The pervading thought among most health club operators in the United States is that fitness club product and brand innovation begins and ends in America. The significant majority of U.S. club operators seek knowledge and information either by attending one of the U.S.-based conventions or trade shows (e.g., Athletic Business, Club Industry and IHRSA), reading one of the U.S.-based publications (e.g., Athletic Business, Club Industry, Club Insider, Club Business International, Recreation Management, etc.), or networking with peers they have met while attending industry events.
Most U.S.-based operators do not commonly seek ideas and best practices from their colleagues overseas, including those in Asia, Canada, Europe and South America. Many of my American colleagues believe that health/fitness operators overseas do not have best practices or innovations that would lend value to their existing expertise—after all, didn’t the health/fitness industry start here in the United States and then blossom as a global industry because of America’s leadership?
Interestingly, the health/fitness industry’s roots lie squarely in the heart of Europe. The founders—or as they are often referred to, the fathers of fitness—are Europeans: Pehr Henrik Ling of Sweden, who founded Swedish Medical Gymnastics, and Johann Guts Muth, the grandfather of German-style gymnastics. The first true equipment innovations started on the European continent (e.g., Gustav Zander’s resistance equipment using cams and pulleys or Joseph Pilates’ reformer), as did the first clubs (Turnverein’s club in Germany or Triatt’s in Paris). Although the start of the modern era of the health/fitness industry might lie in the hands of a few entrepreneurial Americans (Vic Tanny and Ray Wilson), the innovations that will take the industry to the next level lies equally in the spirit of both American organizations and those of our colleagues in the international arena.
European operators are bringing business practices to the budget club sector or, as some call it, the high-volume, low-price sector. An associate of mine in the United Kingdom, Ray Algar, reflects in his 2010 U.K. Low Cost Gym Sector Report that the European budget club sector leverages five core elements: 24-hour access, ability for one staff person to operate the club, extensive use of technology and online joining, a membership offering at half the price of the mid-market clubs, and a fitness center or gym-only proposition (no group exercise).
These European practices, as well as those executed by leading operators in other foreign markets, might hold additional promise for American companies who already operate a budget brand (e.g., Planet Fitness, Blink, Crunch franchise clubs, Gold’s Gym Express, etc.), as well as provide a benchmark for entrepreneurs now considering the budget segment.
The following are European lessons in budget club offerings:
Deliver a great value at a very reasonable price, but don’t give it away. Yes, we all know that Planet Fitness is $9.95 in some markets, some of the new Crunch franchise clubs sell for less than $10 per month, and even the new Blink clubs operated by Equinox offer access to a single club for as little as $15 per month. At first glance, most of us would say this is an incredible value. The question is, are these clubs offering a great value or are they just selling access at a very low price such that it ignores the other key elements of the overall value equation? In Europe, the leading player in the budget segment is McFit of Germany, with more than 120 owned clubs and growing. McFit is not alone in servicing the European budget segment. German operators such as Pure Fitness, Clever Fit and Jumpers, as well as UK operators the Gym Group and Fitspace also serve the needs of this fast growing segment, which has existed for nearly two decades in Europe. The difference is that you will not find these European clubs selling memberships for under $10 per month. Rather, they offer a convenient, simple and no frills experience at a reasonably low price, typically under 20 Euro on the mainland and 20 pounds in England. For example, McFit, which sells for 16.90 Euro per month, equates to approximately $24 per month, while the Gym Group, which sells for around 16 pounds per month, equates to nearly $26 per month. The point is that in nearly every case, the European operators offer a budget experience that is nearly two times more expensive than their U.S. counterparts, yet manage to attract similar levels of membership per square foot (2 to 5 square feet per member). For example, as of year-end 2009, McFit, which typically occupies around 2,000 meters, averaged approximately 7,100 members per club, with many clubs having membership levels considerably higher.
Leverage technology for maximum efficiency, convenience and profit. The European operators offer memberships entirely online. You cannot purchase a membership at the club or from a sales person, something that U.S. operators are now adopting. Yet, technology goes well beyond merely offering memberships online. McFit may have one of the most sophisticated IT systems for supporting its membership offering, providing a complete turn-key system that creates dialogue between members, provides exercise program orientations, exercise instruction, nutritional guidance, information sharing and purchase of additional amenities. The Gym Group in the United Kingdom also leverages technology to bring incredible value to the membership experience. Possibly one of the more unique technology tools offered by these clubs is the use of imbedded chip technology. The clubs provide cards with imbedded chips that allow members to access the facility, access lockers, take a shower, get a towel, purchase a monthly supply of beverage access, buy a headset, get a tan, and if they wish, to participate in a special course. In several clubs, the embedded cards even provide access to specific workout machines, such as high-tech treadmills and vibration machines.
No frills with frills. The budget club concept depends on eliminating operational waste or, as we might say in the United States, cutting out the fat. Well, our European colleagues seem to have taken this to another level by eliminating nearly every frill but allowing members to access those frills with a little flare. Want a shower? Well how about paying for it? Even better, how about a time limit on those showers, sort of like a coin operated car wash but instead operated by technology in many cases and always with a time restriction? Like your sport drinks? How about a month’s unlimited access to your favorite sports drinks and beverages (30-second time limit to fill that cup) for less than 10 Euro per month and, for your convenience, using your chip embedded membership card? Don’t stop with drinks and showers. How about retail products and other amenities? These budget clubs have a way of getting members to spend far more than they may have originally intended because they give it a little flare.
Social media masters. The budget operators in Europe have become masters at leveraging the Internet, and especially social media, in spreading their message to the masses. McFit has an enormous and enthusiastic following on Facebook (more than 11,000 likes on its official page as of September 2011) and YouTube. Visit YouTube and you will find hundreds of member-generated videos that directly or indirectly promote the virtues of McFit. Interestingly, McFit is not alone. The members of other budget club operators in Europe and in other international markets have found a means to use these social media outlets to create incredible fan bases or, in the new marketing vernacular, cult brands.
Membership package flexibility. Many of our European counterparts have forgone the contract-only mentality that pervades the U.S. market. Furthermore, they offer a variety of membership options ranging from one-day memberships to one week, one month, one year, etc. Beyond the elimination of the contractual barrier (purchasing via a contract is available and provides a lower price) or the basic mid-term and long-term membership offering, these clubs also market and charge for their memberships not on a monthly basis but on an every other week cycle, understanding that by doing this, they actually collect more money on an annual basis. For example, instead of 12 monthly payments (12 months at 16.80 Euro per month, which equals 201.60 Euro annually), they offer 26 payment cycles (26 payments at 8.40 Euro equaling 218.40 Euro annually), resulting in receiving two more weeks of payments.
Clean and stylish. In the United States, most budget clubs take a box-like approach to their design, usually converting a strip mall space or similar available space into a club that has little aesthetic appeal. Many international budget clubs believe that esthetics are an important element of the experience (e.g., design for experience) and, therefore, add elements that appeal to the senses and not just the pocketbook. For example, Jumpers offers a beautiful lounge, soft lighting and some unique design elements that give the budget club an open, warm and “clubby” feel. Another area in which budget clubs in Europe and South America, at least in the majority of instances, exceed their U.S. counterparts is in the area of cleanliness. Cleanliness seems to be an essential element of the budget club experience overseas.
Leveraging a one-staff person approach. As reflected in Algar’s 2010 report on European budget clubs, this sector is founded on the principle of operating with one staff person to serve the membership base. Interestingly, although these facilities have only one employee, members can access assistance through a host of approaches. At McFit, technology and members supply information and assistance, while at the Gym Group, independent personal trainers provide 10 hours of complimentary service weekly to support member needs. When visiting several Gym Group clubs, I was astonished by the level of service I received from their independent trainers, especially since they did not receive pay for the 10 hours they committed to serving the club members. When visiting several McFit clubs, I was pleasantly surprised by the level of assistance that I could obtain between the clubs’ IT kiosks, informational placards and members. In many cases, the service available to members of these clubs exceeds what you might obtain if visiting one of the many U.S. operators and even European operators who charge twice as much.
My intent in sharing these methods of European operation is not to point out the weaknesses or strengths of any particular market but instead to highlight the incredible value in expanding your learning opportunities beyond the U.S. coastlines. The industry players in Asia, Australia, Canada, Europe and South America all have some unique and innovative approaches to operating successful and profitable clubs that in some cases mimic those of the United States, but in many cases differ considerably. If club operators are intent on achieving continuous improvement, then they need to seek the best practices from both international colleagues and domestic associates. In doing so, we can emerge as stronger operators and a stronger industry.
Stephen Tharrett is president of Club Industry Consulting. He is the author of four books and is a former board member and president of IHRSA. Tharrett is involved in public speaking, having served as an international keynote speaker at conventions in Argentina, Australia, Brazil, China, England, Ireland, Japan, Russia, Singapore, Spain and Turkey, as well as domestic conventions such as Athletic Business, CMAA, IHRSA and SIBEC. He can be reached at [email protected]stryconsulting.com.