Competition, belt tightening take toll on fitness industry

Premium HCMC-based gymnasium chain Fit24 shut down at the beginning of this month pleading financial difficulties as consumers cut down spending on gyms and new brands offer fierce competition.

Some 4,000 members of Getfit Gym & Yoga, another high-end chain in HCMC, were surprised to receive notifications that all three of its gyms would cease operations.

Two reopened a month later following an infusion of capital by its shareholders.

Several other brands like 25 Fit, Diamond Fitness Center and S'Life Gym have downsized their operations since last year while some other well-known chains have scrapped or slowed expansion.

The fitness industry in Vietnam has been growing at an average of 20% in the last decade, according to market research firm Vietdata.

Indian consulting services provider Ken Research said the industry’s expansion was mainly driven by Vietnamese people’s income growth and increased health awareness.

Nguyen Huu Phuc, co-founder and a board member of Getfit Holdings, which owns the Getfit Gym & Yoga brand, said when he decided to turn his gym into a full-fledged fitness chain before the Covid-19 pandemic, he expected exercise to be a daily routine for youths for the next 15 years.

But after a period of rapid growth, retaining a share of the fitness market has now become a challenge for his chain, he said.

Rising costs are one of the problems plaguing gyms. Retail rents have been increasing in HCMC, eating away at most service businesses’ profits.

Many large food and beverage brands have had to close some of their stores in prime locations as shophouse owners would rather keep their property vacant than lower rentals.

According to a market report for the third quarter by property consultancy Savills, rents in office buildings, potential locations for gym chains, have also risen in some areas in HCMC.

Dane Fort, CEO of Fitness & Lifestyle Group Vietnam, which owns the California Fitness & Yoga gym chain, said operating costs, including rent, equipment and personnel, are also on the rise.

Nguyen Huu Phuc (R), co-founder and a board member of Getfit Holdings, during a discussion with his employee in 2020. Photo provided by Phuc

On the other hand, fitness services’ revenues have been declining. According to Vietdata, the industry’s revenues have fallen by 60% from 2019, when the pandemic began.

Phuc said Getfit's revenues have decreased by 45% from its pre-covid peak and business has not recovered as much as he had expected.

"In the past customers easily spent VND10-15 million (US$400-600) on annual memberships, but now many of the top players in the market are struggling to attract customers even at VND5 million."

As consumers tighten their purse strings, established chains have to compete with each other and with new brands, which offer lower prices for similar or better services.

Instead of registering for a whole year, members can now get various classes and 24/7 access to equipment, air-conditioned rooms and saunas for VND300,000-500,000 per month at the newer places.

One such chain is The New Gym, which currently has 13 gyms nationwide and offers monthly memberships for VND300,000.

In the same price range, Ways Station’s 10 locations also operate 24/7 and have a "buy three months, get one free" promotion.

Minh Nhat, who has been working out at The New Gym for four years, said: "Members from other chains are flocking to Ways Station because it offers quality equipment and allows members to bring their own personal trainers (PTs)."

Chains must also compete with the growing number of freelance PTs.

Ly Ky, who worked as a trainer at a large gym before going freelance over a year ago, noted that many PTs at several top chains have shifted to working independently to avoid the pressure of sales targets.

Customers usually follow their trainers when they quit, causing gyms to bleed members, he said.

A training session for personal trainers at a Fit24 gym in April 2021. Photo courtesy of the company

Consumers also have more fitness options to choose from, with many opting for community-based or combat sports like marathon, pickleball and trekking.

Some wealthy people switch to costlier services like private gyms, which offer a more personal and specialized workout environment.

Industry insiders said this shift in exercise habits and preferences means gym chains would struggle to survive if they do not quickly adapt to consumers’ needs.

Dane said the key to success lies in flexibility and future-oriented strategies.

Members are no longer satisfied with traditional gym services, and so chains should train specialized staff and offer more personalized and diverse ones, he said.

They could add healthcare and diagnostic services or offer useful apps to members in addition to workout spaces, he said.

The challenges faced by the industry are inevitable given the economic situation, he said. "However, this is a time for reflection and for breakthroughs to emerge."