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Spotlight: Gymshark Strategy Considerations

Lotte Muir gives her thoughts on the current strategic position of Gymshark... 🎽

  • Lotte Muir
  • 3 min read

Gymshark is a fitness apparel & accessories brand, manufacturer and online retailer based in the United Kingdom. They focus on selling men and woman’s sportswear that is designed to be fashionable but also have high performance.

Gymshark was founded in 2012 by Ben Francis, who was aged 19 at the time. It started with Francis screen printing products in his garage but rapidly grew to have customers in 131 countries.

PESTLE Analysis for Gymshark

The PESTLE analysis shows that the main external factors effecting Gymshark are political and environmental. The uncertainties of situations like Brexit or Covid-19 have caused a lot of insecurity, including economic uncertainties and possible future changes in UK law and politics. This will affect Gymshark from different trading laws, to a weaker pound making imports dearer, while recent generations have an increased conscience over where they purchase clothing from, with searches for sustainable fashion.

In more detail…

Political

  • Political landscape changing with Brexit & Covid-19 fallout
  • Increased campaigns to promote healthy life – e.g. “Change4Life” in UK
  • Move to support local businesses

Economic

  • Corporation tax changes
  • Inflation rates and economic conditions
  • Weakening of the pound vs other currencies

Social

  • Increase in social media users
  • Focus on stay at home fitness vs gyms
  • Increase in healthy lifestyle adoption
  • Social influencers promoting healthy lifestyles

Technology

  • Trend for new better performing fabrics
  • Increase use of AI for fitness help
  • Ecommerce and online shopping trends
  • Personal shopping experiences using technology

Legal

  • Health and safety laws
  • Corporation tax laws
  • Data protection laws such as GDPR

Environmental

  • Increase in demand for sustainable goods
  • Increase in outdoor appreciation

Read the Ultimate Guide to PESTLE Analysis.

Five Forces Analysis for Gymshark

The Five Forces Analysis shows the most detrimental threat for Gymshark is substitutes. Their products are very easy to replicate (as they have no patents) and there are many other substitute sportswear products available within the market.

However, in the future the most detrimental force is likely to be buyer power of supplier, due to the increase in demand for sustainable materials. As a result of this demand, suppliers of sustainable fabrics will have more control over prices and be more selective of who they supply to, raising costs for brands such as Gymshark.

In more detail…

Threat of New Entry: Low

There is not a large threat from start-ups due to costs associated with entering an oligopoly market. However, it is worth recognising that the rise of social media has lowered the barriers to entry, consequently allowing some start-ups to release their own sportswear, although these businesses are very small and not a direct threat to Gymshark.

Threat of Substitutes: High

There is a large threat from substitutes as many other brands offer alternate product with lower prices. Due to the fact that there is no switching cost to consumers there is high threat to Gymshark, as they can easily loose a large amount of market share if a competitor came out with a product with similar quality and designs (seamless), but with a lower price.

Power of Suppliers: Medium

Suppliers have a large influence over the sportswear industry as they affect prices and product quality, designs and lead times. Gymshark use specific manufacturers to develop their own technical fabrics, and new styles, with products being manufactured and bought to consumers within 6 weeks. However, as a result they are tied into using the same manufacturer in order to maintain this, giving the supplier the power to raise prices.

Power of Buyers: High

Customers have a strong buying power as there are many substitutes within the market for sports apparel, especially as there are no switching costs involved. Gymshark need to ensure they differentiate their products in order to avoid consumers switching to a substitute product.

Industry Rivalry: High

The combination of many suppliers, low differentiation and low switching costs makes this a very competitive industry.

Complete your own Five Forces here.

SWOT Analysis for Gymshark

Strengths

  • Strong social media presence
  • Brand loyalty
  • Brand ambassadors
  • Overseas growth

Weaknesses

  • Limited product portfolio compared to competitors
  • One sales channel (website)
  • Brand ambassadors not known outside fitness community

Opportunities

  • Sustainability
  • Diversify to gym equipment
  • Sportswear is now very fashionable
  • Physical shops
  • Partnerships
  • Alternative demographics to current target

Threats

  • Sustainable activewear companies (TALA)
  • Cheaper imitation products
  • Losing the brand ambassadors
  • Age group 16-25 finding alternative company

Read the Ultimate Guide to SWOT Analysis.

Summary

Gymshark is a great story of a company going from one person in a garage to becoming international in reach and having a value of in the hundreds of millions. In order to keep it’s growth protectory and remain successful the company will need to establish a clear new strategy, one different to the plan that has got them to this point.

So, what would you do? Why not check out some strategic options from Bowman’s Strategy Clock and apply them to the Gymshark case – what would work and what wouldn’t? Something to consider when out for a run… 🏃

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