The fact that as the coronavirus spreads, Moscow fitness clubs will be quarantined, was quite expected. However, the corresponding decree still caught both owners and visitors of the clubs by surprise. It would seem that even on the evening of Friday, March 20, Muscovites, seizing the stress from the flow of disturbing news, could console themselves with the thought that on the weekend they would more than work out delivery from a restaurant on an exercise bike or group classes. But already on Saturday, news spread about the suspension of the work of fitness clubs, and at the same time swimming pools and water parks. Moreover, these objects were ordered to close their doors on the same day, March 21.
What losses are we talking about
According to the specialists of the Association of Fitness Industry Operators (AOFI), the turnover of the fitness services market is 167 billion rubles. - half of this revenue is generated by clubs in Moscow and the region. As RBC calculated, the Moscow fitness club with a mid-price pool with an area of 2.5 thousand square meters. m, a day of downtime costs 200-300 thousand rubles. These calculations take into account the sales of club cards and additional services, and they flew down as soon as it became clear that the coronavirus in Russia is a real threat. In an interview with Business FM, Olga Kiseleva, president of AOFI and head of the World Gym network, noted that by the time the clubs closed, sales in the industry had already dropped by 70%, which was "beyond any profitability." Under the threat of reduction to 600 thousand people.
© instagram.com/worldgymrussia/
“The lack of an opportunity to work and receive revenue threatens the existence of the club, because no one has canceled the lease and basic expenses,” Ksenia Nikitina, head of the My Place sports and beauty club, shares with RBC Style. - It is also impossible to cover staff costs without revenue, but dismissing staff is a bad decision, because coaches are the main value of the club. In this difficult time, the club will only be able to survive by forming an internal margin of safety from its reserve funds. In large clubs, it is mostly formed, but in small studios, most likely it is not."
Nikolay Pryanishnikov, general director of the World Class fitness club chain, believes that only the state can help business today: “We count on the support [of the state], since this is not about business interests, but about preserving the industry that works on the health of the nation in the whole ". In this context, people are increasingly recalling the national project "Demography", one of the tasks of which is to increase the proportion of people involved in physical culture and sports to 55% by 2024.
By the way, the government has included the fitness industry in the list of industries most affected by the COVID-19 epidemic, which will allow sports clubs and studios, in particular, to qualify for deferred payments of taxes and insurance premiums (except for VAT and personal income tax) and further installments for their maturity almost until the end of 2021. Meanwhile, business expects more decisive steps from the state: for example, the introduction of tax holidays. After all, the payment of deferred taxes in the absence of profit for a business that has survived quarantine can turn into a disaster. Olga Kiseleva, AOFI President, is confident that at least 70% of the industry players will be able to survive by recognizing the current situation in the country as force majeure, providing businesses with subsidies for paying taxes, deferring loan payments and freezing interest rates.debt restructuring and an integrated approach to resolving rent disputes. According to the AOFI estimates, such measures to support the fitness industry will cost the state 28 billion rubles if we talk about keeping the business afloat during the self-isolation regime, or 46 billion rubles if we talk about the first three to four months of the clubs' operation after opening.
© instagram.com/worldclassclubs/
Business rallied
In crisis situations, it is especially important to be able to negotiate not only between business and the state or business and employees, but also between entrepreneurs. In conditions when self-isolation becomes the only survival strategy for each individual person, consolidation becomes such a strategy for business.
In early April, about 70 representatives of business and entrepreneurial associations, from the Federation of Restaurateurs and Hoteliers to the Perfume and Cosmetic Association, signed an intersectoral letter to the Prime Minister Mikhail Mishustin, in which they proposed their package of measures necessary to support the companies. Among others, he was signed by representatives of such networks as World Class, Alex Fitness and X-Fit, which form the three largest players in the Russian fitness market.
Against this background, the role of industry organizations is also growing. For example, in Yekaterinburg, the Ural office of the Association of Fitness Industry Operators was opened, which united 19 brands (70% of the regional market). And the association itself launched a feedback channel for industry workers, where not only a lawyer, but also a psychologist will help them deal with problems.
In addition to paying salaries to employees, in a business interruption, one of the pain points of a business is the relationship with landlords (which themselves are bound by many obligations, from payments on loans to land taxes). Against the backdrop of the inability of sports clubs and studios to fulfill their rental obligations, the owners of the premises begin to offer them to larger players: the premises are fully adapted to the needs of the sports club - take it and use it. However, here too, the operators showed solidarity: many joined the declaration of mutual support. The clubs that signed it undertake, within 360 days from the date of resumption of work, not to occupy the space from which their colleagues left, if the lease was terminated due to the lessor's unwillingness to make concessions. In this way, the club owner community hopes to eliminate the possibility of pressure on its affected members.
Solidarity with the temporarily closed clubs was also shown by the service of per-minute payment for classes in gyms Gymmy (its users can visit many fitness clubs without buying a subscription). “The Gymmy team is also aware that after the quarantine is over, the market needs time to recover and it will be hard for everyone. But we are all in the same boat. That is why a decision was made on an unprecedented 0% commission in the first month after the end of quarantine for all partners, both current and future. The team understands that this will bring a big minus to operating profit, but now are the times: we need to stick together,”said Artur Tsykunov, co-founder of the service. At normal times, clubs receive 70% of the amount paid by the user, and the service takes 30% as a commission for attracting and accompanying customers. Although it will probably be more important for clubs tothat through Gymmy the clubs will be able to attract new members: the interaction of club managers with a potential buyer remains outside the scope of the service.
However, do not forget that not only Russian fitness clubs were left without clients: the coronavirus pandemic affects business all over the world, which means that companies in Russia have the opportunity to watch live how their Western and Asian counterparts deal with emerging problems. … And many of them are choosing online care today.
© instagram.com/xfitofficial/
Online fitness
“During the quarantine period, the service sector has only one option - to go online,” says Ksenia Nikitina. - In connection with the restriction of movement, it remains to conduct training from home and develop the direction of online marathons and video lessons. This is what all the clubs are doing now. Our My Place club is boutique style, with classes in mini-groups or in person. We provide an individual coach approach to the guest even in a group lesson. We have transferred the same format to online training. We hold mini-conferences of five people, the trainer conducts the lesson live and controls how the participants perform a set of exercises, while commenting and correcting the participants' movements. In addition, before and after training, participants can chat, share news and share their well-being. The main thing for us is to preserve the community and club format,even more so when the guests stay in the confined space of their apartment."
The World Class trainers also mastered the online format. “Firstly, we have not left our clients without the fitness they are used to. Secondly, during quarantine, when everyone is sitting at home, working at the computer, watching TV, our body simply needs movement, so everyone can join our workouts. Our schedule includes not only powerful functional workouts, but also entertaining warm-ups for children and exercises for the older generation. Everyone will find a suitable occupation for themselves. - Nikolay Pryanishnikov shares. “We received a very positive reaction, many write that they were inspired by the mood of our coaches and want to work with them not only online, but also come to our club in the future”. You can follow your workouts on YouTube and Instagram. Access to such classes is free,but soon World Class plans to add a remote personal training option to its mobile application for the clients of the clubs.
Even the I Love Supersport school, which specializes in sports such as running, swimming, cycling, triathlon and skiing, has found a niche in the online space. The programs developed by the school's coaches will help swimmers and runners keep fit, staying within four walls, moreover, under the supervision of specialists. Well, corporate programs also help the school itself to maintain its vitality: within the framework of current agreements, I Love Running also offers employees of its partners to join Zoom training.
© instagram.com/iloverunning_russia/
For some clubs, this format allows them to retain not only clients, but also the coaching staff. Even though Nikolai Alekseenko, the general director of the Rating Agency for the construction complex, believes that temporarily released coaches can go to the construction site to dig holes and carry bricks, but they are the most valuable resource for fitness clubs. Moreover, the clubs spend a lot of money on training and advanced training of their personnel. Therefore, someone does use corporate resources to help employees find clients at the time of club closings. For example, the CEO of the Bright Fit network (Yekaterinburg, Kurgan, Krasnoyarsk, Tyumen) decided to provide the 60 best coaches of the network with promotion on the company's social networks. All the money that they can earn from online classes, the coaches keep for themselves. Moreover,upon agreement with the Ural Institute of Fitness, Bright Fit personnel can take free training courses.
Will the clubs be able to return customers?
An important question that managers ask themselves. Yes, most chains have suspended their club cards pending reopening. But there is no guarantee that people will begin to return to the newly opened clubs en masse, given the unpredictability of the epidemiological situation. As well as guarantees that the club members who have returned to the gym will resume paid training or renew their subscriptions. If in a calm, as it already seems, 2019, the average percentage of club card renewals did not exceed 50%, then we can expect that in 2020, when unemployment rises and real incomes of the population fall, this indicator will be much lower. So far, clubs are trying to solve the problem by selling delayed season tickets at a discount. But it is obvious that the money raised for them will be used to somehow cover current expenses.
Against this backdrop, sales of sports equipment for home workouts are growing. Already on March 22, the day after the closure of the gyms, Sportmaster recorded an unprecedented surge in interest in fitness products. In the same week, sales of home sports equipment in Moscow jumped 33%. On the one hand, such interest in home workouts should play into the hands of the fitness industry: in addition to online training, clubs can also offer equipment rental. For example, empty cycling studios - exercise bikes. On the other hand, moving into the digital space, clubs and networks are entering a highly competitive race: there are almost more online coaches today than food bloggers at the dawn of Instagram, and sports brands like Nike and adidas are investing in the development of their own mobile apps for classes. sports budgets,which even the largest Russian chains never dreamed of. It is likely that in a month or two of home workouts, many of the visitors to gyms and group programs will understand that to maintain their shape, they only need a little free space in an apartment or a playground in a nearby park, very limited equipment and a training program, which will be helped by a virtual trainer.
© instagram.com/alexfitness_official/
Nevertheless, World Class CEO Nikolay Pryanishnikov is convinced that the clubs will manage to retain a loyal audience: “Fitness at home is different from fitness in the gym. Many people have bought exercise equipment for themselves, but as a result, the track or bike gathers dust in the corner. To achieve impressive results at home, you need a lot of equipment, it needs to be stored somewhere, and it is not so cheap now. It is more difficult to tune in to work at home, and if you come to the gym, then nothing will distract you from fitness. The fitness club has a special energy, an atmosphere that motivates and adjusts to the result. Plus, many of our clubs have pools, jacuzzis and hammams that are essential for relaxation and recovery."
One way or another, many industry professionals agree that the industry is facing major changes: it is necessary to look for new forms of interaction with the client. A community of like-minded people, developed infrastructure, personal contact with a coach - all this really remains a competitive advantage of the existing model of a sports club. But do not forget that today we are not just talking about competition between online and offline fitness. We are talking about the survival of business in an environment where the provision of services offline is impossible, and people are increasingly cutting back on their spending. So the creation of some kind of hybrid, gamified format becomes inevitable for clubs.>