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The Real Reason Behind The Fall Of True Fitness ?

The Real Reason Behind The Fall Of True Fitness ?

why-true-fitness-is-closing-down-in-malaysiaReally sad to see another gym chains leaving Malaysia after California and Gorgeous fitness.

According to the todayonline.com

” The past few years have proved challenging, and unfortunately the businesses are no longer financially viable due to evolving market conditions, ” the statement (http://www.truefitness.com.my/) said without giving further details.

Lets compile all the latest fitness news in Malaysia ,so that we can have a better look into the fitness industry over here in Malaysia .

FIRST ,

Closing down of Gorgeous Fitness

SECOND ,

Merging of Celebrity Fitness and Fitness First

THIRD ,

Closing of True Fitness

What do all these chains have in common ?

They are in big scale ,

Serving the mass market,

High overhead .

So, the 2 big gym players decided to merge ( celebrity fitness and fitness first) ,and True Fitness are force to fight the battle alone .

Case study 1

FAILED BUSINESS MODEL 

Lets go a little bit deeper . Not too sure whether do you guys still  remember about the membership payment of some of the big gym chain such as , California ,True Fitness and Gorgeous Fitness ? Their membership is paid in a big lump-sum in advance . Example a 2+1 membership.So basically you buy 2 years membership and you will get 1 year free.But you need to pay the 2 years membership in advance . And what is the consequence of adopting such membership business module ? Running out of cash flow in the long run , if not managed properly .Three of these big chain gym adopted similar membership module ,and they slowly dying off , starting from California Fitness,Gorgeous Fitness and now True Fitness.Coincidence?

According to Dr Leng Ho Keat, an assistant professor at the National Institute of Education’s physical education and sports science department,

Statement 1:

”  that while such a business model allows for quick business expansion, it means that the company is using money from pre-payments, for services it has yet to provide . ”

Statement 2:

” In order to sustain the business and to cover operating costs, it needs to continually seek new members. When there are insufficient new members or when the management of finances is not properly controlled , the risks of running out of money becomes high . ”

Case study 2

SUPPLY AND DEMAND

Total gym chains In Klang Valley,

Chi fitness 14

true fitness 4

anytimefitness  15 (total 16 1 in Johor)

fitness first 13 clubs

celebrity fitness 23 clubs (total 26 ,2 in JB ,1 in Seremban)

jatomi 2 clubs(total 4 ,1 in johor ,1 in Penang)

TOTAL =71

There are alot more small boutique gyms , studio , concept gym and hardcore gym benching all around klang valley . For this article sake,we only look at the big boys .

Ok we have the supply ,what about the demand ?

 

Let’s look at the total population around Klang Valley.

Selangor =6.298 million

Kuala Lumpur =1.787 million

(as at 2016 from Jabatan Perangkaan Malaysia)

Total of population in Klang Valley is about 8 million of people.However ,this data included the age from 0-85+ . Lets dig deeper .

I am assuming most of the membership is purchased by working adult,this is to better identified the general market with the people that has the buying power.We finish form 5 at age 17, then go uni for 4 years,so we graduated at the age of 21 and we start work at 22.And lets say the purchase power decrease at the age of 60 ,due to pension ,sickness,and most of the older adult would prefer to walk around the park instead of joining the gym .So the range of membership we are targeting is 22-60.

 

The total population that could afford a gym membership in Klang Valley.

Selangor =3.8866 million

Kuala Lumpur =1.127 million

(as at 2016 from Jabatan Perangkaan Malaysia)

So ,there are a whopping of  5 millions of working adult that age from 20-59 in Klang Valley .

NOTE:The estimation of population chart that  we can utilize from the Jabatan Perankaan Malaysia is from age 20 -59 .

WAIT STOP!

According to the labour force survey report in Malaysia in 2016,the unemployment rate in Malaysia for the age 15-64 is 3.4% with employment participation rate of 67.7% .The balance 32.3% of working age population were outside labour force due to studies ,house work,retirement ,disabilities or not interested to work

So,the total population that actually are working is 64.4% (67.7%-3.4%) .

Note:For the sake of easy reading and research, we will ignore the age group from age 15-19.

So total will be 64.4% X 5 millions(total population in klang valley) =3.22 millions

3.22 millions ! 1 people give you one ringgit you already rich like Fxxk! However,according to a  post on fitness first ,the membership penetration rate in Malaysia is only 0.8% as stated on 2017 feb 23 !

Not too sure how they get this number and what is the variable that they included.Lets assume that 0.8% is really the number and is based on the data that we have above. Let’s do the Math :

0.8% X 3.22 millions =25760

ONLY 25760 Malaysian has membership?HOLY CRAP

And this 25760 Malaysian need to be divided into below gym chains?

Let’s do the math again.25760 divided by 71 ( total big chain in Malaysia as shown below in 2016) = 362.8

Chi fitness 14

true fitness 4

anytimefitness  15 (total 16 1 in Johor)

fitness first 13 clubs

celebrity fitness 23 clubs (total 26 ,2 in JB ,1 in Seremban)

jatomi 2 clubs(total 4 ,1 in johor ,1 in Penang)

CRAP! 362.8 of members each club! lol

If 0.8% is really the number , a better business module really need to be be considered .362.7members ???Seriously ? ahhahaha still cant stop laughing while writing this.

If 0.8% is really the numbers , there are a lot of untapped market that we could look into it.

Anyway,above is just a brief breakdown of the fitness market in Malaysia .When come to business ,there are alot more things that we need to be considered .Do your due diligent,check every details, do market survey,get data . Do not rush into the market like a headless chicken , or else you will get slaughtered !

 

Is not about what business you are doing,is about how you make the business works.

Oh ya , if you are the poor fellow that stuck with true fitness membership in Malaysia , apparently you could redeem your membership at CHI Fitness from 3 July 2017 onward.

the real reason behind the close down of true fitness

Above announcement was made straight after TF closed all their branches in Malaysia . However ,according to says on the 12th of July ,above statement is just a BS until everything finalized.More TF orphanage cruising around KL.According to Says:

While CHi Fitness added that True Fitness was in the process of purchasing 2,000 monthly passes, they have not finalised the sale

  • “True Fitness has approached CHi Fitness to purchase 2,000 monthly passes to CHi gyms in Klang Valley (except Nexus and Bangsar Shopping Center branches) to be passed on to their members. As of now, we have not finalised the sale,” read the statement posted on CHi Fitness website.

    Additionally, The Star Online quoted CHi Fitness operations director Ashley Paulus as saying that, “We were never approached or offered to take over their membership, their database or to honour any of the lifetime memberships with True Fitness.

    “We only have control over providing month-to-month memberships and making sure that good care is taken of our members when they come to our gym.”

     

Are you a member of True Fitness? Or a business person?

What’s your reaction to the fitness chain shutting down its business in such shocking manner?What is the business module do you recommend to better run a fitness business in Malaysia?

You can comment below to share your thoughts with us.

 

 

41 comments
  1. Jake

    I signed up as a fresh grad looking to kill time for the evening jams while doing full time employment in PJ. As I’m new to the working world I started mildly at a one year membership after a month trial. The outcome was good; I have a steady job and this gym adds value of me staying in PJ and not return home in a jam.

    The aftermath started to make sense as the puzzles joined to make a statement. The gym is saving costs by discouraging its consumers. It started when by around Dec 2016 the gym decided to cordon off the Ground floor and did not provide any reason to this, other than a surprise. The surprise turned out to be an irrelevant Korean BBQ restaurant. The second puzzle was when the sauna coincidentally closed off out of ordeer. We didn’t know anything other that the excuse that it’s broken. And yet i constantly paid Rm159 monthly for TF services.

    The final puzzle was when a week prior closing yesterday the gym was entirely running on makeshift fans and no longer air-conditioned. My gym trainer told me in secret that the company has yet to pay her salary for months. TF promised to repair by Friday June 9, and so I just endured and swam instead of treadmill.

    That would be my last time swimming as the gym abruptly closed and issued letter not addressing why the sudden closure, why did it not obey its T&C of informing in 30days advance, etc.

    I honestly felt it was good effort on my side in seeking a meaning in life through TF. I lost 12kg and felt much happier under its program and services, but since this story came out I felt like it was my personal efforts more than the gym that got me this far. By now, I am apathetic to the gym and the conspiracy that it’s a fraud. All I beg for is the gym to stop its monthly transaction as my bank informed me the it can’t cease the transactions.

    1. wenghonnfitness.com

      Hei Jake,really sorry to hear what happened to you..This is something that out of you and my control.However,great effort of losing 12kgs.And i sincerely hope that you could continue living a healthy lifestyle and inspire others to be a better and fitter Malaysian.

      Coach Weng

    2. Yeong

      Hi Jake, if the monthly RM159 is used to pay off an installment, much like an Easy Payment Scheme, I think chances of it being cancelled would be low, since TF has already taken that full final amount from the bank when you signed up and you’ll have to serve the monthly installment till the ount is paid off. If RM159 is not a monthly installment but regular membership then it’d be illegal for TF to keep on charging.

      Used to be a TF member myself many years back. I felt its membership scheme was way too dodgy hence decided not too renew when it expired.

    3. Kim

      Just a minor comment. You calculated the addressable market to be 3.22 million, which looks reasonable. But when True Fitness says the market penetration is 0.8% I doubt they had used your formula, but were rather talking about 0.8% of the total population.
      I think you are right in why they got into trouble though. Too many great options on the market now for people to commit to these kind of membership terms.

    4. Isaac Lim

      I think they can adopt the Air Asia business model.

      Create a differentiation between basic and premium or maybe premium plus membership. Towel services, classes, and also discounts for healthy food and beverages (collaboration with other companies).

      Another thing is make your words count. When you say the offer is limited, make it really limited. Those 2+1, 1+1 or whatever membership is good, it brings you cash in advance. But limit them, creating a scarcity while generating huge cash flow in short term and also long term cash flow.

      Price adjustment has to be done too in order to penetrate the market. Imagine a fresh grad with a 2.2k salary. After EPF would be only 2k, RM200 is 10% of his income. Can they afford it?

  2. Calvin Yew

    Into a membership u need to be VERY COMMITMENT (time, afford workout-pain body, food intake, money, right gym mindset) to have good results. Not everyone are can do that for years and years. It’s really need a lot of motivation from inside out. Is your Right intentions and goals. If everyone can do that. All gym club is sustainable.

  3. Calvin Yew

    to me. All gym club already do a very good job ?? to provide everything. Just peoples/members can or can’t commit only.

    1. wenghonnfitness.com

      I agree with you at some point Calvin.Gym are definately doing a great job in Malaysia,as they provide whatever is neccesary to the users.However, time has changed,people are demanding more ,if a gym owner want to step up and win the game,a more creative and sophiscated business model need to be created.

      Coach Weng

  4. Wong ch

    As a big time gym goer, stuck with Long term gym membership is no longer visible. Now people pay for life style not really workout.
    My take, gym should be based on subscription services, like monthly, quarterly or yearly(cheaper). In addition to that, minimise those extra services that will increase the cost(eg tower services, just bring your own tower),

    Classes should be by paid/participate(1 week in advance), this can help predict n control how many member will be coming to the clasess n no string attached, since it is paid by member not by club, club just take x amount of % for admin n rental.

    Collaborate with other smaller business( like mix martial art, kickboxing freelance traine), manicure n panicure, sport massage, protein supplier, to provide more services to the membership. Imagine, a gym mall, with this gym can bring services to their members, bridging GAP with smaller business and earn money together to sustain both businesses.

    Running a gym must be as affordable, flexible and must also collaborate with other business so that together, businesses can overcome the rental rates and also provide more services to the member. Depending on membership fees is not enough to survive looking at the operation cost, rental n also competitions.need to innovate to create new stream of businesses, understand what members want, constantly collect feedback from members so that the gym can innovate at the correct services.

    My 2 cents..
    Regards
    Ch

    1. Dayalan

      I think this is the business model which is being brough forward by Anytime Fitness. A fitness centre which is open 24hours, has the basic necessities for workout. They don’t provide towel or fancy soft drink corners. However, water cooler and self dispensed snack bars are available. Including certain classes. The main attraction for me to Anytime Fitness wad the 24hr availability, which means no excuse for me not to work out.

      I very nearly joined True Fitness until I knew that I had to pay monthly fees in one lump sum. They did have some interesting classes like Bikram Yoga. I don’t know of anyone else offering this in Malaysia at the moment.

  5. Anne K

    All fitness chains should not be allowed to sell memberships by signing on auto-debit! It is an abuse of consumers rights by not allowing members to quit without paying penalties! This style of operation needs to be put to stop immediately!

    1. wenghonnfitness.com

      Hi Anne,
      I totally agree with you as a consumer.However,if we look at the business prospective,an auto debit will be much more easier for a company to manage their big amount of members”s collection.I hope that,there will be a better system to track,check and update members everytime a payment made.i totally understand the feeling of double charge every month,or continuosly charge that put upon member even he/she has stopped their gym membership few months and even years ago.Im work as a management from a commercial gym as well.One last thing,i hope that this issue doesnt stop you from living in a active and fit lifestyle.

      Coach Weng

    2. John S

      Anne K,
      They give you an option to choose auto debit or pay monthly. (Autodebit has a slight discount) it will be your own fault if you signed the terms and conditions without thinking of the concequences.
      There are still some reputable gym’s out there that are managed well, e.g level up fitness, F1 that is making good head way. Please don’t jump into conclusions to say that all these BIG chains are cheating. You signed on the dotted line. Just like how you took a loan from the bank, bought a car etc.
      Think about it.

  6. Raj

    I feel that this big gyms should have an option for payment per entry. I once aproached one of the big gyms and this option is not included… Its a big turn off for me. Another factor is that you pay a large amount for membership in these gyms, feel excited and go to the gym only to find out you know nothing about how to workout and use the equipment. If im not mistaken to get a personal trainer will cost extra… Why dont these gyms just get their trainers to teach new commers the basic free of charge as an added value to the large amount they have to pay for the memberships. Just my two cents worth hahahahha

  7. Bob

    They didn’t pay their trainer’s commissions more than 3 months last time I heard & only pay the basic salary which is only RM1k , the management only care of their own , let say if the trainer forgot to thumb in before or after break time their salary will be deducted for the whole day , if the trainer didn’t reach their monthly KPI , the management will call them sandbag & demoted them instead of giving support or motivation , luckily my former team take care of each other , TF bring this to themselves , PADAN MUKA

    former trainer
    Bob

    1. AL

      Chi fitness do not have true spa,how u gonna use dem?btw there are statement mention that yet to finalise TF member can go Chi fitness for 1 month only

    1. wenghonnfitness.com

      That is what im thinking ,as general i guess.If so,than the numbers are totally useless..and i cant actually get much info on the fitness industry in Malaysia.Do u have any idea where can i get some?

      Coach Weng

  8. Faridah

    Hi Weng Hon

    I believe if TF management merge with CF and FF this issue can be avoid as I know previous time,the management from CF have a meeting with TF team but I don’t really know what is the result.TF is one of the big name in fitness industry and trust me if CF or FF can take over the management I believe the business still can run as usual.

    1. wenghonnfitness.com

      hei Faridah,
      I think there must be a reason of why CF do not want to collaborate with TF.Im glad that cf merged with ff,and cant wait for the changes that they are going to make for Malaysian.

      Coach Weng

  9. J

    Interesting analysis Weng Honn, helps to explain how True Fitness’s operations came to a complete halt after so many years. Actually, I too had a similar run in with Jake’s experience. I was a fresh grad with my first job in PJ, and since starting work, work-life balance was hard to come by, even for gymming. I am tied to Fitness First and the nearest branch was in The Curve, which wasn’t so feasible considering the evening jam and that I don’t pass by Damansara to get home.

    Conveniently, True Fitness was right below me and I had the thought of switching over. But at the same time, I noticed that the Sri Hartamas True Fitness branch, which is closer to where I live happened to close down for a long time too. On a daily basis during lunch hour, TF would send their employees outside to distribute gym flyers, and I would notice that their staffs were in a bad physique. Pardon me for being shallow, but I always thought a PT should look healthy, if not fit/well built. Instead I saw trainers that were on the meatier side, and it was pretty obvious that they all looked rather lost when promoting the membership.

    Come evening, the gym was usually filled slightly, but never full house. But I kept my intentions to join TF on my mind, I just never got around to it because I was unsure about my employment period (contract basis). Eventually when my contract ended, I stopped working at PJ and took it as a sign that TF was just not the best option and went back to FF. But even then, I told my PT that I had plans to move over to TF and wanted to strike a negotiation with him outside of FF’s constrains.

    TF’s environment was pretty okay, I needed a gym that was on a commercial standards, but less crowd. But I guess that’s just impossible, because less crowd = less revenue. Looking at TF’s shut down statement now, I’m suddenly glad that I dodged a bullet. I wondered what would have happened had I opted to sign up for TF and forego the one year contract I worked so hard to keep to in FF.

    Honestly speaking, FF isn’t such a great shape either. People come and go, as do staffs and members, but what I’m trying to get at is that times are bad and nobody wants to keep up with FF’s membership fee. Everything they charge there is premium price and rightfully so, but I would think only people who want to goad about their gyms would join FF, otherwise CF is the go-to commercial gym. Either way, both are a bit too crowded to my liking… and it takes a toll on your lifestyle too, especially for fresh grads struggling to make a living in KL. Makes me wonder how some gymmers can afford both FF & CF membership at times…

    Oh well, it’s a shame TF went down. I would imagine at one point the holy trinity of Gyms would persevere but it seems like one has admitted defeat. Back to letting FF suck our money again.

    1. wenghonnfitness.com

      Hei J,
      Thaank for dropping your comment here..I am a gym goer as well.I agree with you, as the cost of a gym membership is really a commitment for some of us,escpecially the fresh grad.RM200 or even more for a memebership is just do not make sense.
      For me,my sole purpose to the gym is just to work out .So the premium services and enviroment doesnt really matter me.Of course need to be clean la.
      Normally i will go to those RM5 gym around kl which convenient to me.Surprisingly some of those gym is not too bad wan.Friendly stuff,friendly members ,clean and tidy enviroment.

      Coach Weng

  10. rachel

    I used to be a gym member but stopped once I moved into my new condo that had gym facilities with swimming pool. The gym business model was no longer viable because more working adults lived in such places with gym facilities (this factor needs to be included when making the analysis). The model needed to change to make it more appealing – such as workout classes that one can’t get in the condo’s gym. But then again, there’s still no guarantee the such classes is a sure fire success, remember the big yoga centre in plaza damas that also closed down without much notice? i ended up signing up on boot camps. also, times are bad, people are just going to cut out ‘unnecessary’ expenses…

  11. Enze Amom

    Why go to big gyms and pay large fee LUMP SUM just to use their facilities when you can pay RM350 at a boutique gym for a six weeks program which is personalised and you have access to your trainer anytime… for simple whatsapp questions.

    It’s Jerry Maguire again… personalised services rules.

  12. Cacophony

    Great research and good read.
    But you really need to correct your spacing between your symbols (” . , ! & whatever). No doubt they are the least important stuff in this read, but still… seriously.

  13. hanna

    looking at this. we should have a prepaid gym membership. pay as you use. better still it shoukd be applicable to all DBKL and government run gyms where you pay RM 2 ( i think) per session.

  14. Irwin

    I use CF and I think their business model is more sustainable.. no yearly subscriptions, I pay 2 months deposit and then just oay every month.. if I am outstation and cannot come for a month, I can give notice and they will charge me only 50% for that month. I can also terminate anytime if I wish to. This encourages people to come and go as they need to.

  15. Simon

    Why such a low members count in each gym? Blame it on the delicious Malaysian Food variety. LOL. Most gym goers now all wayang kulit in gym, either look at people, play handphone, chit chat, locker room chat all just want to show they at the gym and look pretty for their social media posting. I did check with a few gym outlets, they members quantity typically range from 200-400. Hence, I believe your assumptions or guestimate is pretty ok. Now the remaining big players will laugh as they will absorb the remaining floating members. Hence, their sustainability just went up. I feel safer now…lol….

  16. aziz

    yeah true fitness closed really bad its sad..btw im consultant at celeb fitness, if anyone wants to join celeb + FF later just gimme a text or whatsapp 0172713717 i be happy to help clients that are lost w/out gym membership lol >_<

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