Coronavirus: How to relaunch your club

Hi Jane, we’ve seen mixed reports around the status of gyms in China, what’s the latest?

Jane Jiang: When the Coronavirus lockdown came into effect in January, Chinese clubs closed for two months, before starting to reopen in March, with some back up and running for more than a month now. It really varies by city. Shanghai is the furthest ahead in terms of reopening, whereas Beijing was setback when clubs had to temporarily reclose, but the clubs in the capital are back up and running again now.

Restoring confidence, firstly from the government and then from the public, is key. The first week that clubs open they see the most hardcore 10 per cent of members return. Over the next couple of weeks, this rises to 30-40 per cent with people mainly using gym equipment and personal trainers. After a month, group fitness started coming back and now we’re seeing some clubs reaching 50-80 per cent of capacity, which is very encouraging.

What were the key criteria clubs had to meet to reopen?

The Chinese government set very strict inspection criteria for clubs to meet, particularly around hygiene precautions and safety measures in place to protect members. Everyone visiting the gym needs to take a temperature test before entering and they’re expected to wear a mask, although some gyms are starting to relax this policy now.

To manage club capacity, members have to book their gym sessions (typically 80-minutes long) in advance. Between 80-90 per cent of clubs are geared up to take these reservations online thanks to recent progress made with their digital offerings, while others take telephone bookings. Overall capacity allowed depends on the size of the club and the level of social distancing required. This is typically two square-metres per person, although a few cities require up to eight square-metres.

Clubs aren’t allowed to use air conditioning due to the risks of spreading bacteria, so they need to have satisfactory ventilation and temperature regulation measures in place to address this. Some clubs have invested in expensive machines to support this, while others with the right sort of premises are simply able to open some doors and windows. Regular temperature checks and twice-daily cleans of the entire club are required, as well as the obvious cleaning of equipment after member-use. Swimming pools haven’t been able to open yet and there are still some restrictions on club showers and changing facilities.

What’s been the financial impact of the lockdown on Chinese clubs?

Most clubs in China are privately-owned, so it’s not easy to ascertain how they’re doing financially. We partner with 1,400 of China’s leading clubs and although it’s obviously been a tough couple of months, none of these have been forced to close permanently. From the reports I’ve read, it’s thought that 3,000 clubs in China have gone out of business, out of roughly 60,000 clubs in total (these figures combine conventional clubs and also small, personal studios).

We’re also seeing some clubs delay reopening, as they don’t want to start incurring full operational costs until their club can be closer to full capacity for member visits. In contrast to most global markets, the majority of Chinese gym members pay annual fees, so many clubs don’t want to take on the service costs of being open while there’s little chance of them increasing their revenues.

What’s the situation with group fitness?

With many clubs now open for over a month, we’re really starting to see group fitness come back strongly. Clubs started with group cycling programs because the bikes ensure people are fixed in position, with adequate space. Classes like BODYPUMP™ and CXWORX™ are also doing well as there isn’t any need for participants to move from their station, whereas classes that comprise a lot of running around require a little more consideration. But gradually we’re starting to see the higher intensity classes like BODYCOMBAT™ coming back as well. Participants are delighted to be back in the classes and sharing a social experience. The key thing for clubs is to crunch the numbers around studio size and social distancing requirements to right-size class capacity. What’s interesting is that the greater emphasis on booking systems for gym visits and classes means there are now bigger opportunities for traditional clubs to monetize their group fitness offering if they can heighten the member experience.

What does this look like in practice for clubs?

In the past, group fitness has always been a free service for members, but since time and space are becoming more precious, there are greater opportunities to generate revenue via group fitness, both from existing members and also from non-members like a boutique club would. The challenge they face is that many premium clubs already charge high membership fees, so there isn’t much room for additional costs on top. Meanwhile, budget clubs have a lot of scope for offering more premium services, but member perceptions of these clubs might mean they don’t see value in paying extra.

So we’re helping clubs to elevate the member offering and shift perceptions, so that when members return to the club, it feels like a completely different experience. This covers the decor and fit-out of the group fitness studios, the quality of the programs you offer, as well as the caliber of Instructors leading classes. It goes without saying that now is a great time to upskill your Instructor team and also acquire rockstar Instructors who have recently become available. I know it’s a very difficult time to justify investments of any kind, but for clubs that are willing to be bold, now is a perfect opportunity to reinvent your club and create something that members will be willing to pay more for when they return. Help them to fall in love with your club all over again.

How are clubs using campaigns and promotions to attract more members?

Many of the top operators like Pure Fitness have set out rebound plans designed to reactivate their members, bring back those who canceled in the wake of COVID-19, and also attract new people into clubs. We’ve seen lots of promotional activities – including campaigns and discounts – to entice new members into clubs. Much of this has been around incentivizing members to bring their spouse or family members to the gym with them, while early bird discounts for people to join the gym within the four to six weeks of reopening have also been common. Another interesting factor – which I’m not sure how applicable this would be outside of China – has been that lots of cities are issuing special ‘consumption coupons’. These give people a certain amount of money to spend to help stimulate the economy, and some of this can be used for fitness.

Presumably, the key to successful promotions is rebuilding confidence that it’s safe to return to the club?

Absolutely. Building confidence that it’s fine to get back into fitness is key and that’s one of the reasons for the emphasis on getting members to have their friends and family working out with them. But it goes wider than that and one of the things we’ve worked on with seven of our club partners is a big outdoor activity event to get people moving and feeling good about fitness.

We staged an outdoor event in Nanjing, China, in early May, where 400 people took part in a mass workout doing BODYCOMBAT and BODYJAM™. Obviously, there haven’t been any big activities or events anywhere in the world for the past few months, so it was incredibly exciting to bring everyone together again for a powerful live fitness experience – the atmosphere was electric! Hopefully, it can serve as inspiration for gyms in China to think big with their marketing activities to get fitness back on its feet and help bring more people into the club space. Obviously we needed to show due care for social distancing requirements and Les Mills worked proactively with the Nanjing city government to ensure the event supported the national strategy to boost public health, both physically and mentally.

Have you witnessed a shift in mindset among Chinese clubs since COVID-19 started?

As soon as we saw lockdown being brought into Chinese cities, clubs were very quick to realize the importance of creating digital platforms to support their members. Those who have been fast and smart are emerging from lockdown with new revenue streams and a much stronger club proposition. The success of live-streaming classes and coaching sessions has also brought home to clubs the importance of their Instructors, as these are truly the stars who can connect with consumers and turn them into fitness fans.

The online to offline business model – where businesses build an audience through a slick digital presence and then channel them towards physical sites – was already highly popular in China thanks to the ubiquity of WeChat, and lockdown has added huge momentum to this movement among clubs. Online activity is a great way to reach large numbers of people effectively and efficiently, while I think the isolating effects of lockdown has created a yearning for real community and social connection, which clubs are well-placed to provide with their facilities. Online to offline is here to stay and the key for clubs will be getting the balance right to best meet the needs of consumers, whether they want to be in the gym for every workout, or whether they prefer a mix of on-demand and livestream workouts as well.

With many more countries beginning to ease lockdown, how should clubs in these markets spend the next 20 days preparing?

In addition to all the key hygiene and operational obligations, I think there are three big things to focus on:

Coming back to my earlier point, it’s essential to think how your club can reassure members and build confidence among the public that it’s safe to come back. People have been in lockdown for a long time now and have been taught to fear social contact, so these are the challenges we have to overcome. Communicating the precautions and safety measures you’re putting in place, driving that sense of community, and reminding people of why they fell in love with your club in the first place are the central pillars here. There’s also a role here for Instructors to use SMART START principles, to help members rebuild workout frequency and intensity step-by-step.

Secondly, you’re going to be operating at reduced capacity where time and space are at even more of a premium, so it’s vital to look at how you can maximize use of your club and studio. This requires a well-thought out booking system so that everyone has a fair shot at a workout, as well as getting the right balance between continuing to service demand with online workout offerings, while tapering this to drive people back towards the club. Virtual fitness in your studio is a great solution for optimizing your club hours and providing cost-effective group fitness if your class numbers can’t justify the cost of an Instructor. Of course, an even bigger question for multi-site operators is which clubs do you open right away and which clubs do you keep closed until the situation improves enough to make them financially viable?

Last and certainly not least, clubs need to think long and hard about their most important asset: their people. Chances are that not everyone will be able to come back to work at the same time – both from a practical and financial standpoint – so it’s a case of working out who are the key personnel to bring back first and what training do they require to meet your new safety standards? Likewise, for those teammates that won’t be coming back right away, what does their reintegration timeline look like and how can you keep them engaged while they’re away from the club? It’s important that clubs show kindness and compassion for their teams, as many will have experienced uncertainty and financial difficulties as a result of lockdown. To help Chinese clubs to prepare, Les Mills created a range of online educational sessions to ensure Instructors were ready for the reopening. We also offered all certified Instructors a gift pack for their return to work in May, partnering with Forterra to provide a range of goodies, including vitamins and protein supplements.

What transformations do you expect to see for clubs in the medium to long-term?

While there will certainly be a lot of joy as countries come out of lockdown, it’s inevitable that we will face a significant global recession and this will present significant challenges for clubs in growing their memberships and attracting investment. Traditionally our industry hasn’t done badly out of recessions, as people tend to pare back their spending and focus on simpler pleasures like exercise. Health is now everyone’s top priority, so people will be looking for ways to get fitter, but tightened purse strings will mean they’ll be even more cost-conscious than ever, so clubs will have to offer really compelling value to merit their membership fees.

Central to this will be clubs demonstrating their unique selling point and what they can give members that others can’t. How can they merge the online and offline experience to provide something greater than the sum of its parts? Instead of seeing online as a competitor, think of it as your best friend and a vital tool for gaining and maintaining members. And the last thing is how can we as an industry work better together? Penetration rates around the world are on the rise, but there’s plenty of progress still ahead of us. A rising tide lifts all boats.