Fitness brands ‘come and go’: Gym owners juggle stiff competition, rising rent and workout fads

SINGAPORE: In a span of three years, one fitness coach found himself being laid off not once, but thrice, when the gyms he worked at decided to shut.

“My first thought was ‘okay now what do I have to do, I have to secure myself a next job’,” said the coach, who only wanted to be known as Mr Tan.

There is a lot of helplessness and anxiety that comes with sudden closures, Mr Tan said, adding that he expected the industry to “fluctuate” as “brands will always come and go”.

One such brand was Ritual, which abruptly shut all four outlets in Singapore, saying last week that it had placed the company in provisional liquidation. 

Ritual founder Brad Robinson told CNA on Mar 1 that the company “never fully recovered” from the impact of COVID-19, as well as other factors like rent and inflation.

It follows a string of other gym closures last year. Fenix Fitness shut in August, while UFC Gym and Haus Athletics ceased operations in May.

Often, customers were left with unused gym packages and credits.

COVID-19

Gym operators CNA spoke to said COVID-19 was a big factor impacting their business, on top of other challenges like rising costs and competition in the fitness industry.

With more people working from home, Ritual's Mr Robinson said outlets in the central business district became a “ghost town”. The pandemic had eroded its key selling point of helping executives save time through 20-minute high-intensity interval training (HIIT) workouts.

Gym memberships were also the “last thing” on people's minds when COVID-19 struck as they were more concerned about their finances and jobs, said Mr Robinson.

"We were left with some pretty large arrears from landlords ... And the industry was very slow to return from what it used to be in 2019," he added.

Mr Wilson Low, who owned an F45 Training fitness studio, a franchise from Australia, said his gym took a “big hit” from the pandemic when people realised they could work out at home.

While some gyms later saw a brief attendance boost, it didn't last.

Turnout dropped “tremendously” when border restrictions were lifted, said Mr Tan Shun De, owner of boutique gym Axiom at Holland Village. 

The gym stopped offering indoor cycling in December to reduce operational costs as attendance for those classes was not enough to “break even”, Mr Tan said.

Some gym owners told CNA that classes need to be about 70 per cent to 80 per cent filled for them to break even.

“Once the flight gates open, people’s priorities change," said Nicholas Jacob, owner of CLMB studio, a vertical climbing gym in the CBD area.

He added that the business used to be able to predict slow periods for the fitness industry during the holiday seasons, but now it is "so hard" because people are travelling throughout the year.

COSTS AND COMPETITION

Rental prices are another key concern.

They're "always going up", said Mr See Wee Jie, co-founder of The Garage, a circuit training gym with outlets in Bukit Timah and Upper Thomson. Its latest rent in Bukit Timah had increased by about 25 per cent.

This adds to the challenge of a saturated fitness market, most gym owners told CNA.

Mr Robinson, for instance, said that before COVID-19, competition was not so stiff. Potential owners then saw a boom in the boutique gym scene between 2019 and 2020 and rushed to enter it, creating a “supply overload”, he added.

“(When) we opened in all our locations there was not a gym within kilometres … And now you could throw a rock from any Ritual (outlet) and hit five gyms," he said.

Mr Low also said his former F45 Training gym found it difficult to retain members when competition picked up during the pandemic period.

Now that he owns two gyms under the Australian Fitstop franchise, he noted about seven to eight gyms in Holland Village alone, where one of his outlets is located.

“Business-wise, it’s not the most ideal because you’re hoping to monopolise … But it’ll never be (the case), because business is so saturated, so everyone gets their own fair share of members," he added.

“It boils down to who’s going to be first.”

Locally owned boutique gyms are hit harder by competition compared to “bigger brands” which typically have more capital and a more attractive brand image, said Mr Tan from Axiom.

And because the fitness market is filled with options, customers could be “spoilt for choice” so they may not want to commit to a particular routine or gym, Mr Jacob added.

FITNESS FADS COME AND GO

Businesses may also be at the mercy of fitness fads, fuelled by social media. 

For instance, CrossFit and functional training have become more popular because fitness professionals are sharing more of such content on social media, said Mr Low of Fitstop Holland Village and Fitstop Downtown.

And while yoga was the "in thing" many years ago, pilates is now "booming", said Ms Wu Simin, founder of Algorhythm, an indoor cycling studio at Bukit Timah.

She added that customers may also have changing fitness goals, such as improving flexibility, stamina or strength, which means they might prefer to focus on specific types of workouts.

It is normal for many new brands to emerge because customers often get bored and seek variety, said Mr Tan, the coach. But he noted that there is only so much of the market share available.

While offering the latest workouts may seem lucrative, no one can predict how long trends will last, said Mr Tan from Axiom.

As to why gyms are still popping up despite stiff competition, business owners said most gyms start off as a passion project.

Prospective owners also see potential because more people are becoming health conscious. Ultimately, a gym's success depends largely on its business strategy, Mr Low said.

GYM PACKAGES AND REFUNDS

Gym owners said long-term membership packages of six months, a year or even two years are a way for businesses to "lock in" customers and cash flow. 

These packages typically offer cheaper rates per session or other perks. However, there are risks for customers if a gym closes, as with similar membership packages in other consumer industries.

According to Mr Tan, the coach, there are generally some warning signs when a gym is about to shut.

For instance, customers may no longer be allowed to purchase packages so they would not continue to lose their money. The gym may also claim that its point-of-sale system is down, he added.

So are there ways for consumers to minimise such risks?

It is important for customers to consider how long it would take to use up the prepaid sessions before committing to a package, said Mr Chia Huai Yuan, partner at law firm Dentons Rodyk & Davidson.

“Customers may also want to consider a company’s track record and read up on the company before committing to any purchase,” he said, noting that layoffs may be an indication that a gym is not doing well.

Mr Alvin Tan Yong Joon, partner at Rajah & Tann, said that if the advance payment amount is "significant", customers can also conduct a corporate insolvency search online to confirm that the company had not already been served a winding-up order.

Lawyers said customers should keep invoices, payment receipts and attendance records, which would help prove their case should they seek refunds when a gym closes.

"If the company winds up, these customers will need to file a proof of debt with the liquidator for such monies to be paid back," said Mr Tan.

"Yet, the problem is that there may not be enough money left over to pay back the customer. This is because the customer will generally be paid only after the costs and expenses of the liquidation and claims of secured and preferential creditors are paid."

There are other possible recourses, such as claiming against the company at the Small Claims Tribunal or pursuing the matter with the Consumer Association of Singapore (CASE).

Mr Tan's advice is that where available, customers may choose to sign up with companies that offer insurance or escrow arrangements that protect the advance payment.

"Some CaseTrust-accredited companies allow customers to claim back the unused portion of advance payments if the company shuts down," he added.