As the festivities and indulgences of December come to a sharp end in January, New Year’s resolutions quickly begin to loom over many of us. The first port of call? Perhaps the gym.
For the UK gym and health club industry, the first quarter of the year (also known as the ‘golden quarter’) typically yields a spike in consumers purchasing new gym memberships: estimated to make up 12% of the annual total in the UK. While the industry enjoyed a 32.5% increase in market size from 2021 to 2022, the economic landscape moving into 2023 may generate a new set of challenges.
UK fitness club chain The Gym Group (GYM) recently released their trading update, showing promising financial and operational results for 2022, while simultaneously approaching the new year with caution. The company reported that total year-end membership had increased 14.3% from the end of 2021, with revenue up 63.1% in 2022 versus the prior year and January trading in line with expectations.
The trading update also touched on the current tough macro-economic environment and shifts on consumer behaviour, which has led to the company taking a ‘measured approach’ to site openings in 2023 after 28 new openings in 2022 took total site numbers to 229. In addition, the company expects utility costs to increase by £10 million compared to the previous year.
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The Gym Groups' outlook for 2023 comes off the back of a difficult year of soaring energy prices accompanied by consumers continuing to tighten budgets. With many gyms running 24/7, the huge energy bills generated are set to create unprecedented challenges for the industry. In addition, research conducted in the final half of 2022 found that almost 1 in 5 people in the UK could no longer afford fitness services, as energy bills and inflation began to cut into consumers’ budgets.
While taking the cost of living squeeze into account, it’s certainly not all doom and gloom for gyms with lower-priced and flexible memberships, including Gym Group. That could leave it well positioned to get ahead of premium fitness clubs with high membership prices like Nuffield, Banatynes and David Lloyd by picking up gym-goers downtrading to more affordable alternatives.