Gym closures signal change in fitness scene

California Fitness' Novena outlet last Tuesday before it closed. After nearly two decades in Singapore, the gym chain shuttered its Raffles Place branch suddenly on July 16, followed by its Novena and Bugis outlets last week.
California Fitness' Novena outlet last Tuesday before it closed. After nearly two decades in Singapore, the gym chain shuttered its Raffles Place branch suddenly on July 16, followed by its Novena and Bugis outlets last week.ST PHOTO: AZMI ATHNI

California Fitness' fall comes as S'poreans get access to different, and even free, workout options

California Fitness was once hailed for making gym-going trendy when it muscled its way into Singapore in 1998. But after nearly two decades, the mega gym has closed all its outlets.

It shuttered its Republic Plaza branch in Raffles Place suddenly on July 16, followed by its Novena and Bugis outlets last Wednesday, leaving members high and dry.

But when it first opened, it redefined gyms and how they operated, said Singapore Polytechnic senior retail lecturer Sarah Lim. "With the floor-to-ceiling glass windows, people outside got the impression that it's hip to go to the gym and it's not just a sweaty guy doing weights. It became glamorous," she said.

  • How California Fitness chain buckled under weight of debts

  • February 2016 

    Chain shuts Orchard branch due to "variable business strategies and decisions". Three branches here remain open: Bugis, Novena and Raffles Place. July 12 JV Fitness closes all 12 California Fitness gyms in Hong Kong, amid debts of HK$130 million (S$22.6 million). Two senior executives are arrested. Some 64,000 members and 700 employees are left in the lurch.

    July 16 

    Raffles Place outlet closes "until further notice", but The Sunday Times learns the unit was repossessed due to gym's failure to pay its rents.

    July 20 

    Company closes remaining Singapore outlets in Bugis and Novena "until further notice". Provisional liquidators Ferrier Hodgson brought in as members scramble to get money back, seeking help from the Small Claims Tribunal and Consumers Association of Singapore (Case).

    July 22 

    Ferrier Hodgson looks for buyer to help affected members but says JV Fitness will not be sold.

But the fitness scene has evolved, as Singaporeans have grown increasingly health-conscious, and their fitness needs have changed. With more green spaces being built in the heartland, free group classes in malls, as well as gyms in condominiums, people have found cheaper and even free alternatives.

The fall of a well-known brand like California Fitness could also have been due to financial management issues. For one thing, it had been selling gym packages to members that required them to make upfront payments, often before they were utilised. These sometimes amounted to thousands of dollars for packages spanning several years.

Dr Leng Ho Keat, an assistant professor at the National Institute of Education's physical education and sports science department, said that while such a business model allows for quick business expansion, it means that the company is usingmoney from pre-payments, for services it has yet to provide.

"In order to sustain the business and to cover operating costs, it needs to continually seek new members. When there are insufficient new members or when the management of finances is not properly controlled, the risks of running out of money becomes high," he said.

But some gym chains here say they are growing and expanding.

A spokesman for True Fitness, which has six outlets across the island with plans to open one more at the end of this year, said: "We adopt a price inflation policy on a periodic basis to keep up with increasing operating costs for business viability."

The company's overall revenue last year stood at $47 million and membership numbers rose 6 per cent last year compared with 2014.

It is now survival of the fittest among gyms here in an increasingly saturated market, said experts.

In True Fitness' case, the opening of its new outlet will see a new functional training system, which includes training equipment such as suspension training apparatus and boxing rings.

And Fitness First Singapore, which currently has 16 outlets and over 40,000 active members, said it has tried to adapt to changing needs by rolling out initiatives such as a CustomFit app, a free digital training system designed to help users keep track of their fitness goals and exercise routines at all times.

Then there are smaller heartland gym chains like GymmBoxx which have been growing their market share. Since its first opening in 2010, its members have more than quadrupled and it says it has plans to open two more outlets by next year, on top of the current seven.

It offers alternative payment methods such as collecting fees from gym-goers per entry.

Mega gyms now also have to contend with new fitness businesses that do not tie users to just one gym.

GuavaPass, for instance, was launched here last year and offers its members access to classes at specialised boutique fitness studios across Asia.

Said Mr Nick Foley, president of South-east Asia, Pacific and Japan at brand consultancy Landor: "Brands need to be agile and respond quickly to changes in consumer tastes and preferences."

"New segments in the personal fitness industry have brought about disruption. For incumbent brands, the decision is straightforward. Evolve or exit," he added.

A version of this article appeared in the print edition of The Straits Times on July 25, 2016, with the headline 'Gym closures signal change in fitness scene'. Print Edition | Subscribe