In this article we're going to look at the strategy of a real leisure centre here but, for the sake of anonymity, we'll call them GetFit.
GetFit are a leisure centre with the mission to get everyone exercising for 30 minutes a day, five days a week. Although there is intense competition, the market for fitness is growing rapidly year on year. The public have an abundance of choices from streamed fitness classes, to wearable technology programs, to numerous gyms.
So how does a leisure centre strategically grow, and what considerations are required? Let's take a look...
PESTLE for a Leisure Centre
The fitness industry is driven by high social and technological trends and developments and is showing strong annual growth. The key impacting factors for the industry are:
- Age demographics: 16-24 year olds have the highest sports/exercise participation with 73% of males and 59% of females, forecasting a growing potential market
- Changing demographics: with a 3% increase in adults classified as obese since 2016, and 20% of year 6 children classified obese, there is increasing concern about national health in the UK
- Rise in wearable technology: over 6.5 million users globally and a projected increase of 400,000 by 2023 - there is increasing personal fitness data available to consumers
- Online training programs: growing brands such as Peloton disrupt the market with new online alternatives for consumers to consider
- Growth in the fitness club market: forecast 8.5% compound annual growth over the next five years, increasing the market's value and profitability.
- Brexit resulting in increased costs of importing goods: John Halls claims 15% increase
- Government healthcare policy: Increased social emphasis on health, fitness and wellbeing
- National minimum wage increase: Forecast increase £8.70 by 2023
- Declining consumer confidence: concerned about future/expected unemployment rise
- Growth in fitness club market: Compound annual growth rate 8.5% forecast value over five years from 2019
- Ages 16-24 highest sports/exercise participation: 73% male, 59% female
- Higher participation average under 44 than over
- Changing demographics: 29% adults classified obese, 20% year 6 children classified obese
- Rise in wearable technology: 6.59m users 2019, projected growth 7.1 million 2023, predominately aged 25-34
- Online training programs, new trends, e.g Peloton: indoor cycling studio for your home
- Rising energy prices: Increased cost
- Sustainable exercise expectations
- Outdoor initiatives that are carbon neutral
Five Forces for a Leisure Centre
The competitiveness of the environment can be analysed through Porter’s Five Forces and identifies these key elements:
- Threats from new comers have the lowest impact on GetFit, due to high barriers to entry which GetFit covers with 190 centres and established supply chains
- High industry rivalry dominates the environment with a range of differentiated products/services. GetFit must constantly compete to retain and grow market share and provide a differentiated, superior service
- High threats from substitutes through a growth in online training programs and strong, cheap alternatives. GetFit must account for this decline in interest and incorporate substitutes into its service to provide clear incentives
Industry Rivalry: High
- Firms offering differentiated services/products, creating fluid industry
- Market growth increases intensity of competition, new consumers/technologies enter market
- Large brands opening leisure centres, Virgin Active, funding and awareness
- GetFit must compete to retain/grow market share - provide differentiated, superior service
- New technologies – adopted by GetFit to avoid stagnant service
- Grow/retain brand awareness over competitors
Threat from New Entry: Low
- High barriers to entry include: running costs, equipment
- High staff training requirements, such as personal trainers needing level 2 certificates/diplomas in health and fitness areas
- GetFit has over 190 leisure and cultural centres
- Established supply chains
Threat from Substitutes: High
- Growth in online training programs, customers feeling no longer necessary to visit gym to train
- Exercise outside fitness centres
- Home gym equipment, 546,000 people purchased equipment under £100 in 2018
- Factors may result in decrease in members due to alternatives
- Substitutes have their own benefits including price and time-saving
- Substitutes such as wearable technologies can be synchronised with GetFit's fitness centres
Threat from Suppliers: Medium
- Increase in fitness instructors 69,000 (2019) compared to 62,000 (2018)
- Utilities suppliers higher bargaining power, properties have few options and high usage
- Access to a larger talent pool/lower prices
- Energy saving strategies should be incorporated
Threat from Customers: Medium
- Monthly memberships - switch service in short timeframe
- Possible decrease in revenue - little time to react
SWOT for a Leisure Centre
- Local community initiatives
- Brand partnerships
- Range of funding sources
- In-house range of health foods
- Website – modern and accessible
- Lack of innovation within facilities
- Lack of R&D departments
- Poorly maintained facilities
- Lack of value-adding firms/individuals
- High investment-based alliances
- Technological innovation and its implementation into service provided
- Growing fitness market
- Targeting of younger demographic
- Growth of social media influencers
- Developments in brand image
- Virgin Active aggressive strategies as direct competition
- Rise in substitutes with strong customer benefits
- High threats of substitutes due to fluidity of industry
- Increased importance of technology perceived by consumers
Example Strategic Goals & Approaches
Some example goals might include:
- Decrease the number of year 6 children classified as obese in the UK
- Grow market share by 10% in the UK market
- Improve customer satisfaction by 10%
Digital marketing could be the primary strategy to compete and push through the alternative strategy. Ofcom’s communications market report in 2019 brought together a range of findings explaining the relevance of a digital marketing campaign. One study found smartphones have the second greatest reach, behind TV, with 67% of people aged 6+ in an average week.
On top of this a study carried out in 2015 found 59% of smartphone users visit social media sites or apps, a trend which is still growing and expanding. As a result digital marketing is the most effective platform to launch a strategy based around social media influencers. This strategy should consider its efficiency by launching promoted posts towards the target audience at peak times. This is between 6-9pm according to Ofcom, with a peak of 26% of users in an average week logging on at this time.
This strategy should also be integrated into the 5 I’s of digital marketing:
- Identification – Target 16-24 year olds who take part in no physical activity or males taking part in sporting activities.
- Individualism – Range of facilities as part of the service allows it to be tailored to consumer’s needs.
- Interaction – Team replying to comments or posts on social media posts, creating communication between the brand and the consumer.
- Integration – Use data from social media posts (such as conversion rates) to refine the campaign to improve cost per click (CPC).
- Integrity – Providing the services that social media influencers promise, and take on ambassadors who are not at high risk of cause problems which may result in a loss in integrity.
Fitness and activity is increasingly on the mind of the general public, with many technology companies pushing into this area (eg wearables).
The opportunity is large for GetFit, and with the right focus they could grow into a very healthy (no pun intended) business!