Virgin Active aims to be digital fit

Health clubs were one of the businesses hardest hit by Covid-19, having been forced to close for months during the first hard lockdown. Virgin Active MD for SA Mark Field spoke to Business Day about the future of the health club sector.

Health clubs were one of the businesses hardest hit by Covid-19, having been forced to close for months during the first hard lockdown. Many have also faced members suspending or cancelling their membership as consumers adjust to a postpandemic world. Virgin Active MD for SA Mark Field spoke to Business Day about the future of the health club sector.

Can you give us an idea of Virgin Active’s presence in SA and globally? What is your footprint in SA, the rest of Africa and internationally?

Our African presence consists of 133 clubs in SA, two in Namibia and one in Botswana. Outside of Africa, we have 39 clubs in the UK, 38 clubs in Italy, 11 clubs in Australia, eight clubs in Thailand and six clubs in Singapore.

How many people does Virgin Active employ in SA?

Our Southern Africa operations employ about 4,400 people and facilitate the employment of a further 3,900 people in roles such as personal trainers and group exercise instructors.

It was reported that Virgin Active laid off 3,000 employees temporarily in August due to Covid-19. Have these employees been rehired and what is the situation now?

The business took the decision to pay all its staff as much as it could for as long as possible while our clubs were closed (March 24 to August 26 2020), and we were able to retain all staff on reduced pay until the end of June 2020. We entered into a temporary lay-off of our staff for July and part of August 2020, but continued to pay them 25% of their normal pay and the government Ters [Temporary Employer/ Employee Relief Scheme] provided further support. All of these staff were brought off temporary lay-off when we reopened and are back on full pay.

Do you still have plans to expand in Southeast Asia and possibly enter the US and Brazil given the effect of Covid-19?

Our Asia Pacific expansion plans have progressed well and today we have 25 clubs across Australia, Thailand and Singapore. We have no immediate plans for further territory expansion; instead we are focusing on strengthening our existing market positions.

GARTH THEUNISSEN Virgin Active is facing increasing competition in SA from rivals such as Planet Fitness and smaller regional gyms. Then there’s also CrossFit and boxing or MMA gyms that offer alternative exercise formats. Do you think the market is becoming saturated?

Virgin Active focuses on large, multipurpose facilities which allow us to offer a broad range of exercise experiences, including swimming, under one roof. This also allows us to offer strong value for money compared to our competitors, given that we offer the broadest range of services in one location and at one price. Furthermore, we are able to adapt our offering for the latest trends.

We see competition as being relatively stable, with new operators’ opening being offset by operators closing. If we look back at the last eight years, Virgin Active has grown from 106 clubs to 133 clubs. In terms of square metres of supply added to the market, we would comfortably be the market leader. Over the same period, our nearest competitor, Planet Fitness, has grown from 23 to 29 clubs.

Do you think the market for health clubs will be as strong post-pandemic as it was before 2020?

Going into the pandemic, we saw demand for health and fitness growing. We see the pandemic as accelerating the awareness of the importance of fitness in maintaining a healthy immune system and fighting the pandemic, as well as highlighting the role exercise has to play when it comes to mental health. The long-term fundamentals for the industry remain positive; however, we do expect some near-term consumer weakness as the economy recovers.

A further effect is that it has accelerated the digital evolution of our industry. Going into lockdown, we did not have an online exercise proposition, but we have moved fast to get one up and running. We see the continued development of our digital capabilities as a key pillar in both strengthening our core product proposition as well as tapping into a new market.

Did you lose a lot of members during the first hard lockdown or did you notice resilience during what must have been a difficult time?

Being forced to close our clubs certainly put strain on the business during lockdown. We are very grateful for the loyalty and support of our members and partners through the closure period; however, not being able to sell during the lockdown period has put us behind schedule on our growth plans. We are, however, seeing demand picking up again, which will drive growth.

What can members expect over the next five years?

The Virgin Active brand has always been known as the premium operator with the highest-quality fitness facilities. We will continue to build on our offering with the best fitness experiences inside these gyms, with particular focus on delivering market-leading, on-trend group exercise classes and personal training. Furthermore, we have commenced a digital strategy, which will allow us to better engage and service our members in a more personal way, offering them access to a range of digital programming, tools and advice, which will enhance their exercise experience and better support them in achieving their goals.

Can you tell us more about the different formats?

We operate three brick-andmortar formats: our high-end Collection clubs; our large Premium facilities; and our smaller Value clubs. This breadth of offering gives us the flexibility we need to service the market. The size of the market for Collection clubs is small, and we intend to keep these exclusive. Our Premium clubs make up the bulk of our estate and remain our go-to model; however, we also see opportunities for our value model as the market evolves.

Our range of formats and comprehensive urban footprint gives us the option to offer different features at clubs in close proximity so we can significantly broaden our local market offering. Given that we have large clubs with multiple studios, we are able to offer a broad variety of on-trend fitness programming all under one roof. We are also able to vary what we offer in the club, without having to change the format of the club.