The winter of the fitness industry

Winter is always the weakest season for the fitness industry anyway - the coronavirus outbreak makes the situation even worse. Gyms are locked, and reopening times delayed in line with the city’s recommendation. While some of them have already reopened, most people prefer to stay at home, avoiding public places. The fear from the virus outbreak seems ready to inflict a lasting impact on the business. Conservative estimates suggest the industry will return to normal at the end of April. However, the revenue in February and March counts for more than 80% of the total revenue in Q1 for a traditional fitness company, according to Bian Guangming, the CEO of a Chinese fitness company, Nirvana Sports (青鸟体育). The best timing to recover the cash flow is off, and the loss is incalculable.

Among all the fitness companies, Keep is one of the least affected. Although having more than ten ‘Keepland’ offline stores, most revenue comes from other channels, including advertisement, sporting goods, and membership. Another leading company in the industry wasn’t that lucky. SuperMonkey, China’s ‘staffless’ gym startup, has 116 gyms across eight different cities in China. The virus delayed the opening of its locations and brought a negative impact on the customer flow after the gyms reopened. According to the report by Founder Radio (蛋解创业), every SuperMonkey gym can generate CNY 0.3 million revenue per month approximately. Revenue loss caused by the virus crisis is likely to be severe for the company. Mercifully, they avoid some labor costs as the gyms are automated. Combined with its great customer acquisition capacity and friendly relationship with the property company, SuperMonkey can always get the ideal price for its store rent. According to the CEO of SuperMonkey, the company is now negotiating with the property company for the reductions on rent during this extraordinary time. Even so, the rent cost of more than 100 stores, in addition to the salary cost of more than 200 coaches, is an ordeal for the company.

New attempt

As the offline section is impossible to recover within a short time, these innovative companies try to find another way out and have started to look at the online market. The coronavirus crisis has strengthened people’s awareness of fitness, and people are now considering physical activity as a way to prevent disease. Due to the temporary lock-out, a massive demand for online fitness has risen up. Keep, which offers a variety of training programs through its mobile app, saw its ranking in the country’s iOS App Store shoot up from 75th to 51th within a week, according to App Annie statistics. China’s top fitness platform also brought all of its offline classes online, live streaming them for free on Douyin, the Chinese version Tiktok. Not only are they helping people to stay fit and healthy, but the company also gained more traffic and exposure during the crisis. By the end of February 5, the total views of online courses reached 5.65 million, and its PCU achieved 0.16 million. All the live-streaming and video items are currently free, and the offering of live-streaming will last at least till the end of February. Another beneficiary of online courses is SuperMonkey, which introduced live-streamed lessons right after the virus outbreak. Its free online classes have more than 2 million views each on Weibo’s Yizhibo. Due to this windfall, the company has begun to consider live streaming as a key long-term service, as it is valued by the customers. On February 10, SuperMonkey announced a new lesson product, which is a two-week online training course, selling at CNY 399. So far, all the courses have sold out. It seems that the online market is not only a way to weather the epidemic, but also a potential opportunity waiting to be explored.

The future of online fitness?

Whether online fitness is the future of the industry is controversial. We analyze a few pros and cons for your reference:

+ Online training is more accessible, which removes the barriers of location. People can work with a coach who operates out of any corner of the globe from the comfort of your home or your local gym.

+ Online training is more affordable. In the US, where the fitness industry is mature, most online training services are more affordable than the local face-to-face trainer.

- Online training is limited. One of the main problems with online training is the inefficiency of guidance. When the training is not face-to-face, the coach can hardly differentiate between correct movements and wrong ones. Moreover, it is difficult to correct the action without a physical demonstration.

- Online training is riskier. The trainer at home is not able to receive adequate treatment through online training in the case of an emergency. 

Overall, the demand for online fitness is considering. The entire fitness sector is ever-increasing, and the global market size is predicted to reach USD 147.9 billion in 2023, with a 6.4 % increase from 2018, according to the Global Wellness Institute (GWI). However, the growth in consumer spending on physical activity will not guarantee increasing participation. The fitness market size in China ranked the 4th in 2018 by GWI, while its fitness participation rate, only 0.8%, is much lower than any other country on the list, except India. There are enormous opportunities to grow the business, and online training seems to be a possible way of achieving this goal. GWI researched and reviewed dozens of national and cross-country surveys, which revealed the major motivations and barriers to physical activity worldwide. Among both adults and youth, the top reasons for not engaging in physical activities are lack of time and lack of interest. Online training can potentially provide the perfect solution for such inactive people. However, for the moment, there are many problems that need to be overcome, including the lack of interactivity, safety issues, and a scarcity of scenes. Virtual reality may be a potential solution to keep members motivated, but the fitness companies should think of more.

The coexistence of challenges and opportunities

These are challenging times for Chinese companies, especially for companies with substantial offline industries, but the crisis is temporary. With people spending more time online, this is an excellent opportunity to concentrate on building brand equity by engaging with the consumer and providing them with quality content. It is predicted that, once it is safe to be outside again, people will be desperate to get out of the house, causing a surge in demand for offline services, including fitness. Now it is an excellent time for fitness companies like Keep and SuperMonkey to try new things - and we are curious about what diversions will they bring us after the winter.