Business Strategies Of Gyms In Malaysia During MCO 2.0
The pandemic has highlighted the importance of staying fit and healthy. Despite what COVID-19 has done in Malaysian gyms, there may be a bright future for the fitness industry. That’s according to Babel Fit chief executive Billy Waters.
Malaysian gyms took a huge hit after shutting down physical outlets during lockdowns. However, they have now learned that fitness does not exist only in the four walls of brick and mortar.
So we spoke to 4 local gyms to find out what lessons they have learned to survive a pandemic since they rushed to the 2020 AGC.
Fitness is a community driven social activity
YouTube is an endless library where anyone can learn everything. Therefore, these gyms had to design classes that could convince members and the public to choose them over social media content.
It definitely helps when your brand is built on a community mindset. It worked in favor of the KL TRIBE and FLYPROJECT gyms.
The TRIBE brand is built on the relationship between its instructors and its members. Building on this community spirit, the live lessons were an opportunity to recreate the in-person experience online.
The FLYPROJECT livestream experience also cannot be found after YouTube videos. Its CEO, Kenny Choong illustrated, “Have you ever heard your name hailed by your favorite instructors during a class? It’s the best feeling in the world to motivate you more.
As the AGC dragged on, gyms invested in production equipment to match the quality of workout videos already in the virtual sphere.
Babel began to focus more on transforming its marketing team into an in-house production team. By offering free HD virtual courses via Zoom, they saw an average of 150 participants join per day.
But Members needed equipment to recreate the experience
The 4 gyms we interviewed have also started to combine their online classes with equipment rental.
“Following feedback from our members on previous closings, one of the main concerns about not being able to participate in meaningful in-home training was due to a lack of equipment,” Billy said.
But renting heavy items like Spin Cycles and standing punching bags posed logistical challenges when transporting them to tenants.
Thus, specific partners offering low delivery costs have been selected for this right. For example, FLYPROJECT has partnered with Grab and Lalamove to help them make their deliveries on demand.
TRIBE went the extra mile by borrowing vans from friends and staff to make several deliveries themselves. This made it possible to reduce the logistics costs of the company.
Level Up Fitness (LUF) has chosen to rent only easily transportable equipment such as Body Pump Bars to accompany the free livestreams.
On the Babel side, to ensure equipment setup was hassle-free for members, staff would follow up to advise them on installation and maintenance.
But even with these virtual classes and equipment rental, the amount of income generated did not affect the current financial deficits of the 4 gymnasiums.
Speaking of cash flow …
Each of these gyms was quick to negotiate their rent with landlords and freeze membership fees when MCO began.
While none of them had to lay off full-time staff, the rest took drastic different steps.
FLYPROJECT continued to pay full-time staff, but with pay cuts during the first MGA. By the time MCO 2.0 arrived, the company’s cash reserves had mostly dried up and unpaid leave had to be used up. It was an unfortunate decision for Kenny Choong, but it had to be done.
He has so far applied for the Prihatin loan of RM500k to alleviate the cash flow needs. Their shareholders also pledged to bear their losses until normalcy returns.
“Home training packages and bike rentals help alleviate cash flow with minor income, but it’s not far from supporting our losses,” he said. And the same was felt by the other 3 gyms.
As the third month of the 2020 MCO approached, LUF was in a dire cash flow situation. CEO Kenny Sia advocated for members to pay their dues, which kept them afloat for another 2 months.
LUF has probably been one of the hardest hit gym chains as the majority of their 13 outlets are based in East Malaysia. Their gyms in Kota Kinabalu had been ordered to close three times now.
With Sarawak outlets contributing 70% of the gymnasium’s revenue, its 9 operational establishments were able to support the others throughout MCO 2.0.
Reflecting on his struggles at the 2020 AGC which we previously covered in detail, Kenny Sia said: “I’m happy to say that compared to our two previous stops we’re a little better prepared now in terms of support. to our staff, and therefore able to maintain the burn rate for an additional month. “
Virtual lessons should be complementary to physical lessons
In a post-pandemic fitness life, consumer behavior will clearly change. TRIBE does not intend to return to business as usual, but to start a new standard.
We envision that gyms will subscribe to what we call a hybrid model (in studio and online). Not all home fitness consumers who have ever invested in home equipment are going anywhere, and we think that’s because they’ve gotten used to the experience.
Sarah Chong, Marketing Manager of TRIBE.
This sentiment was also shared by Billy. “Virtual services are not a replacement for reality, but a complementary improvement that will allow us to provide a more holistic and personal experience to each of our members.”
More than ever, these gyms will need to step up their marketing efforts to recruit new consumers and increase community engagement efforts.
The rebound will come down to consumer spending. With much of the economy affected, it will take some time for consumers to come back in force.
We will continue to do our best to serve the community and hope that there is no OLS 3.0 or another pandemic in the future. We hope our colleagues in the industry will walk through this pandemic with us, as health and well-being are essential to the well-being of our people.
Kenny Choong, CEO of FLYPROJECT.
- You can check out other topics related to MCO here.
Featured Image Credit: TRIBE Boxing Studio
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