Pricing and flexibility are our recipe for success


July 5, 2020 | By Rupkatha B

“Pricing and flexibility are our recipe for success,” states Loren Holland, co-founder of UAE-based fitness brand GymNation that is not only sustaining operations, amidst COVID-19, but also pursuing growth. This is at a time when several gyms have had no choice but shut down. What’s more, GymNation invested AED1.5 million on a brand-new concept called Blitz – a boutique high-intensity training (HIIT) studio – making it available to members on reopening its Al Quoz facility.

Currently, GymNation operates a 40,000 sqft in Al Quoz that opened in June 2018 with over 7,000 members that quickly surpassed the 10,000-mark. Soon two more branches opened in Bur Dubai spanning 30,000 sqft and at Manar Mall in Ras Al Khaimah (RAK) spread across 25,000 sqft.

Going forward, GymNation has announced the opening of five more facilities during 2020, including Downtown Dubai, Motor City, Mirdif, Silicon Oasis as well as in Abu Dhabi. That’s not all, GymNation has also absorbed members from other fitness concepts that didn’t survive the pandemic.

Flexible, no-frills model brings volume

It has been a challenging time for all businesses, including gyms, says Holland. “What has worked in our favour – pre-and-post-COVID – is a disruptive, no-frills business model. We launched GymNation to fill a gap in the local market for affordable gyms with membership fees starting from AED99 going up to AED199 with no-hidden costs. That’s quite an unrivalled proposition, as we charge a fraction of what most traditional gyms do. We have created an affordable path to fitness in the UAE, which happens to be the second most expensive market globally for a gym membership – a Deutsche Bank study indicates.”

A typical practice in the UAE is for gyms to charge for 12 months in advance using the pre-payment model. “We believe in this day and age, it’s an archaic and unsustainable model,” Holland emphasises. “We don’t bound members with long-term contracts; they can even purchase a monthly contract. We are charging a really low average revenue per member, which is compensated by the volume. We operate on thin margins, but leverage the economies of scale. That’s why we have seen impressive revenue growth and profitability since we opened in June 2018; COVID-19 only caused a brief pause.”

Success amidst challenging time

Even during the COVID-19 led lockdown period when gyms were closed, GymNation managed to sell over 2,000 new memberships for its existing facilities. “We sold to many people who didn’t have a prior gym membership. The two weeks post reopening we sold over 2,500 new memberships across our existing facilities, far exceeding the new year numbers that happens to be a peak period in our business. We have also seen a surge in members returning to our facilities. We are seeing almost a 1,000 check-in currently,” shares Holland.

Having said that, during the 70-day lockdown period, GymNation incurred losses as memberships were frozen. “As such, we had to undertake cost-cutting measures, but we didn’t let go of our staff,” Holland clarifies. “Our staff did a fantastic job of selling memberships during the lockdown even as they were working remotely. It ensured we generated some business from new sales.”

As new membership sales were being signed up during the lockdown, GymNation partnered with Les Milles, the online fitness concept that launched a streaming service called Les Milles on-demand. “We are one of the first gyms globally to partner with Les Milles, opening up their on-demand streaming service for all our members and non-members, who could attend 800 classes for free,” Holland points out.

On track for future growth

GymNation has decided to continue investing in the business through the current cycle. “While this year we are on track to open five new facilities, in 2021 we plan to take our concept beyond the UAE to other GCC countries,” Holland reveals.

When asked how the current decline in the expatriate population in the UAE will impact GymNation, Holland says agrees that such a crisis isn’t good for any business. “But in such a market condition, people will look for affordable propositions to stay healthy and fit, which works very well for GymNation. It will help us to gain market share. For instance, five-six gyms haven’t been able to reopen post-pandemic and we have offered to support to Cult.Fit and TribeFit by accepting their members free of charge for the remainder of the contract period. And, I hope a significant portion of these members will stay with us in the future.”

The fitness penetration level is likely to increase in a post-COVID world, creating an opportunity for the industry. “Overall, the fitness penetration level in the UAE is around 6%, which is 16% in the UK and 20% in some Scandinavian countries. So, there is enough growth opportunity and a long way to go,” Holland concludes.

 

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