The mid-market has been a tough place in which to operate over recent years, squeezed from below by the burgeoning low-cost sector – which has all but stolen the ‘affordable’ mantle – and from above by an emerging boutique sector that’s offering perceived value by delivering what people want, and only what they want, done very well.
The response from the mid-market has been varied. Some operators have reinvented their offering, staying within the mid-market segment but striving towards a more distinct positioning – think Fitness First and its recently stated ambition outlined by CEO Andy Cosslett: “We’re moving upmarket, but it’s a gradual process based on member perceptions. We want to be the top end of the mainstream market – the Audi A4 or BMW 5 Series.”
Other operators have opted instead to diversify beyond their mid-market heartland. In the UK, LA fitness ‘premiumised’ its London estate – upgrading a number of sites in the capital and rebranding them under its new LAX brand – while maintaining a mid-market positioning elsewhere in the UK. We wait to see if that strategy will get the company back to where it wants to be. At the time of going to press, LA fitness was the subject of speculation about an imminent buyout.
Meanwhile in Canada, recognising that the budget sector is here to stay, GoodLife Fitness launched a low-cost offering in mid-2014 – Fit4Less by GoodLife – to complement its existing mid-market GoodLife Fitness model. And in Europe, HealthCity’s low-cost Basic-Fit brand is growing at the expense of its HealthCity estate which, although officially categorised as premium, is priced on a par with Fitness First in the UK.
Whatever the strategy adopted, after the initial shock of disruption, it seems mid-market health club operators have regrouped and set out their stall going forward. Indeed, in his recent report – Review of the UK Health and Fitness Industry and Outlook for 2015 – Ray Algar predicts that, although low-cost operators will likely make further inroads, 2015 will be the year when the ‘squeezed’ middle market fights back.
Do our panel of experts agree with that verdict? We ask for their thoughts.
