Could the public sector be a serious challenger to the budget gym model?

After a career as player, coach and manager in rugby league, Callum Irving took a position with Sport England working on projects to increase participation in sport. Since that time Callum has developed a boutique consultancy, gorillaBC, that’s renowned for its behavioural research, data collection and insight into participation in sport and fitness. Callum’s clients range from gym chains to local authorities, and he was recently elected to become a fellow of the Royal Society of Arts for his work in behavioural economics.

With his unique insight into both the public and commercial sectors, we met with Callum to find out how he felt local authorities and leisure centres could compete with the booming low cost gym sector.

What’s challenges are leisure centres currently facing?

Leisure centres now exist in a world where their subsidies have either been cut or removed entirely, which is placing huge pressure on their ability to survive. They are having to think more commercially and it’s a challenge. A private gym can afford to be ruthlessly commercial. If their swimming pool or spa is losing them money, they can fill it in with concrete and add another 30 machines. Leisure centres can’t do that. They have a far broader range of political and social considerations. If Dorris from 37 Mapletree Avenue wants to come in for her weekly swim every Thursday at 6:45, then the leisure centre better make sure she can or she won’t be happy. And it’s people like Dorris who turn up and vote in the local elections, so you can be sure her voice will be heard!

So leisure centres are stuck between a rock and a hard place. On the one hand they’re under so much financial pressure that they absolutely must start thinking and acting commercially, but on the other hand they still can’t lose sight of their broader social responsibilities to the community.

 

How are leisure centres responding to these financial pressures?

Some are responding very well. For example in very recent months both Cheshire West and Chester Council and Manchester City Council have just opened two new leisure centres and had record numbers through the doors. The facilities are fantastic and it’s proving popular with both families and gym goers. However, the majority are still stuck in the past and struggling to compete with the ever growing competition from the commercial sector.

 

What are the specific problems getting in the way of their progress?

There are a huge number of issues but they fall under the following categories:

  • Culture and halfway house – Are leisure trusts running a business or a service? They were historically council services but have been propelled into a world where they need to act commercially and deliver against key revenue targets. There is also the issue of how much control the parent authority has or if the centres are allowed to operate with autonomy as its own commercial entity. This varies hugely from region to region.
  • Marketing – Marketing in the gym sector is extremely sophisticated, particularly among budget gyms. Leisure centres should be building the same marketing models but it requires a huge shift in mindset which most aren’t yet able or willing to make. Marketing to your typical leisure centre is sticking up a couple of posters inside, and they may have detailed brand guidelines but it’s concerning the use of colours rather than the human experience!
  • Budgets – They’re not familiar or comfortable with the budgets involved in modern marketing in the commercial sector, but they’re also not familiar with the potential benefits. Therefore the temptation, particularly when they’re under so much financial pressure, is to either cut marketing further or simply carry on with the same tired methods of the past.
  • Choice architecture – if you go to the Pure Gym you get one option. If you go onto a leisure centre website you get 12. There is this belief that more choice is a good thing, but actually it just leads to confusion. They need to strip back and simplify their offerings but again that’s just not how they’ve been taught to think.
  • Personal service – one of the big selling points of a leisure centre is that it feels safe and friendly. This is something that needs to be capitalised on, and yet you walk into many leisure centres and the customer service team are all sat behind inch thick Perspex or assume customers know where they are and what they are doing. The personal touch and the feeling of ownership is something that leisure centres have over the low cost commercial sector sector and they need to be making more of it, not less.
  • A lack of communication between districts – in the past there has been a real lack of conversation between local authorities. That may have been okay when they each had lots of funding, but if they continue to operate as silos and not share information or resources then they’re each going to be highly vulnerable to their local commercial competition.

 

Can they turn this around? Could they ever be a serious challenger to the mainstream commercial sector?

This is the exciting part. Yes, absolutely. If you look past the challenges outlined above and focus instead on the underlying assets of leisure centres, you realise that they’re in an incredibly strong position!

  • Their strength of brand – it’s ironic really. They may not treat brand as seriously, but the truth is that they each own incredibly strong brands within their local communities. Families and the elderly will always feel safer and more at ease at a local leisure centre than a commercial gym.
  • Their swimming pools – their weakness (the fact they must hold onto their swimming pools) is also a very real strength. Gym goers may not use the swimming pools as often as the leisure centres would like, but it’s still an option that the majority of members see as a big positive.
  • Their locations – the budget gym market may have boomed over the last 5 years but their challenge now is property; how do they continue to find these huge properties in the centre of towns and cities? Leisure centres are some of the largest and most centrally located fitness facilities in the market.
  • Their data – these centres are sitting on huge quantities of user data that can transform both their marketing and membership offering by understanding what really motivates people, if only they’d start making use of it!

So in summary, yes, leisure centres are in a really challenging place right now, but they are also the lucky owners of certain assets that if used correctly should give them a significant advantage over the private sector. They just need to start talking to one another and begin thinking far more commercially.

 

Posted in Gyms & Clubs, Interviews, The Fitness Network.