Looking at the number of Gyms and fitness centers that have mushroomed recently in
One just has to visit a gym to understand their business model and the troubles they face. To the naive, it might seem a very profitable business given the number of fitness sensitive people one finds everywhere today. The sheer number of people who sign up for these fitness centers is astonishing. But how many actually continue to attend after the first month is unfortunately a very small number. The gym I visit is frequently thronged with new faces everyday and many of them do enroll the very first day itself. But hardly any of them continue after the first few days/weeks. “Customer Attrition” at a different league! But how does one motivate people? - and that too for something as strenuous and boring as a gym? Even a discount in the rates doesn’t suffice to entice people.
The other problem is the competition. In my area alone I see some 4-5 full fledged modern gyms (price ranging from Rs. 800-3000 per month) and many assorted smaller gyms (prices ranging from Rs. 250 – 500). Even though its early days and half of these might close within a year there is still the problem of plenty, considering that the majority of their target audience is in the age group of 15-35. Because of the competition the prices too comes down. The other day after my quarterly payment was due I was offered an Rs.6500 annual fee if I could pay immediately (and of-course I didn’t miss the golden opportunity as it amounted to an annual saving of Rs.3700). But for how long these guys can sustain if they continue like this?
The investment costs for such gyms runs in lakhs (my estimate came up to approx. 10-15 lakhs for a decent establishment – equipment, music systems, AC etc) and of course there is the operational cost (cost of trainers, electricity and maintenance costs). Also there is the infrastructure cost of setting up the whole setup and paying monthly rentals. It will atleast take 1-2 years for them to break even.
One should not only have lots of patience but also the right business acumen to turn it profitable. Many things like renting out the space for aerobics/Yoga during afternoons (when the strength for actual gym is very low), offering family packages, offering special programs for reducing or increasing one’s weight, selling accessories like deodorants, energy drinks, and appropriate food items should be taken up. I hardly see these in many gyms. Also one should even try becoming an agent or distributor for the gym equipments in one’s area. Many people don’t like to go to gyms but would like to buy equipments and use it at home (atleast that’s what they hope for when they buy!) and so there is tremendous potential there. Considering the amount of competition and the problems of sustaining the customer base, one really needs to constantly innovate if one doesn’t want to shut shop.