Friday 29 Mar 2024
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This article first appeared in Personal Wealth, The Edge Malaysia Weekly on October 7, 2019 - October 13, 2019

As the fitness trend becomes a staple of the wellness economy, practitioners increasingly expect fitness to be available on-demand. As a result, one of the thriving sectors in the wellness market is the fitness studio business.

Traditional gyms are already being transformed to incorporate group classes, but it does not stop there. The trend is also changing other industries, from the providers of fitness equipment and apparel to beauty brands and smart cities.

According to the International Health, Racquet & Sportsclub Association (IHRSA), the global health club industry’s revenue totalled US$94 billion last year, with more than 210,000 clubs in 65 countries serving 183 million members.

One of the bigger players in this sector is ClassPass — a New York-headquartered online marketplace that connects fitness studios to consumers on a “pay-as-you-go” model. Launched initially as Classtivity in 2012, the platform used to provide users a choice of classes offered by dance and fitness studios. Later, it rebranded itself as ClassPass and morphed into a subscription model because most people would not have the motivation to work out regularly without an upfront monthly commitment fee.

After securing

US$85 million in Series D financing in July last year, ClassPass further expanded into Southeast Asia, bringing the number of countries it has a presence in to 22. One of its funders was Singapore’s Temasek International Pte Ltd.

As ClassPass grew its footprint in Asia, it acquired Singapore-based GuavaPass in January. GuavaPass had 840 unique studio partners across Abu Dhabi, Bangkok, Beijing, Dubai, Hong Kong, Jakarta, Kuala Lumpur, Manila, Mumbai, Shanghai and Singapore.

While the health and wellness industry is at different stages of maturity in each country, fitness is no longer just a fad, says Jessica Ong (picture), country manager for ClassPass Malaysia. “Mature markets such as the US attract billions to the industry, specifically because it is a lucrative one. With the rising cost of healthcare and insurance, mature consumers in the health market understand that it is wiser to spend on health — which includes exercising, eating healthy and taking care of their physical health today — than it is to spend on health recovery in the future.

“Fitness has become very much a lifestyle, a cool or hip thing to do. Our concept of beauty is changing — gone are the days when stick-thin models were idolised. Today, strong is the new sexy.”

Citing IHRSA’s 2019 annual report, The State of the Health Club Industry, Ong says the Malaysian fitness market has been growing at a healthy rate of 9.5% a year since 2014 and reached a total market value of US$200.69 million in 2017. “As the world’s oldest and largest fitness and wellness aggregator company, we have been in this space long enough to recognise the potential for growth and have witnessed the explosion of the health and wellness industry,” she adds.

Apart from studio-based fitness classes, ClassPass Malaysia has included access to wellness centres. “We now have sports recovery centres, physiotherapy clinics, massage centres and spas, like the ones located at luxury hotels such as W Kuala Lumpur and Mandarin Oriental, listed on our marketplace,” says Ong.

On the funding of ClassPass, a Temasek spokesman says this is the first direct investment it has made in a fitness membership platform. When asked its reasons for foraying into the industry, the spokesman states that its investment is driven by structural trends, which are longer lifespans, rising affluence, sustainable living, smarter systems, the sharing economy and a connected world. It is also compelled by how technology is enabling the growth of companies and sectors.

“ClassPass is an example of a company that seeks to harness technological advancements to meet the needs of demographic shifts and other changing consumption patterns. We have observed that ‘fitness fintech’ is increasing in prominence, particularly as growing middle-income populations have more disposable income and are putting more focus on leading healthier lifestyles. We see this trend continuing and, in turn, enabling the growth of companies such as ClassPass to further develop their products and reach,” says the spokesman.

Despite the rosy outlook for the industry, there is some debate as to whether health and fitness clubs and studios can weather the rapidly evolving landscape as start-ups are also taking a shot at home fitness. For example, New York-headquartered Peloton Interactive Inc offers studio cycling classes and on-demand workouts online using its Peloton bike. The company combines live-streaming boutique studio cycling classes with a touchscreen-equipped indoor bike to bring workouts into the homes of riders all over the world.

However, CB Insight says gyms are throwing down the gauntlet at the challenge by incorporating technology and wellness throughout the gym experience. Luxury fitness club Equinox, for example, offers tech-enabled spin classes and a chatbot embedded in its mobile app that offers reminders. It has also experimented with tracking members’ movements while they work out.

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