Mathematician John Allen Paulos famously wrote, “Uncertainty is the only certainty there is…”
China’s health club operators would almost certainly agree, having spent the past three months battling unprecedented challenges at the epicenter of the coronavirus pandemic.
But despite having to close their doors for two months as the country went into lockdown, many clubs were able to survive, and indeed thrive in spite of the uncertainty, building their digital presence in a matter of weeks to dramatically transform their businesses.
Now, in April, as much of the rest of the world starts to adjust to life in lockdown, gyms all over China are reopening their doors, welcoming back existing members and also new customers they’ve attracted with their online offerings.
So how did they pull through the biggest crisis clubs have ever faced? And what can the rest of the fitness world learn from their approach? Here are 12 key insights into how Chinese clubs overcame the challenges of the coronavirus disruption.
Rip up the rule book
Across every industry, coronavirus has forced businesses to re-think their go-to-market strategy. For the Chinese clubs featured in this article, this has meant ripping up the rule-book and using coronavirus as the catalyst for a completely new approach to meeting people’s fitness needs.
Necessity has been the mother of invention. Operators who previously relied entirely on visits to their gyms to bring in revenue have been forced to reconsider their strategies. In these cases, they’ve emerged from the lockdown with complementary digital channels, more efficient systems, plus fresh opportunities to grow their revenue and customer base.
By looking at new ways to support their employees and customers during a crisis, these agile club businesses have unearthed solutions that will set them up for greater success as fitness evolves towards a new normal.
Strengthen personal connections
In a country where the average family home has just three occupants, going into lockdown instantly sparked increased demand for online communities and shared experiences, so gyms were quick to step up and forge connections with their members.
For Asia-based premium operator Pure International Group, which has seven clubs in Shanghai and two in Beijing, this meant mobilising all staff to communicate with members and send daily workouts to members through the Pure 360 Lifestyle app.
“In our closed clubs in Shanghai and Beijing, the yoga teachers, the sales team, the PTs and group ex instructors constantly kept in touch with the members,” Pure CEO Colin Grant explained in an IHRSA briefing - see www.hcmmag.com/ihrsawebinar
“You’ve got to get them engaging with members through social media, to make sure the members know we care about them, even though we’re closed. Send them daily content through social media for things like home workouts and information on how to eat well.”
Keep members engaged
The shutdown has created a new open competitive situation for members’ attention when it comes to digital and a top priority for clubs during lockdown has to be providing workout solutions to keep members engaged and moving before their heads are turned by other online fitness offerings.
Whether this is done by setting up instructor-led online classes, or by harnessing a member-centric solution where clubs can earn revenue from each sign-up, the key points are ease of execution (particularly if lockdown will present logistical challenges around filming) and the quality of the content. Poor quality detracts from the member experience and risks giving new audiences a negative perception of your brand.
Chinese boutique Shape, which operates 10 sites in Beijing, started streaming live workouts from the first day of the lockdown. Shape chose a platform where viewers can donate money in the form of ‘gifts’, with the amount raised covering the cost of the instructor, enabling them to keep their skills sharp, while still being paid.
Focus on cashflow
Maintaining cashflow is key to surviving a crisis. Clubs in China took several steps to limit their outgoings, while still honoring commitments to instructors, members and suppliers.
Pure’s Colin Grant advocates accessing support from your local government, where available, as well as exploring the possibility of rent reductions.
“We spoke to our landlords in Shanghai and Beijing about rent relief and we had some success in that area,” he said. “It varied by site, but we had a lot of good responses from landlords who understood that we were closed and still had to pay our staff – they’re our most important asset.”
For group fitness-focused gym chain Lefit, which has rapidly grown to 500 sites across China in just five years, the team’s resolute focus on short-term survival was designed to ensure long-term prosperity.
“You’ve got to allow for worst-case scenarios and forge a plan to maximise your survival through strong fiscal discipline,” says LeFit director of operations Ren Xingrong – who joined the business from e-commerce giant Alibaba in 2016.
“With coronavirus, everyone is in the same boat and facing huge operational challenges, so those who can survive the longest will be best-positioned to benefit when the industry recovers.”
Go after new revenue streams
While cutting overheads is essential during hard times, finding additional revenue streams can be just as effective in keeping you afloat, as well as adding long-term value to your business.
Boutique operator Shape started streaming live workouts on the day of the lockdown and after building an audience (which reached 100,000 viewers) by using social media platforms WeChat and TikTok to grow their brand, were quick to monetise this new audience.
The operator launched a 12-day online fat-loss training camp, where instructors host video training and coaching sessions with participants. Priced at 369 RMB (US$52), more than 1,000 people signed up, with many going on to purchase additional bespoke packages.
The instant revenue helped the business stay buoyant and created another outlet for its instructors. Shape now plans to expand these personal coaching concepts across its physical network.
“Personal coaching really complements the group workouts our boutique has become known for, allowing us to grow our audience and reach older consumers who prefer one-to-one services,” explains Shape CEO and founder Zeng Xiang.
“As well as online, it’s a great addition to our physical presence and we plan to launch this offering in 90 per cent of our sites by the end of 2020.”
Make a bold play
The online to offline (O2O) business model – where businesses build an audience through a slick digital presence and then channel them towards physical sites – is highly popular in China thanks to the ubiquity of WeChat, which facilitates the majority of consumer transactions.
As one of the leading proponents of O2O (alongside Super Monkey), Lefit already had some pedigree in online innovation, but coronavirus prompted the operator to embark on a bold new project.
The gym deployed a team to start broadcasting fitness content and within weeks the classes were attracting an average of 20,000 viewers, thanks to smart promotion via WeChat and TikTok. Lefit says its online workouts have clocked up a total of two billion views since launch.
Buoyed by this initial success, the team started an online gym platform – dubbed ‘Lefit Live Broadcasting Room’ – offering live workouts, training programmes, and coaching upsells.
With membership starting at only 99 RMB (US$14) per year, the number of paying users is “increasing exponentially every day”, according to Lefit. The chain hopes to significantly reduce its reliance on offline income, which currently accounts for 85 per cent of total revenue.
“We don’t yet know the scale of the opportunity for online fitness and whether everyone will revert to the physical gym once coronavirus fully subsides,” says Ren Xingrong, “but coronavirus has given us an unprecedented opportunity to integrate our online and offline businesses. From a state of total panic at the start of this pandemic, we’re now much more positive about the future.”
Attract new fans
While both complex and impressive, the underlying principle behind both Shape and Lefit’s strategies has been to grow their audience beyond their existing member base and use the lockdown as an opportunity to win new fans.
Prior to the coronavirus outbreak, Shape’s instructors had never broadcast live workouts and the chain’s TikTok account was dormant. Fast forward a couple of weeks and the operator was attracting 100,000 participants to its online workouts.
“We had a standing start, but by bringing in experts to train our coaches in how to broadcast, as well as teaming up with live broadcast platforms, we were able to harness multiple online channels to attract audiences towards our brand,” explains Zeng Xiang.
Grow through partnerships
At a time when lots of brands are eager for online content that helps people stay fit and build a stronger immune system, strategic partnerships are an effective way to ramp up your reach.
Spotting an opportunity, Shape launched a series of corporate wellness classes in mid-February using a freemium model and has since delivered these to more than 30 companies, bringing in extra revenue, while introducing thousands of white-collar workers to the brand.
Alibaba forged a content partnership with Les Mills China across five channels and apps to help the Chinese public stay active during the lockdown, resulting in half a million workouts in the first week of the partnership.
“Crisis in Chinese means both danger and opportunity,” says Les Mills China CEO, Jane Jiang. “Resilience and confidence have been key to the fitness industry overcoming this crisis by unearthing new opportunities.”
Manage your reputation
Whether your club is still open, closed due to lockdown, or preparing to reopen, it’s vital to manage perceptions and take clear actions to inspire confidence and make members feel safe.
“At the end of the day, it’s our job to ensure we provide a safe and healthy environment for our teams as much as all our members,” says Pure’s Colin Grant, who’s made hygiene measures a key focus.
“Perception is reality. So it was important members could see cleaners walking around the clubs actively cleaning on a regular basis. At the same time, we started communicating these measures to members, via social media and notices in the club.
“Now, we’re putting videos together documenting all the elevated hygiene measures we’re adding to ensure we’ve got a safe and clean environment.
Upskill your team
The lockdown gave operators a golden opportunity to upskill staff and clubs were quick to capitalise. They made the most of their teams’ free time, as well as the efficiencies of educating online.
Pure Fitness put on large numbers of internal training sessions for its teams, while Lefit kept its instructors active and gainfully employed by having them host live workouts and coaching sessions on its new online platform.
Les Mills China provided a raft of online training courses for instructors, attracting around 3,000 to quarterly workshops. As well as saving time and travel costs, instructors were grateful for the opportunity to fully digest content by rewatching it multiple times.
But it was Shape that really raised eyebrows, making use of the premium boutique chain’s healthy cashflow to announce a recruitment drive for 200 new instructors during the lockdown. With many clubs struggling to pay wages, Shape was able to acquire a squad of rockstar instructors, with the expectation that many of their class participants would follow them across.
Strategise around your relaunch
As challenging as things are for everyone right now, Chinese clubs demonstrated the importance of staying focused on the light at the end of the tunnel, as better days are ahead.
For your staff and members, this means keeping them updated on every club development and starting to think about how you’ll build a buzz through relaunch events once you get the green light to reopen.
“We’re working on our rebound plan,” said Pure’s Colin Grant. “The two keys to a successful rebound plan are timing and tone – it can’t be too soon and you can’t be too aggressive.”
“In the coming weeks, we’re aiming to get our suspended members re-activated, then we’ll speak to lapsed members to try to bring them back. We also need to get new guests in, so we’re looking at ways to do that too.”
Adapt to the new normal
For clubs that pull through the coronavirus pandemic and make it out the other side, there’ll be significant opportunities for growth. With health now a priority for pretty much everyone, we can expect an increased demand for fitness offerings once the lockdown lifts.
In China, a post-lockdown Nielsen survey found 75 per cent of the public planning to spend more on sport and fitness in the future, while 80 per cent are trying to eat more healthily. This has been reflected in spring festival spending, with sales of home fitness equipment up 300 per cent.
It’s too early to say what the impact will be on gym membership numbers, but logic would dictate that once coronavirus anxiety subsides, these new legions of fitness fans will be eager to escape the confines of their homes and embrace the thrill of live fitness experiences.
Either way, clubs that have grasped this opportunity to integrate their online and offline offerings will find themselves in a win-win situation, concludes Shape’s CEO Zeng Xiang.
“Despite the enormous disruption, coronavirus is a short-term pandemic and eventually things will return to normality. Most people will go back to their gyms and return to normal life.
“From our perspective, we’re glad we seized this opportunity to unlock new online revenue streams at relatively little cost. We aim to grow these, while also leveraging online as a means of attracting new customers to our clubs on a larger scale.
“We’re much more comfortable about the future now and it’s entirely possible that our online business will account for one-third of our revenue within the next two to three years.”