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Vietnamese Fitness Industry's New Era

General Report November 19, 2024
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TABLE OF CONTENTS

  1. Summary
  2. Current State of the Fitness Industry
  3. Consumer Behavior Trends
  4. Financial Implications of COVID-19
  5. Market Positioning of Key Players
  6. Conclusion

1. Summary

  • In the face of economic pressures and shifting consumer behaviors, the Vietnamese fitness industry is undergoing substantial challenges and transformations. The rapid expansion witnessed over the past decade has come to a halt as formidable competition and financial strains, exacerbated by the COVID-19 pandemic, pressure gym chains. Notable fitness centers like Fit24 have collapsed, while others such as Getfit Gym & Yoga have downscaled operations. Many prominent gym chains have suffered severe revenue drops due to decreased consumer spending on fitness, compelling them to reevaluate their business models and pricing strategies. Meanwhile, consumer preferences in fitness are evolving, reflecting a rising trend for health awareness and diversity in workout options. Technological innovations are also playing a significant role, with digital platforms influencing how fitness services are consumed and accessed. Key players such as California Fitness & Yoga and Elite Fitness leverage premium pricing models and sophisticated marketing tactics to retain and attract health-conscious consumers amid a transformed market landscape.

2. Current State of the Fitness Industry

  • 2-1. Impact of Competition on Market Dynamics

  • The Vietnamese fitness industry has encountered significant challenges due to intense competition among gym chains. This competitive pressure has led to the shutdown of notable chains, such as the premium Ho Chi Minh City-based Fit24, which ceased operations early this month due to financial difficulties. Other high-end chains like Getfit Gym & Yoga also faced severe disruptions, with three of its gyms closing, although two reopened after additional capital was injected by shareholders. Brands such as 25 Fit, Diamond Fitness Center, and S'Life Gym have also downscaled their operations since the previous year. The rapid growth of the fitness industry, which averaged 20% over the last decade, has now been stunted as new brands emerge, intensifying market rivalry.

  • 2-2. Financial Struggles of Major Gym Chains

  • The financial health of major gym chains in Vietnam is currently under severe strain. With a reported revenue decrease of 60% since the pandemic began in 2019, many of these establishments are finding it increasingly difficult to attract members. Prominent figures in the industry, such as Dane Fort, CEO of Fitness & Lifestyle Group Vietnam, have noted that operational costs—encompassing rent, equipment, and personnel—have risen, contributing to their financial woes. Consumers have also adjusted their spending behavior, with previously common annual membership fees of VND10-15 million (approximately US$400-600) now struggling to attract customers, as many top players in the market now have difficulty even offering memberships at VND5 million.

  • 2-3. Shifts in Consumer Spending Behavior

  • Consumer spending behavior in the Vietnamese fitness sector has shifted noticeably, significantly impacting gym attendance and revenue streams. With the onset of economic uncertainties, consumers are increasingly cutting back on their discretionary spending, notably in the fitness sector. This trend has caused gym attendance to decline, further exacerbating the financial issues facing various chains. As competition has stiffened and operational costs have surged, the ability of fitness establishments to maintain their member base has been compromised, reflecting broader changes in consumer habits in response to economic conditions.

3. Consumer Behavior Trends

  • 3-1. Health Consciousness and Lifestyle Changes

  • Consumer behavior in Vietnam’s fitness industry is evolving significantly, influenced by increased health awareness. More Vietnamese individuals are prioritizing fitness as a key part of their daily routines. This notable shift is especially prevalent among younger generations, who not only see exercise as a way to maintain physical fitness but also consider it a lifestyle choice that enhances their overall well-being.

  • 3-2. Diverse Fitness Preferences Among Consumers

  • Consumers in Vietnam are increasingly seeking diverse fitness options that cater to their personal preferences. This trend is reflected in the variety of services available, including traditional gym memberships, group classes, boutique fitness studios, and outdoor activities. Additionally, there is a growing demand for specialized programs, such as yoga, martial arts, and high-intensity training, showcasing consumers' desire for varied fitness experiences.

  • 3-3. Digital Integration in Fitness Engagement

  • The rise of technology has significantly transformed consumer engagement in the fitness landscape. Many individuals are now utilizing mobile apps and online platforms to access workout guidance, participate in virtual classes, and track their nutrition. This digital integration marks a crucial shift in how Vietnamese consumers approach their fitness journeys.

4. Financial Implications of COVID-19

  • 4-1. Impact of COVID-19 on Fitness Services Revenue

  • The COVID-19 pandemic has significantly impacted the fitness services revenue in Vietnam. The pandemic demonstrated the critical role the sports and fitness industry plays in public health, especially during social distancing measures. Despite the challenges, the health consciousness of the Vietnamese community has increased, leading to a shift in spending towards fitness and health. Reports indicate that California Fitness, which has 250,000 subscribers maintaining a significant market share, is focusing on improving member retention due to the high cost associated with acquiring new members.

  • 4-2. Consumer Exercise Habits During Pandemic

  • The exercise habits of consumers in Vietnam shifted during the pandemic. According to a survey conducted in December 2020 involving 600 respondents aged 18 and older, 44% reported exercising frequently while 19% indicated they exercise very little or never. These behaviors highlight a growing interest in fitness as part of daily routines, influenced by heightened health awareness during the pandemic. A follow-up survey in May 2021 involving 1,406 participants further analyzed the spending levels of Vietnamese consumers on fitness and exercise.

  • 4-3. Market Recovery Post-COVID

  • Post-COVID, there are signs of recovery within the Vietnamese fitness market. California Fitness and other key players have reported growth in active members and revenues compared to pre-pandemic levels. The penetration rate of the health and fitness industry among the middle class remains low, estimated below 1%, but is expected to increase to 1.25% by the end of the year and potentially to 5% over the next five years. This growth signals emerging opportunities for innovation and market expansion as consumer health consciousness continues to rise.

5. Market Positioning of Key Players

  • 5-1. California Fitness & Yoga’s Market Strategies

  • California Fitness & Yoga positions itself in the high-end segment of the Vietnamese fitness industry, utilizing a customer value-based pricing approach that emphasizes the exclusivity and premium quality of its services. The club offers various membership types with distinct fees, where the prices for membership range significantly. For instance, the Titanium membership is priced between 15,000,000 VND and 19,000,000 VND per month, providing extensive benefits akin to those of the Platinum membership, which is priced at 9,000,000 VND per year. California Fitness also employs promotional pricing strategies with seasonal discounts and vouchers to attract new members. Furthermore, the centers are strategically located in major urban areas, facilitating access for customers. Promotional campaigns heavily rely on celebrity endorsements, as evidenced by campaigns like “I AM MORE THAN YOU SEE”, which featured prominent public figures to build brand awareness and engage potential customers.

  • 5-2. Elite Fitness’s Premium Pricing and Marketing Tactics

  • Elite Fitness adopts a premium pricing strategy similar to California Fitness & Yoga, targeting affluent consumers who are health-conscious. Their membership fees reflect their brand positioning, with prices ranging from 1,500,000 VND per month for basic membership up to 31,000,000 VND for a two-year Passport membership that offers unlimited access. Elite also conducts promotional activities such as discounts and special membership campaigns to incentivize sign-ups. The company markets itself through various channels, including social media, where it focuses on increasing brand awareness through engaging content, contests, and customer feedback mechanisms. Notably, their marketing efforts incorporate public engagement and service improvement through the analysis of member feedback. Their facilities are located in high-traffic urban areas, ensuring visibility and accessibility to potential gym-goers.

Conclusion

  • The Vietnamese fitness industry's transitions are evident as economic challenges and consumer behavior shifts reshape its landscape. Significant entities like California Fitness & Yoga and Elite Fitness have adapted their strategies, emphasizing upscale services and leveraging digital integration to meet the rising health consciousness among consumers. Despite the formidable downturn due to competition and pandemic-induced financial constraints, there exists a promising opportunity for growth spurred by increased public focus on health and wellness. Addressing the limitations, such as high operational costs and reduced consumer spending, remains crucial. This analysis suggests that future prospects may hinge on innovating service delivery and enhancing consumer engagement through technology. Fitness brands must pivot towards more cost-effective and customer-centered approaches to capitalize on health trends and sustain market relevancy. As the penetration rate is poised to grow, the fitness industry could see a resurgence by aligning its offerings with the evolving needs of Vietnamese consumers. Practical applicability includes tapping into digital fitness solutions and adapting membership models to accommodate economic variabilities, ensuring resilience in future market dynamics.

Glossary

  • California Fitness & Yoga [Fitness chain]: California Fitness & Yoga is a dominant player in the Vietnamese fitness market, accounting for a substantial market share. The brand focuses on member retention strategies and has adapted its services post-COVID to meet changing consumer needs. Its operations and marketing strategies are pivotal in understanding the competitive landscape of the fitness industry in Vietnam.
  • Elite Fitness [Fitness chain]: Elite Fitness positions itself in the premium segment of the Vietnamese fitness market, leveraging high membership fees and exclusive services. The brand employs targeted marketing strategies to attract health-conscious consumers, making it essential to analyze for insights on market positioning and consumer engagement in the fitness sector.

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