National chains of low-cost, high tech self-service gyms are set for accelerated growth in 2014, introducing new nationwide brands, bringing down monthly membership fees, grabbing market share and further squeezing established middle-market names whose future may depend on reinventing themselves.

These are among the predictions in a new report by Ray Algar, 2013 review of the UK Health and Fitness Industry and an outlook for 2014, released by Brighton-based Oxygen Consulting.

A key observation is that the facilities in the 'squeezed' mid-market need an overhaul, not only experimenting with price - as Bannatyne Health & Fitness has been doing - but to justify its charges, perhaps by returning to more personal services and instructors, upgrading specialist facilities and beginning to compete at the premium end as LA Fitness is doing with its LAX premium club brand and David Lloyd Leisure with its DL Studios 'micro clubs'.

Competitive pressure is intensifying from a new generation of chains such as The Gym Group, Pure Gym and Xercise4Less, which all secured new funding during 2013 and will now be spending it opening low-cost clubs across the country. In 2010, there was just one low-cost operator in the UK's top 30 gyms; Algar's report estimates that by the end of 2014 there will be eight.

These brands are joined by new studios offering a specialised service - be it solely machines, exercise classes or indoor cycling, the latter including the new 'Psycle' concept - and taking customers from the full-service gyms by only charging for what the users really want.

Falling subscription rates and pay-as-you-go are seen by the report as possibly helping to stabilise an industry where churn is a continuing problem, with companies now no longer able try to stem losses with tough, lock-in member contracts.

Not everything in the middle is squeezed though, with the report showing how the public sector offers substantial opportunities as local authorities continue to outsource, enabling leisure trusts and leisure management operators such as GLL, DC Leisure and Parkwood Leisure to anticipate a year of healthy growth.

Nevertheless, Algar believes the industry is changing. His report not only foresees many low-cost brands displacing mid-market names in the top 30 but also looks at market share, with the mid and premium-market players seen as losing share and the low-cost operators set to enjoy a rise from 14 per cent of clubs in 2013 to 25 per cent in 2014.

The report - which divides the market into three segments: low-cost, with monthly membership fees below £20; mid-market, with fees below £50; and premium - concludes by observing that whatever the final outcome for individual brands, the UK health and fitness industry is entering a potentially fascinating year.