus on the core retail business.
The announcement – and most notably the price plan – has sparked lively discussions among health club leaders about what this means for the sector. HCM editor Kate Cracknell chaired a debate at SIBEC EU on the topic (see p80), while several influential figures have also shared their thoughts.
HCM editorial director Liz Terry said: “Sports Direct is treating gym membership as an additional driver of retail sales. This is a new approach for a club operator, but we know from the experience of existing operators that a £9 membership can turn a profit without the retail element, so this isn’t a huge gap to bridge. It will be interesting to see how a company such as Sports Direct, with its expertise in consumer marketing, optimises the profit potential by upselling to customers.”
Here, we present a round-up of the prevailing viewpoints…
