Sports Direct has become something of a dominant force on the High Street, with the rapid expansion of stores, the collapse of key rival JJB Sports and the purchase of shares in major firms such as Debenhams by founder Mike Ashley creating a solid financial base cushioning the retailer from any further economic pitfalls. However, the chain has this week confirmed its intention to expand into other areas of the consumer market, with Mr Ashley announcing the launch of a budget gym chain.
The decision to expand into the growing gym and leisure market came after Sports Direct purchased 30 gyms from rival brand LA Fitness earlier this year. Yet this will simply be the tip of the iceberg for Sports Direct’s gym brand, as the retailer intends to open a portfolio of 200 gyms across the UK in the coming years.
Along with rebranding the 30 former LA Fitness sites, Sports Direct is working towards this goal, with the first flagship gym to open in Aintree, Liverpool next month. Another will open in Keighley, West Yorkshire soon after, with both gyms believed to be adjacent to existing Sports Direct retail outlets.
According to a spokesman for the brand, Sports Direct’s entry into the gym sector will “revolutionise” the market by bringing a new level of affordability into gym memberships. Upon joining, members will simply pay a £10 fee, followed by a membership fee of just £5 per month in order to gain access to facilities.
In a statement, Sports Direct said; “Our gym memberships will offer fantastic value for money in the same way that our customers have come to expect from our retail outlets and our website.
“This will be affordable fitness on an unprecedented scale – it will revolutionise the market by making private gym membership a realistic lifestyle choice for millions of people.”
Unfortunately, the move seems to have caused a degree of uncertainty with shareholders and economists, as the price of shares fell by almost 5 per cent following the announcement. Investors reportedly stated concerns regarding the cost of running a gym chain, concerned that the low membership fees would prove unsustainable, and also worried that the increased focus on leisure would move the brand away from its traditionally strong core retail base.
Yet the fact that Sports Direct’s gym chain is so closely linked to the retail aspect of the business indicates that this will not be a move away from core values. In fact, should Mr Ashley decide to include retail concessions within the gym properties, it could prove to be a shrewd method of elevating profits and expanding the retail core relatively inexpensively.
Sports Direct is not known for making mistakes when it comes to judging consumer appetite, which is how it has become one of the strongest players on the High Street today. However, with Mr Ashley dabbling in a number of different investment vehicles at present, the question is whether the brand can feasibly continue to stretch in so many different directions.
Do you think the gym chain will prove successful or will it prove to be a costly mistake?
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