The rise and rise of low-cost gyms

ELOISE GIBSON
Last updated 17:16 07/03/2013
Claire Attard, Jetts
PHIL DOYLE/Fairfax NZ
LOW-COST SUCCESS: The goal is to make an environment where no-one feels shy about turning up, says Claire Attard.

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Six women walk into an empty gym. One prods a button and a ripple-stomached beauty appears on a projector screen. She starts gyrating bossily.

This is Zumba on demand.

New Zealand is known globally for spawning Les Mills, the full service gym chain that licences its fitness classes. But this is not Les Mills. Nor is it trying to be.

There are no cheery receptionists, cafes or saunas. Just fluorescent-lit rooms full of weights, bikes and treadmills. And now, virtual Zumba.

In the lean years since the 2008 global financial crisis more than 70 24-hour fitness clubs have opened, 50 of them in 2012. Another 20 are on the way.  

Fitness has never seen anything like it.

"The last year was probably the greatest growth of low cost/24 hour operators ever in New Zealand. It was certainly the largest growth of gym clubs in the last 15 years," says Richard Beddie, chief of gym industry body Fitness NZ.

He'd never have believed you had you told him five years ago that in 2013, Australian import Jetts would be within a few thousand New Zealand members of Les Mills.

In two and a half years Jetts has opened more than 40 glass-fronted, brightly-painted clubs and signed up more than 40,000 people.

Its main rival is Snap, an American chain that entered New Zealand through Christchurch and now has about 25,000 members.

The new breed of gym claims to be offering new commodity - smaller clubs with no hair dryers, crèches or baubles of membership. Just you, some machines and a fortnightly direct debit. No long term contract.

It is the fitness equivalent of a prepaid cell-phone.

Franchisees say they are attracting a new breed of gym bunny - one who would never have set a sneakered toe inside Les Mills.

BUFF NATION

Firm national membership numbers on gym-goers are difficult to secure without up-to-date census data.

But research by Fitness NZ suggests that the ranks of gym-goers - believed to include about one in 11 people - grew about 4 per cent last year, roughly twice as fast as the economy.

A rise in jobs for fitness workers seems to bear that out, says Beddie.

What's with the sudden trend for shaping and toning?

More baby-boomers and women seem to be joining says Claire Attard, the woman who has spearheaded Jetts' growth in New Zealand.

But more than that, there is the lure of price.

Beddie estimates more than half of members at each new club are gym first-timers.

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"Some clubs are reporting small drops. But effectively it's a brand new product for people who never liked clubs charging $35 a week," he says.

The goal is to make an environment where no-one feels shy about turning up, says Attard.

Jetts burnishes its Everywoman appeal by capping its heaviest dumbbell at a weightlifter-unfriendly 40kg. 

Snap and Jetts operate a similar business model, while Anytime Fitness is more of a hybrid with its 24-hour opening, middling prices and year-long contracts.

In England, traditional gyms are sweating about the competition. 

But Beddie says our whole $240m industry is growing.

Those doing it hardest are gyms that do not fit easily at either the cheap or fancy end of the spectrum, says Chris Beasleigh, retail sales and leasing manager at Jones Lang LaSalle, who looks after the low cost gyms' leasing requirements.

The market is splitting down the middle: cheap and cheerful at one end and group classes and big freshly tiled shower blocks at the other.

"You have the big super gyms like Les Mills which are expensive but very popular then you have the much smaller gyms of 300-400 sq m. I think the ones that have been hurt are the ones in the middle," says Beasleigh.

GROWING THE PIE?

Andy Peat, a Christchurch-based owner of three Snap franchises, says there is no point butting heads with Les Mills, the undisputed king of the group fitness jungle.

"They have a group exercise system that is known worldwide as the best and no-one can really take them on," he says. 

Yet in what could seem like an odd move for a cheap gym, Snap in Hawke's Bay has been trialling classes. 

Flesh and blood instructors teach yoga and aerobics at Hastings and - soon - Snap's new gyms opening in Christchurch and Auckland. Outside class times, there are the projector-screen beauties.

In some ways this is incongruous: Jetts, Snap and Anytime have bred like amoeba on the very sound basis that average people don't use classes, even if they think they will.

"Most people don't use classes. That's how this model came up," says Peat. "But now we're trying now to cater for everyone."

But Snap's average cost is about $4 a week more than Jetts - the cheapest chain at under $12 weekly, including payment processing fees. It has to differentiate itself.

Peat can wax lyrical about the fancy imported equipment: "I like to think of us not as a version of Jetts but a lower cost, 24-hour version of Les Mills because we offer a lot more weights than Jetts do."

Another way of looking at it is that pioneering virtual classes is a classic low-cost gym manoeuvre. By simultaneously limiting its wage bill and making classes available to groups of friends at any time, Snap wins twice. It benefits from lower wages than if it hired a fuller staff of real people, and can boast of greater convenience.

You can see the same pattern in low cost gyms' preferred locations, which are often smaller buildings out in the suburbs, or in small towns where the likes of Les Mills don't go. Lease costs are cheaper away from the city. And the gyms can sell themselves as being closer to your place.

While a Les Mills is "very big and expensive to open, says Beasleigh, "the smaller guys get quite a bit of work done by landlords. They have few to no staff so their cost of running is very low."

Big, shared blocks of toilets and showers are out for a gym that opens, unstaffed, overnight. 

But many people are willing to forego a wash when they live around the corner, says Beddie. "Some have literally no changing rooms to speak of. And for some people that's not a big deal."

Including Les Mills' and its hefty branches, he says the average New Zealand gym club has 920 members.

Beasleigh: "These guys can break even at 450."

THE COST OF BEING BUFF

None of this has taken the heat out of gym prices, at least on a what-you-pay-compared-with-what-you-get basis. Gym prices have risen faster than inflation in the last five years, says Beddie. But the range of costs on offer has grown.

Gyms now start at $10 a week, not including payment processing costs of about an extra $1 weekly.

"You can go to a club that costs $35 a week and get a fluffy towel on the door and personal training session every couple of weeks. Or you get say 'show me what to do and then leave me to it," says Beddie.

At a minimum, a budget gym member can expect an induction session. Usually a personalised programme, too.

Perhaps not surprisingly, the most touted innovation - 24-hour opening - is only a marginal draw-card, says Beddie.

Not many people want to weight lift in the small hours.

But people like having flexibility "around the edges" of traditional closing times - say, the hour around 9pm, says Peat.

Beddie says parents like knowing they can go home for dinner, put the kids to bed and then work out.

CCTV rules, with a skeleton staff keeping an eye on things from roughly 7am-7pm. At other times there's keycard access.

The main drawcard is no-strings membership. "A lot of people are joining gyms now who have never been able to afford it, or who have been able to afford it and got stuck with a 3 year contract that they used for five months," says Peat.

OLD DOG, NEW TRICKS?

Rather loftily, Les Mills New Zealand marketing manager Guy Needham suggests people are using low cost gyms as a gateway to something better.

"A lot of people are coming to us after them because they have had a taste of what a gym can be," he says.

Needham says other countries have seen mergers and buyouts of budget gyms once the market hit treadmill saturation. It is already difficult to drive a main suburban highway in some cities without passing a shop window full of joggers. There are no signs the amoeba-like expansion is slowing.

The next frontier for Jetts is Christchurch, where it was about to open before the earthquakes. 

Snaps, meanwhile, which started in Christchurch and seven gyms there, is spreading up North.

As to where this leaves our biggest chain, Needham says Les Mills grew faster than ever in New Zealand last year. He won't say how much. 

He sounds sanguine about the challenge. "We are in a different league to them but obviously there's a market for them and that's why they're growing," he says. "Good on them. They are growing the pie."

Still, it never hurts to test something new. Les Mills brand new club in Hamilton, opening in March, will open 24 hours on weekdays.

CHEAP AND CHEERFUL

Jetts

- 43 clubs open (42 North Island; 1 South Island)
- 8 soon to open (7 North Island; 1 South Island)

Anytime 

- 11 clubs open (8 North Island; 3 South Island)
- 5 soon to open (4 North Island; 1 South Island) 

Snap

- 23 clubs open (15 North Island; 8 South Island
- 7 soon to open (4 North Island; 4 South Island)

Total: 77 24-hour clubs, 20 opening soon.

(Source: Jones Lang LaSalle)

- The Press

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