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PureGym - Is market domination too much of a stretch?

PureGym is a UK-based chain of gyms that was founded in 2008. It is one of the largest gym operators in the country, focusing on providing affordable, high-quality fitness facilities. PureGym gyms are generally open 24/7, and they offer a variety of fitness options, including cardio machines, weightlifting equipment, and a range of classes from yoga to high-intensity interval training (HIIT). It is part of the "no-frills" culture in fitness that really started to make prominence in the mid-2000s, providing an alternative to luxury health clubs like David Lloyd and local leisure centres, for those who just wanted to focus on the core elements of a gym.

PureGym is committed to making quality fitness accessible and affordable for everyone, anytime and anywhere. So where do they create value, how can they utilise cutting edge and emerging technology to create a sustainable competitive advantage in an increasingly competitive market.

Let's look at the numbers first.

One of the strategic growth drivers for PureGym has been their investment in creating new sites and aggressively expanding. Between Q2 2022 and Q2 2023 they have opened 57 new sites, with overall revenue up 17% and profit up 39% over the same period. This is partly due to the expansion in number of clubs but also by continuing to leverage a model where CAPEX is significantly lower than traditional gyms by refusing to include auxiliary facilities such as swimming pools, saunas and catering facilities. Added to the fact that consumer research indicates that gym membership is one of the least likely areas of reduction by households, even during economic uncertainty meaning that there are opportunities on both sides of the profit coin. Also by virtue of being the market leader in the value gym space, they have benefitted the most from members "trading down" during the recent difficult economic times with a net increase in membership of 274k since last year. Importantly, although the average customer lifetime value is £322, the only existing customer segment to see any growth (18+ months with the brand showing +6.8% growth YoY) has a lifetime value of £722, showing significant room for further growth.

So how do they create the value that inspires these kind of results?

The core areas of value creation clearly lie within their extremely lean model, making their operations their key areas of competitive advantage. This is closely followed by their sales and marketing and inbound operations that effectively boost revenue and manage costs, respectively.

So what do we recommend?

There are lots of technological advancements that PureGym can leverage to increase their advantage and not only stay well ahead of the other value brands but also challenge larger commercial gyms and luxury brands for market dominance in the fitness sector. These range from geo-fencing promotions (providing on the spot offers when a member is near a gym) to blockchain loyalty programs. But we don't need to go quite so far to have a huge impact with existing mainstream technologies. Here are our top 3.

3. IOT (Internet of Things) Enabled Inventory Management

With so many gyms and a volume focused business model, PureGym will almost always have equipment that needs repair or nearing repair. And (market) leaders, anticipate. Using IOT devices in their equipment will remove the need to rely on average revolutions to understand when a treadmill is about to break down. It can even be as specific and efficient as to know which part is wearing out and order it and the repair person for delivery and implementation on the day it needs replacing with close to zero downtime, saving time and money.

2. Data Driven Personalisation for Marketing

Leveraging the amount of data that is collected through the self-service model, both in membership sign up and gym entry would allow a mass intimacy that traditional gyms would have to work a lot harder for. Understanding the training habits of individuals can allow other technologies such as AI (I tried to avoid talking about it in this one) to create content specific to each user, building a stronger affinity towards the brand.

Some others...

  • Biometric Access: Adopt biometric authentication like fingerprint or facial recognition for gym entry. This enhances security and customer convenience while collecting data on gym usage patterns.

  • AI-Powered Workout Assistants: Deploy AI assistants via mobile apps to create customised workout plans, offer real-time advice, and track user's performance, which adds a digital layer to the physical experience.

  • Chatbots for Support: Introduce AI chatbots on the website and app for 24/7 customer support, handling frequently asked questions and escalating issues when necessary.

  • Edge Computing for Data Processing: Use edge computing to process data on-premise, reducing latency and improving the customer experience in real-time workout tracking or biometric authentication.

But our top recommendations is..

1. VR Gym Experiences

This concepts involves PureGym offering a type of membership that does not include access to a physical location but rather allows the gym experience at home. With the cost of VR hardware due to fall over the next decade as production costs reduce and more players enter the market, this could be a viable option for many more people than it is now. Members could interact in many of the activities at a gym without leaving their home, provided they don't need specific equipment to participate. The sense of community that is developed in classes could be replicated giving members access to a far larger network of PureGym members.

While this may initially seem at odds with PureGym's focus on physical locations, it actually complements their value proposition of making quality fitness accessible and affordable for everyone, anytime and anywhere. With VR, they could truly offer a gym experience that's not limited by geographical boundaries, while still maintaining a focus on high-quality, engaging fitness activities.

What COULD the future look like for PureGym?

In a world redefined by the democratisation of innovation, PureGym has transcended its humble origins to become nothing short of a planetary colossus in health and well-being. The company recognized early on that the future wasn't confined to a single hub of innovation but was a global mosaic of ideas, cultures, and breakthroughs. They tapped into this boundless ecosystem, transforming from a mere gym to a decentralized empire of fitness innovation. From Buenos Aires to Bangalore, every location wasn't just a gym but a mini-think-tank, channeling local insights into global revelations.

The catalyst for this metamorphosis lay in PureGym's adaptation to the 'Post-Job' era. Gone were the days of full-time, location-tied employees. In their place, a dynamic swarm of gig-economy professionals flourished—nutritionists from Seoul, martial arts instructors from Sao Paulo, yoga gurus from New Delhi. These experts weren't employees in the traditional sense; they were project-based contributors who shared their wisdom across PureGym's ubiquitous digital platform. The effect was electrifying, fusing diverse knowledge and skills into a single, unified tapestry of wellness.

But PureGym's ace in the hole was artificial intelligence. Far from being a mere digital assistant, their AI became a co-creator, a virtual personal trainer designed not only to manage but to inspire. Leveraging real-time biometric data and machine learning, the AI curated hyper-personalised fitness and wellness plans. Need a post-workout meal that aligns with your dietary needs and local cuisine? The AI has you covered. Experiencing muscle fatigue and don't know why? Your virtual coach adjusts your exercise routine and suggests preventive measures, dynamically.

The results were more than revolutionary; they were transformative. Members weren't just fit; they were holistically healthier, mentally sharper, and profoundly more connected. Walking into a PureGym became akin to stepping into a worldwide wellness network, tailored minutely to individual needs but driven by the shared intelligence and passion of a global community. Whether you were in London or Lagos, the PureGym experience was simultaneously local and universal, reflecting the unique cultures that contributed to its making.

For the millions who stretched, sweated, and grew within the embrace of its ever-evolving ecosystem—be it in physical locations or in the limitless virtual arenas—PureGym was more than a mere gym. It stood as a compelling testament to the limitless possibilities of collective innovation, reshaping not just bodies, but lives and entire communities, in its ceaseless quest for human potential.

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