MANY retail businesses were hit hard in the early days of the strict movement curbs as foot traffic literally vanished overnight.
Although most retailers gradually found their footing and were able to leverage e-commerce to keep up sales, not everyone could fit into the migration to online. For some, being physically present makes all the difference.
Among these were gyms.
The gym industry has been heavily affected by the movement restrictions and Evolution Wellness Group chief executive officer Simon Flint says there will inevitably be a number of closures in the sector as a result of the long periods of revenue impact, including several months of zero revenue during the mandatory closure period.
Smaller gyms were especially hard-pressed to survive, particularly those with low-budget neighbourhood operations that depend on daily income or those that don’t have membership subscriptions.
Even when they were eventually allowed to reopen for business in the middle of last year, they remained impacted by the restriction on their capacity and cost increases.
Strict physical distancing guidelines meant that fitness studios and gyms can only accommodate about half the usual number of members at any one time. This could result in members not being able to access the gym as often as they might like, come and go at their convenience, or stay as long as they normally did previously, which may lead to some members suspending or terminating their memberships.
On top of lower revenue, many of them also incurred significantly higher costs including for the provision of additional hygiene and cleanliness tools and to undertake deep cleaning and sanitising activities on premises.
“It’s frankly tragic that an industry that offers so many benefits to physical and mental wellbeing is as threatened as it is. We are thankful that the government appears to recognise that with discipline around the standard operating procedures (SOPs), well-run health clubs are a part of the solution to helping society through this pandemic, ” says Flint.
Flint says the group’s operations were significantly impacted during the various lockdown periods in the six markets they are in – Hong Kong, Indonesia, Malaysia, Philippines, Singapore and Thailand – resulting in periods of zero income while still incurring rental and staff costs.
Evolution Wellness owns the Celebrity Fitness, CHI Fitness and Fitness First brands and also acquired boutique gym FIRE Fitness over a year ago.
Going online is something fairly new for the local gym industry. But as the movement control order (MCO) was extended, fitness players started offering classes online – initially for free, until they found a paid model that worked for them.
Flint says the online classes helped their brands continue their engagement with the members and the cross-sharing of fitness content from the various brands and across countries also led to higher brand awareness and exposure, both from within and outside its existing member base.
“These pivots not only helped to keep our members engaged with their gym brand, but also kept our teams busy and gave them purpose.
“While it is not sustainable to produce content and simply give it away for free, we felt it was the right thing to do at that moment in time to build good will among the member community. Our learning and development teams also went into overdrive, using this time to engage teams in learning activities to ‘sharpen the saw’, ” he shares.
The group also accelerated the deployment of its mobile apps to facilitate class booking functions and members’ safe return to the gym upon the lifting of the lockdowns.
Taking the licensing route
As fitness players pick up pace, many say online services are here to stay and will play a bigger role in charting their growth forward.
But for Evolution Wellness, opportunities lie in partnering other entrepreneurs to grow their network.
Late last year, it launched licensing programmes for two of its brands, namely, its affordable, low-priced gym brand GoFit and the premium boutique gym brand FIRE Fitness.
“Both brands have very distinct personas and appeal to very different segments of the market.
“By licensing these two brands, we’re offering investors and entrepreneurs the opportunity to develop their own business in either one of the biggest growth segments in the fitness industry – high-value, low price or boutique fitness. With the brands that we have chosen to make available through licensing, clearly our focus is on maximising growth at both ends of the pricing spectrum, ” says Flint.
The programmes provide front-end support in establishing the business and helps ensure that investment costs are minimised with fair and transparent fees.
Flint says both these brands have the potential to scale globally and as much as they offer new entrepreneurs an opportunity to build on an established base, it also offers the group an opportunity to move into the global playing field.
Having this new licensing division will enable the group to scale faster with lower capital outlay and could prove to be an attractive value add to their portfolio.
“Given where the brands play from a product and price perspective, we expect them to make an important contribution in broadening the addressable market and growing the size of the pie, so to speak.
“While Covid-19 has stalled many entrepreneurs’ plans, we have had several conversations in play including a number of formal expressions of interest in this so we expect to see traction when things normalise, including the inking of our first contract agreements, ” he adds.
Flint is confident that the fitness and wellness industry will see a resurgence given the increasing awareness on the importance of taking care of one’s physical and mental health. Additionally, the sense of community and connection will eventually bring people back to gyms and health clubs.
The Global Wellness Institute projects that the physical activity economy, which includes the sports and active recreation, fitness, and mindful movement core segments, along with the supporting markets of equipment and supplies, apparel and footwear and technology, currently valued at US$828.2bil globally will surpass US$1.1 trillion by 2023.
Asia Pacific is expected to lead this growth, overtaking North America as the largest market and representing about 40% of all global growth.
“So, going forward we can expect continued growth in all these areas, ” says Flint.
However, he notes that the shape of the industry is likely to change as it recovers with some customers being displaced and others forming new habits and regimes.
Evolution Wellness launched its virtual studio offering to continue reaching out to more people outside their network and to cater to those still cautious about returning to the gym during this time.
Apart from managing its portfolio of owned clubs and pushing ahead with its licensing programmes, the group is also exploring growth in the areas of mental wellness and connected fitness.
In 2017, it acquired Bali-based Fivelements which offers bespoke wellness experiences. It has since gone on to add wellness centres and is in talks with several parties interested to partner them to build new retreats.
Evolution Wellness also recently invested in Australian startup Vitruvian, which has developed an adaptive strength training device driven by intelligent algorithmic technology to improve the efficiency and accessibility of resistance training.