Market Saturation, Way Off The Mark

A few years ago while I was travelling in the USA, I grabbed a casual workout in a health club in Los Angeles and got chatting to the club manager.

Always interested in how things tick in the fitness world on the other side of the Pacific, I was keen to get a handle on the density of health clubs in the area.

When I asked him how many other clubs were in his catchment he replied that there were sixteen. Not a formidable number I thought, and I went on to ask him what kind of clubs they were, expecting to hear a cross section of boutiques, big box, studios etc.

So it came as a bit of a shock when he told me that the sixteen clubs were all in the same chain as the one I was standing in – sixteen branded clubs in one catchment!

Even today that situation would be a stretch in Australia, and that was twenty years ago.

So it begs the question – when does a geographical market reach saturation?

In the current fitness landscape of small box franchised clubs this must be a question a franchisor would hear on a regular basis, but there’s a good argument that a saturation point isn’t reached as quickly as you might think.

In some suburbs there are two or even three clubs in the same block, all happily co-existing and each with their own unique selling proposition.

The combination of a multitude of fitness modalities and a tendency to individually branded workouts has resulted in clubs that almost sit side by side.

Yet we all continue to exist, each club differentiating itself by way of genre, personality and value proposition.

With our comparatively small Australian market we tend to have a fear of competition that at many levels is unwarranted and can be unhealthy.

Competition drives innovation, but innovation should be derived from many different sources.

When it comes from just one source – price – markets and businesses are damaged, as are consumers as the quality of offerings chase the downward price spiral.

The current density of health clubs is testament to the many unique features that the modern fitness landscape offers.

Innovation and creativity has not just underpinned the fitness market, it has actually grown it, and will continue to do so.

Focusing on the 85% of Australians that don’t use health clubs, rather than the 15% that do, provides significant opportunity.

Far from being on the cusp of over-servicing, as long as we continue to create, develop, invest and innovate, the saturation point is still a long way off.

Article written by Bill Moore for the What’s New in Fitness Magazine – Autumn 2017 Edition.

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