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Body blow: Singapore fitness players still reeling from Covid suckerpunch

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The blow to the business is all the more shattering coming on the heels of an extraordinary boom in the fitness sector.

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BODY BLOW: Singapore fitness players still reeling from Covid suckerpunch.

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Workouts at WeBarre combine ballet techniques, yoga, pilates and strength training.

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“Singapore was one of those places where we saw phenomenal growth in spite of high rent and so much competition. And the overall pie was growing as demand grew,” says Sean Tan, director of True Group.

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Fit Summit founder and CEO Ross Campbell

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Darnerl Lim (right), owner of F45 Yio Chu Kang.

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Ground Zero offers strength, indoor cycling and boxing inspired workout classes.

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Collette Miles, creative & content manager at Yoga Movement.

IT WAS 11.59am on a Friday and Mabel Chua was getting ready to book a spin class at Ground Zero. It’s fastest fingers first (and perhaps strong Wi-Fi) when it comes to securing a class once slots for the following week are released on Fridays at 12pm on ClassPass, an app which gives subscribers access to multiple gyms and studios. Barely a minute after noon, slots for the class that Ms Chua was eyeing were completely snapped up.

Indeed, the demand for fitness classes remains robust amid the ongoing pandemic.

Still, gyms and studios are reeling from the significant loss of revenue during the circuit breaker period when they had to close their doors, and the impact of safe distancing measures that allow centres to operate now but limit class sizes.

According to a survey conducted in October on 64 gyms and studios here, 40.6 per cent are operating at 30 to 50 per cent class capacity, 32.8 per cent are at 50 to 70 per cent while about 7.8 per cent are operating below 30 per cent capacity. Meanwhile, 15.2 per cent can operate at between 70 per cent to full customer capacity.

The survey, conducted by Fit Summit, a business network for health, fitness, wellness and sports in Asia-Pacific, also found that 35.9 per cent of players here reported a 25 to 50 per cent fall in earnings before interest, taxes, depreciation, and amortisation (Ebitda) from the year-ago period, while 21.9 per cent of those surveyed saw a 50 to 75 per cent drop in Ebitda.

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As safe distancing measures continue to be mandatory for the industry, many gyms and studios took their classes online to make up for losses. But was this enough to hang onto members or did they lose clients to the likes of Chloe Ting and Pamela Reif as more people become accustomed to working out from home?

The fitness movement

The blow to the business is all the more shattering coming on the heels of an extraordinary boom in the fitness sector. The industry in Singapore has gained traction over the past three years, say players who attribute this to influence from the United States.

The US takes the biggest slice of the pie in the fitness and health club industry with revenue estimated at around US$35 billion across 41,370 clubs, according to data from Statista.

On a global level, the market size of the fitness and health club industry has been steadily increasing, exceeding US$96 billion in 2019.

And growth from the US quickly trickled down to Singapore, says Sean Tan, director of True Group, which has 11 gyms in Singapore.

"Singapore was one of those places where we saw phenomenal growth in spite of high rent and so much competition. And the overall pie was growing as demand grew," he says.

Social media, too, was an important factor that drove demand for fitness classes. The case of "if you didn't post it, did it really happen?" had in part contributed to the strong following among fitness studios here, says Dexter Tay, head of training and development at education, training and certification centre Fit Singapore.

That said, it wasn't just about aesthetics; people were genuinely becoming more concerned and aware about their health, says Mr Tan.

That strong growth trajectory was abruptly halted with the announcement that Singapore would go intowhat would eventually be a two-month circuit breaker.

Going virtual

With prolonged virus safety measures in place, industry players were forced to take their livelihoods online in a bid to cushion the impact on revenue.

Players like WeBarre immediately made preparations to offer online classes once news of the circuit breaker broke. "When CB first hit back in April we had to shut down all our locations on short notice, and scramble to start online classes via Zoom and launched it within days," says co-founder Anabel Chew.

Going online provided a stream of revenue for WeBarre during the circuit breaker and helped them tide over that period, she says. WeBarre was able to get 50 per cent of its client base to go virtual and attracted some new clients during the circuit breaker period.

At F45 Yio Chu Kang (YCK), owner Darnerl Lim rolled out online classes just a day after the circuit breaker kicked in. Classes were modified to ensure that they could be easily coached over Zoom, says Mr Lim.

While going online allowed gyms and studios to continue operating, prices charged had to reflect the difference between a physical and a digital class, and that consequently meant less revenue. At WeBarre, prices for virtual classes were around S$15 per class compared with S$40 for in-studio classes. At F45 YCK, online classes were priced at S$29 a week whereas in-studio classes started at around S$59 a week.

Yoga Movement also introduced online yoga classes through what is now known as YM Live.

With real time instructions, verbal adjustments and personalised cues, YM Live offers an experience similar to that of in-studio classes, says Collette Miles, creative & content manager at Yoga Movement.

James Ng, founder of online yoga platform Peculiar Yogi, saw the opportunity to develop the digital space to cater to yoga instructors who were unable to practice when studios were closed. Mr Ng launched the platform in August.

Within four months, Peculiar Yogi now has some 18 instructors on board and sees about 12 to 18 students per class, including some outside Singapore such as from Australia, Hong Kong and the United Kingdom. Mr Ng is also looking to reach the growing Chinese market.

Fit Singapore's Mr Tay says that he observed a shift when it came to the level of acceptance for virtual classes.

Had the circuit breaker lasted a couple of months, virtual offerings might have been temporary. But the circuit breaker was long enough to initiate behavioural changes, says Mr Tay.

To reach out to a growing group of people who may prefer working out at home, Yoga Movement allows clients to attend either online or in-studio classes without having to purchase a separate package.

"It makes it convenient for the working class people who aren't able to make it to the studio, but are still looking for a studio-quality sweat," says Ms Miles.

People who invested in gym equipment during the circuit breaker may also continue working out from their homes, says Peculiar Yogi's Mr Ng.

Since the onset of the pandemic, there has been a surge in demand for home fitness equipment and fitness apparel.

The home fitness equipment market is projected to register a compound annual growth rate of 2.9 per cent, according to a report by Research and Markets.

At Decathlon Singapore for instance, best sellers are at-home equipment such as dumbbell kits, benches, fitness and yoga mats, yoga blocks, and the ab wheel, says Nils Swolkien, managing director of Decathlon Singapore.

The French sporting goods retailer saw a spike in sales since the circuit breaker, he says, and in September opened a new two-storey outlet at Centrepoint to add to its 11 stores here already.

Decathlon Singapore recorded a year-to-date growth in revenue of 3.9 per cent as compared with 2019.

A temporary fix

Still, most industry players say that there is an unsubstitutable demand for physical classes given the limitations of online classes or working out at home.

F45's Mr Lim completely dropped online classes when they were allowed to re-open their doors to members.

"People prefer more in-studio training because there's only so much you can do for online classes," says Mr Lim. He adds that there are limitations when it comes to instructing a big group of peoplevirtually, further hindered by issues such as poor Internet connection.

Fit Singapore's Mr Tay points out that the intent of many gyms and studios that took to the digital space was not to generate more revenue, but rather to retain memberships.

"It's basically to stay in sight or clients might cancel their memberships if they haven't been to the gym in a while - it's a retention tool," Mr Tay explains.

Likewise, True Group's Mr Tan says that offering online classes are merely a "stop-gap measure".

"They might appease your members while you're in a complete lockdown situation. But the moment you are allowed to reopen and go back to the gym, the overwhelming preference is for people is to go back and physically do the workout," says Mr Tan.

While True Group offers online content, Mr Tan says that as long as the current capacity restrictions are not relaxed, it will be challenging to retain members. Only a handful of operators around the world have made money from online or hybrid offerings, he says.

Physical classes in demand

There is an emerging bright spot as people return to gyms and studios to work out.

"We can see that total expenditure on gym and fitness classes has returned to levels close to pre-Covid period," says Donald MacDonald, head of group customer analytics & decisioning at OCBC.

The number of transactions at gyms and studios is down about 10 per cent compared with the same period last year, according to data from OCBC.

That said, many are still struggling to make up for earlier losses. WeBarre's Ms Chew says that they are still far from where they were at last year in terms of revenue.

"We are doing the best we can to sustain our business and try and cover our costs every month. Profitability is out of the question for 2020. If we can make it through this year, I think we have done very well for ourselves," she says.

At Ground Zero, 50 per cent of customers chose to temporarily freeze their packages, which leads to a lower conversion rate of customers buying new packages, according to a Ground Zero spokesperson.

True Group is at around 50 to 60 per cent of pre-pandemic revenues with the biggest hurdle being capacity controls and safe distancing measures, says Mr Tan. To overcome the restrictions imposed, most gyms and studios The Business Times (BT) spoke to are increasing the number of classes they offer to reach out to more customers.

At F45 YCK where class sizes had to be reduced from 36 to about 18, Mr Lim decided to increase the number of classes in a day to make up for that. (see amendment note)

The studio how offers up to 13 classes a day compared with just seven from before, with almost every class at its capacity limit, says Mr Lim. 

Ground Zero is adopting the same approach to offer greater flexibility and convenience to their customers. It now offers 20 per cent more classes than before and has included more morning and lunchtime classes to cater to more customers working from home.

Yoga Movement has added over 100 classes a week across its six physical studios and online platform.

Looming uncertainty

But with the lack of indication of what Phase Three entails for gyms and studios here, some are concerned about how long they can thrive.

Some have had to let employees go or have taken on enormous amounts of debt to try and keep their business up and running, says Ross Campbell, founder of Fit Summit. "Just like any other business out there, people are doing anything they can to survive," he says.

Barely a year into operations, F45 Kovan in November announced its demise.

Others that thrived before in their Central Business District locations have had to make the decision to close, with office denizens still not fully out of work-from-home mode. Freedom Yoga, for instance, said it will shut its Cecil Street flagship studio next month.

Asked if staff were let go, True Group's Mr Tan says that they had to "restructure and streamline operations".

WeBarre's co-founders Ms Chew and Linda Tang voluntarily took pay cuts in order to retain staff and maintain their salaries. Others that BT spoke to relied on freelancers and part-timers, giving them more flexibility.

As government grants run out, the road to recovery remains long.

"There's a lot of belt tightening. So you're cutting costs wherever you can. You're trying to increase revenue wherever you can. If you're able to change your business model, you'll do that as well," says Mr Tan.

But ultimately, Mr Tan believes that increasing the capacity of facilities and relaxing the safe distancing measures is the best way for the fitness and wellness industry to help itself get back on its feet.

Mr Tan has together with Mr Campbell come together to set up a fitness alliance to better represent the industry, similar to the likes of the Singapore Nightlife Business Association and the Restaurant Association of Singapore. Mr Tan is president-elect while other members of the committee are in the midst of being finalised.

"We (the fitness industry) serve different demographics in Singapore so it's very important that all these facilities open up so that we can ensure that people can have the opportunity to get healthier," says Mr Campbell.

By representing hundreds of businesses that employ thousands, Mr Tan says that there will be a lot more weight behind their voices.

Amendment note: An earlier version of this story incorrectly stated that it was Mr Ng from F45 YCK. It was in fact Mr Lim.

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