#1.2 The Strange Economics of Local Gyms in India

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One thing I have realized while looking at gyms in India is that this market is extremely unorganised

And the market dynamics change every few kilometers 

Tried doing some rough analysis based on my observations

Gym No. 1
Location: Metro City - Gurgaon
A local gym (unorganized player)

Financial Estimates:

Clientele ~ 80-100 (based on daily footfall)
Membership fees - on average 1,500 per month
Estimated Revenue - 90 x 1500 = INR 1,35,000

Profitable?

Expenses:
The heavy weight are the fixed expenses.
Rent ~ INR 1,00,000
Employee cost ~ INR 15,000-20,000
Then there's Electricity expenses, maintenance etc

Thus, it is very unlikely that the gym is profitable based on normal clientele and membership fees.

But they also earn from other sources like:

Commission on Supplements
Personal Training
The resolutioneries - those who pay for the gym but rarely comes, those who pay for a 12-month membership, but doesn't come even for 12 days in the year.

Porter analysis:

1. Competitive Rivalry - surprisingly low
The nearest gym was of Cult Fit, which was highly overcrowded.

2. Threat of New Entrants - High
Anybody who is willing to invest 20-50 lakhs can start his own, however low chances of profitability can be a barrier to entry. But also consider that these trainers are very passionate for opening a gym.

3. Bargaining Power of Customers - Moderate
Instead of bargaining, they push for longer membership tenure for a discount.

4. Bargaining Power of Suppliers - Moderate
Suppliers like equipment vendors, trainers - there are many in the area around like in Delhi, so their bargaining power is moderate.

5. Threat of Substitutes - Very High
These can be substituted by online fitness providers, calisthenics, sport activities, home workouts and other ways to stay fit because that's the goal.

As I couldn't find many raw and real-world insights around this industry, why not you share your experience in the comments below?

It would be interesting to know the same

Will be summarizing the best insights and observations later into another post.

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