1. 06/10/2010
A strategic look at the emergence of the
low-cost gym sector
FIA Seminar October 2010
Ray Algar
My perspective
neutral
towards the
sector
www.oxygen-blog.blogspot.com
MINIMUM OF
50% LOWER
THAN SIMPLICITY SIMPLICITY
INDUSTRY
PRICE
SUPPORTING SUPPORTING
INFRA- INFRA-
STRUCTURE AFFORDABILITY STRUCTURE AFFORDABILITY
SCOPE TO HEAVY
OPERATE 24 TECHNOLOGY
HOURS AND WEB USE
MY MARKET MARKET
DEFINITION DRIVERS DRIVERS
OF A LOW-
COST GYM
CONSUMER CONSUMER
CONSUMERS ARE CONSUMERS ARE
SENTIMENT SENTIMENT
CHANGING CHANGING
TOWARDS CLUBS TOWARDS CLUBS
ABILITY TO
OPERATE CLUB GYM-ONLY SPORADIC SPORADIC
WITH A SINGLE PROPOSITION ATTENDANCE ATTENDANCE
PERSON
1

2. 06/10/2010
I Care
Consumers now have
considerable experience
of low-cost services
2

3. 06/10/2010
“More of our shoppers
are using us for their
whole shop instead of
top-up shopping”
“Fly for the price Group MD Aldi UK & Ireland
of a pair of jeans”
“Spend a little, live a lot”
14
13
Think of a sector…you will
find low-cost
“Look good, pay less”
16
17
3

4. 06/10/2010
300
million units
annually by
2013
“Quality up, cost down
… way down”
SIMPLICITY
SUPPORTING
INFRA-
STRUCTURE AFFORDABILITY
MARKET
DRIVERS
CONSUMER
CONSUMERS ARE
SENTIMENT
CHANGING
TOWARDS CLUBS
SPORADIC
ATTENDANCE
4

5. 06/10/2010
5

6. 06/10/2010
SIMPLICITY
SUPPORTING
INFRA-
STRUCTURE AFFORDABILITY
MARKET
DRIVERS
CONSUMER
CONSUMERS ARE
SENTIMENT
CHANGING
TOWARDS CLUBS
SPORADIC
“I can join online – no pushy
ATTENDANCE
sales staff to deal with!”
SIMPLICITY
SUPPORTING
INFRA-
STRUCTURE AFFORDABILITY
MARKET
DRIVERS
CONSUMER
CONSUMERS ARE
SENTIMENT
CHANGING
TOWARDS CLUBS
SPORADIC
ATTENDANCE
6

7. 06/10/2010
SIMPLICITY
SUPPORTING
INFRA-
STRUCTURE AFFORDABILITY
MARKET
DRIVERS
CONSUMER
CONSUMERS ARE
SENTIMENT
CHANGING
TOWARDS CLUBS
SPORADIC
ATTENDANCE
Word of mouth Word of mouth
on steroids on steroids
40
7

8. 06/10/2010
SIMPLICITY
INFRA-
STRUCTURE AFFORDABILITY
MARKET
DRIVERS
CONSUMER
CONSUMERS ARE
SENTIMENT
CHANGING
TOWARDS CLUBS
SPORADIC
ATTENDANCE
“Why am I paying “Why am I paying
for a club I £50 just to use What do low-cost gym
occasionally use ?” a treadmill?” consumers say?
8

9. 06/10/2010
“I have never been to a
gym that is £15 before. I
“It is almost free” thought I would walk in
and find a lot of
broken equipment”
54
9

10. 06/10/2010
55 56 57
58
10

11. 06/10/2010
McFit Financials 2007
Euros % turnover
(millions)
Turnover 86
Staff costs 3.4 3%
EBITDA 28 32%
Interest charge 0.1 -
Net assets 34
Clubs 88
61
“Perhaps the biggest
threat we face is that
someone from outside
our sector, with a huge
war chest of cash and
proven customer-centric
business model, will
build 1,000 shiny new
facilities, and offers
budget-busting
membership deals”
Fred Turok, Chairman, FIA
(statement from 2007)
11

12. 06/10/2010
Operational
excellence
Customer Product
intimacy leadership
budgetgymresearch.ning.com
oxygen-blog.blogspot.com
Google: “Ray Algar”
12