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Gyms in stores: workout winner or fitness flop?

As Sports Direct, JD Sports and now Debenhams launch on-site fitness centres, Drapers investigates whether this growing trend set to continue. 

Department stores and other retailers are creating gym spaces in their branches in an attempt to offer a point of difference, increase customer footfall and dwell time, and create new revenue streams in a growing sector.

Research published in March by consultancy Allegra Strategies found the health and leisure centre sector has been the fastest-growing industry in the UK over the past five years. The fitness club market alone is worth an estimated £5.1bn.

Sports Direct first indicated its intention to launch a chain of 200 low-price gyms, attached or adjacent to its retail stores, in 2014. Four years later, and after acquiring several LA Fitness sites, the company now has 32 gyms, run under the Sports Direct Fitness or Everlast brands.

JD Sports also launched its first fitness gym in 2014, in Hull. It now has 20 to its name around the country, and a further four are planned for the near future.

And this week, Debenhams reaffirmed its intention to introduce gyms in store, thanks to a partnership with fitness chain Sweat. The first is due to open in Sutton in south-west London by 10 September. Further outlets are planned for 2019 in Manchester and Bristol.

It is a trend that has also proved popular with retailers in the US – Bloomingdale’s, Saks Fifth Avenue and Urban Outfitters all offer in-store fitness classes.

Malcolm Pinkerton, vice-president of retail and digital insights at Kantar Consulting, says the introduction of fitness spaces is part of the experiential shopping trend bricks-and-mortar stores are using to compete with online retailers.

“This is an ongoing manifestation of a trend we’ve seen for some time, which is retailers repurposing their space,” he explains. “It’s all part of building a connection with the customer to lock in their loyalty. It might be a bit of a loss leader, but if you can get people in … you then can upsell different products, services and solutions.”

Improving footfall levels in store will undoubtedly be on the minds of Debenhams’ executives, who issued a third profit warning for 2018 in June, citing “increased competitor discounting and weakness in key markets”. The retailer plans to automatically enrol gym members in its Beauty Club rewards scheme, and will offer incentives and discounts based on the frequency of their gym visits.

“Experiential retail is definitely a way for retailers to drive footfall into stores, particularly as the UK high street has been so challenging,” Mamequa Boafo, senior retail analyst of Global Data, says. “But I think it has to be relevant to the retailer’s main proposition or its customer base.”

She believes the addition of gyms by Sports Direct and JD Sports “makes perfect sense”, but Debenhams’ fitness collaboration feels “disjointed”: “We’ve seen players like John Lewis who haven’t incorporated gyms into their retail estates but they have included a lot more services, such as beauty treatments, nurseries and home designs and I think that makes more sense … [it gives retailers] the opportunity to upsell their core proposition.” But, she admits, gyms are a great way to fill redundant space in store.

This may be the overriding intention behind such a decision, says Jonathan de Mello, head of retail consultancy at property firm Harper Dennis Hobbs: “Retailers that have portfolios of large units are finding they now have too much space, given falling consumer spend and the rise of online shopping. It provides an opportunity to bring in complementary retailers or other use classes, such as cafes and restaurants, which gives shoppers more reasons to visit, generates additional footfall and increases dwell times, as well as creating an additional source of income from concession fees and rents.”

The Drapers Verdict

In turbulent times, many retailers are keen to offload unwanted store space by bringing concessions and partners onboard to help pay rising rents and business rates. While cashing in on the growing athleisure and fitness movement may seem attractive, retailers should ensure the addition of experiences such as gyms, resonates with their core shoppers to ensure they not only boost footfall but also drive the all-important additional spend.

 

 

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