How Celebrity Fitness Survived the Sharing Economy

KFIT is one of Malaysia's most successful internet start-ups, with a focus on the fitness & health industry, specifically gyms and group classes. In less than one year, its grown to eight countries and recently merged with two of Australia's biggest players. Like many apps catering to the sharing economy, it has disrupted the ecosystem and introduced the concept of variability.

Asia Pacific's largest network of gyms, Celebrity Fitness, has however weathered the storm and devised win win solutions to stay competitive. Intrigued, I met with Martin Darby, the CEO of Celebrity Fitness to learn more about his journey and impact on how Asian's view the fitness experience and why his business has stayed strong.

Gym Sessions
Gym sessions. Photo: Company website

You piloted Celebrity Fitness with Jakarta in 2004. Since launching, what have you and the team accomplished?
Celebrity Fitness opened it’s first club in Jakarta in 2004. Today, it's the largest independent fitness club chain in Southeast Asia with the number one position in both Indonesia and Malaysia, with 60 clubs in three countries and 16 cities. We were recognised by Frost & Sullivan as the Health Fitness Company of the Year 2015 and recently partnered with the Ministry of Youth in Malaysia to promote a fitter nation. Celebrity Fitness is recognised in the fitness industry, both locally and around the world, as an innovative, fast moving and respected regional player, raising the benchmark for personal training, creating signature dance and aerobic programs and leading the industry into new areas like loyalty reward programs, competency based training and development and member centric event activities. Our brand is an active member of IHRSA (the International Health Racquet & Sports Association, the governing body for the industry).

Fitness is a lifestyle choice, and involves a wide array of apparel and nutrition beyond the exercise. Will Celebrity Fitness as a brand expand to include products in the equipment, apparel, nutrition (etc) range?
Celebrity Fitness partners with award winning innovative fitness development and accessories, apparel and nutrition brands like IOM (Institute of Motion), Bosu, David Weck Method, adidas and Olimp to develop shop within club concepts, partner benefits and integrated education, edutainment and motivational activities. Many of these relationships are exclusive in Asia. For example in 2015 Celebrity Fitness partnered with RMT (Rotational Movement Training USA) to introduce exclusively RMT to Asia and developed jointly an RMT personal training program, an RMT stress release program and an RMT group fitness class program. These partnerships with world renowned brands ensure Celebrity Fitness members and employees have access to the latest fitness trends and associated apps, plus also compliment the in-house developed Celebrity Fitness signature programs like Celebrity Fitness Floating Yoga™ and Celebrity Fitness DNA Dance™ Programs which often come with their own branded apparel and signature products like branded yoga mats etc.

 

Martin Darby
Martin Darby, CEO of Celebrity Fitness. Photo: From file

How did you come up with the idea?
I strongly believe that fitness can be fun, engaging and entertaining. When we are engaged in an activity with others like dance, we’re dressed up like our favorite instructor, or K-Pop (Korean popular music) star - we are getting fitter but without the boredom setting in or the sense of fitness being hard work or a chore that often leads to high attrition rates in other fitness chains. Celebrity Fitness members tend to be more engaged, visit the gym more frequently and stay longer with the brand. In creating the brand the idea was that everyone (every member) could look and feel like a celebrity. That going to the gym can be more than just exercise, it can be a place of entertainment, a place to make friends and feel a sense of community.

How soon after starting did you break even?
Celebrity Fitness clubs on average break even around 2 months post opening with payback within 3 years of opening. Celebrity Fitness operates a monthly dues subscription model where members commit to 12 months but have the flexibility to pay monthly and cancel if their circumstances change. This means Celebrity Fitness needs to constantly work hard to keep members engaged and happy, and has the benefit of no expensive pre-paid membership subscription required so opening up the fitness market to those whom otherwise could not afford to join a fitness centre. Members are encouraged to purchase personal training and to upgrade their membership to allow access to clubs close to where they work, live and holiday (Celebrity Fitness has clubs on the holiday island of Bali).

How does the pricing structure work in this industry?
Celebrity Fitness offers a tiered transparent pricing structure from Merah Putih (literal translation red & white, the colors of the Indonesian flag) which allows access to all Indonesian clubs, to Premier (access Jakarta clubs only) to ONE (as the name suggests a one club membership). Staff are commissioned to sell higher tiered memberships but also to meet customer service deliverable's to ensure a member centric sales culture. We have focused significant resources on staff development through our unique SEGAR training program, the Celebrity Fitness Personal Training Academy™ and external assessments for talented management in partnership with global brands like DDI International.

What is the strategy you started off with for growth and what has it now evolved into?
Celebrity Fitness owns and operates all its clubs to ensure consistency of service and experience. Unlike many fitness centers, no centers are franchised or second class versions of the original. New club expansion and an extensive program of club refurbishments and new equipment are all funded from internal revenues. The Company is profitable and re-invests all profits back into the business.

 

Trainer
Trainer. Photo: Company website

What's the go the market approach towards customer acquisition, and the structure of consumer & corporate deals?
Celebrity Fitness is a B2C business and acquires each member one member at a time. Members are called internally ‘Celebrators’ and like any celebrity each must be treated individually and with the utmost respect and care. With fitness equipment purchases, Celebrity Fitness as a policy of purchasing the best equipment from around the world whether this be Body Bikes from Denmark, Life Fitness or Precor equipment from USA or Technogym from Italy. Celebrity Fitness places innovation, quality and service support above and beyond bulk purchasing and price. Our Celebrators deserve the best!

Amid rising wage costs, interest rates and APAC uncertainty, how has Celebrity Fitness been affected?
We're fully re-investing income within the countries traded in, so it is less affected than many from FOREX and other market factors. Being as much a hospitality and lifestyle brand as it is a fitness brand, Celebrity Fitness has avoided the negativity of economic downturns and continued to grow and expand. We've become as much part of a members' daily life as grocery shopping, taking the children to school or going to the mosque/church. Virtually all Celebrity Fitness centers are located within shopping malls, which in Southeast Asian tend to be the heart of the community where all these activities can be combined under one air conditioned roof.

What are you planning for the next quarter?
We have a strong pipeline of new clubs and expect that by the next quarter, we'll expand into new Malaysian cities like Johor Bahru, new Indonesian cities especially in central Java, new malls and at least one new Southeast Asian country. Celebrity Fitness has plans to refurbish a number of older clubs, introduce a new fitness concept and some exclusive new products from the USA and Japan.