Covid-19 second wave: Industry players paint a grim picture for the gym sector

Prudhvi Nimmagadda, who owns a gym chain in Bengaluru, operating six centres under the brand name F45 Training, said that the second wave of Covid, which has led to gym closures, couldn’t have come at a worst time. “We were allowed to reopen last September, and we saw 60-65 percent of our pre-Covid business coming back in the January to March period this year. But now it is like going back to the drawing board,” he said.

Revenue has completely dried up, said Nimmagadda, adding that negotiations in terms of rents are harder this time.

“At the beginning of this month, gyms in Karnataka were asked to shut for two to three days. The utilisation of gyms from 70-75 percent went gone down to 50-55 percent due to the confusion and later fell to 30-35 percent. Also, the new-lead funnel has completely dried up,” said Nimmagadda.

An industry under stress

Prateek Sood, Director, Grand Slam Fitness, a chain of fitness stores, also painted a grim picture for the gym industry. “The biggest struggle is outlook and lack of optimism. Last year, it (the coronavirus) was new and everyone was thinking that it is a wave and will pass. But now, people think it is here to stay. In the last 15 days, the conversation has shifted from fitness entirely. The current objective is to stay safe.”

“Last time, during the lockdown, people wanted to become a better version of themselves; right now, that’s not the case at all. Hence, the gym industry is down in the dumps,” he added.

Sood, who had plans to start three new gyms this year, said new investments in the gym space will drop. “Last year, people had the money so there were investments in the space and new gyms were opening. But now, because we haven’t made money for a year as an industry, new gyms coming up will reduce dramatically. So, the total number of gyms available to people will reduce,” he added.

Focus on staying afloat

Currently, players in the gym industry are bystanders, said Sood, and noted that the focus is on sustainability rather than improvements or better sales. This is because gyms are shut in markets that contribute the most in terms of revenue.

Concurring with this view, Neha Motwani, Founder and CEO of Fitternity, a gym aggregator, said: “When Maharashtra was shut down, 60 percent of the gyms on our platform were impacted. Now, with gyms shutting down in markets like Delhi and Bengaluru, most of the gyms on the platform are not operational.”

Fitternity has a network of more than 5,000 fitness centres across 20 cities in India. Recently, the platform was acquired by health and fitness firm Cure.fit, which has more than 200 of its own Cult gyms. Of the 200 gyms, about 150 had reopened after the pandemic forced them to shut down for five to six months last year.

Motwani said that the shutting down of gyms has come at a time when the industry was seeing a recovery in the January to March quarter. “Purchase behaviour was slowly coming back. Footfalls were at about 45-50 percent and recovery of sales was finally starting. But with the lockdown, all of this is impacted.”

 Online fitness fatigue

With the retail business of gyms getting impacted, does this mean virtual fitness is trending again? While Motwani said that people have started opting for online fitness sessions, there is fatigue for such offerings.

The biggest struggle is outlook and lack of optimism

- Prateek Sood

“It (virtual fitness offerings) wouldn’t even be a fraction as virtual revenues cannot stack up to physical (retail) revenues. A gym or a studio that has invested in trainers and equipment would be doing Rs 4-5 lakh in sales a month. But by offering virtual fitness, they would see only a small percentage of revenue coming back,” she said.

According to Motwani, virtual fitness offerings are more apt for celebrity fitness trainers, who run activities such as the 21-day challenge. A branded gym wouldn’t want to look at such programmes, she added.

Both Nimmagadda and Sood had similar views on virtual fitness initiatives.

Nimmagadda noted that in 2020, because the situation was new, people were more supportive and it was easier to switch to online offerings. In July and August last year, he saw 70-80 members opting for online fitness classes. But this time he says he has not seen such traction for virtual fitness programmes.

“Now, there are free services available that people are opting for. So, as a gym owner, online is not appealing.”

Adding to this, Sood said: “Nobody is making money and nobody is interested in paying for virtual fitness offerings. It is not a concept that is sustainable for companies and only works for trainers, who will make money from their homes. Last year you saw people looking for online classes but now nobody cares.”

 Hope on the horizon

Despite the struggles, Motwani is not losing hope and believes that after lockdowns are lifted, people will return to gyms.