Is the gym sector too crowded to make money?

But despite the fact that the industry has already grown hugely over the last 15 years, and taking into account the huge range of gyms and gym companies on offer to the average consumer, this is a perception that is only part of the picture. The reality, beyond the simplicity of treadmills and dumbbells, contrasts areas of market saturation with areas of rich entrepreneurial potential.

To explain this a bit further, and explore exactly what I mean, it is worth taking a brief look at both the market and the evolution of health and fitness. The industry has seen tremendous growth over the last 15 years – a growth that you might think suggested that the UK has become much fitter and healthier. In fact, the vast majority of this growth has been fueled by the increased fitness appetites of those who were already active, while the rest of the population has got progressively less active and less fit – illustrated by the unerring rise of obesity and diabetes. The proportion of people who have gym memberships in the UK is just 12 per cent, and has been so for the entirety of this 15-year period.

Fundamentally, this is why the market seems crowded; because despite fervent consumption within that 12 per cent, the market remains small. And yet, as a business opportunity, there is huge potential here. This mystical 12 per cent figure represents a glass ceiling that is eminently smashable – it just requires a few businesses savvy enough to wield the hammer with craft and confidence. After all, once that 12 per cent becomes 15 per cent or 20 per cent, then the industry will once more offer extremely strong opportunities to investors and entrepreneurs alike.

But this is the tricky bit; how to do what 15 years of trying hasn’t managed. Ironically, the first thing to do is to stop focusing on the gym environment – because that market is saturated. While there is always scope for good businesses that are run well, the high margins that prompted high-profile business personalities such as Duncan Bannatyne to enter the industry are far harder to come by. You can, of course, go luxury or budget, but in both cases you are simply another fish in the same sized barrel.

Instead, the industry needs to evolve to help address the major social and health concerns affecting modern generations; inactivity and obesity. To me, this is where the industry has both responsibility, and from a business perspective, opportunity. To do this, the fitness industry needs to go beyond health clubs, and provide new services to suit the needs of the 88% who have remained resolutely unmoved by the charms of the gym. It’s not rocket science; those who may be overweight and self-conscious about their weight, or those who have no natural affinity towards exercise, are highly unlikely to walk through the doors of places culturally associated with intimidatingly sculpted bodies.

A different tack is required, one that engages wider communities through activities such as walking groups, weight management groups, outdoor exercise classes and boot camps. The Government has placed a huge emphasis on getting individual health and activity into the public consciousness, with multi-million pound advertising and marketing campaigns. Smart health and fitness start-ups that have seized upon the present momentum are able to use such campaigns almost as secondary marketing, essentially bringing target consumers into marketable range. It is an evolution of the health and fitness business that is almost limitless in its opportunity.

Many companies have already taken full advantage – you will see outdoor fitness classes like British Military Fitness posting strong profits, while weight management programmes such as Premier Lifestyle are also growing rapidly – but such is the genuine need for the UK’s general health to be improved, there remains a huge proportion of people who still need activity that is suited to them. These could be gentle group walks to provide a social element to the older population, or indeed specialist fitness provision for those who are battling obesity, but at this present time there is huge scope to find new business niches within the industry, and for existing companies to adapt their offering.

Ultimately, the trick to beating oversupply in the gym industry is to look beyond the gym. Health and fitness has always been an industry that is extremely reliant on the changing trends and lifestyles of the populous, and ultimately, this is its greatest strength as an attractive prospect for new business. However, never has the potential market for innovative health and fitness companies been as wide open as it is at present. While obesity and inactivity are very much the scourge of the industry, the rising prevalence of both simultaneously provide more business opportunities for health and fitness than ever before. 

Debra Stuart is CEO of fitness group Premier Global

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