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The demise of the California Fitness brand

California Fitness has closed its Raffle’s Club branch, much to the ire of many members who signed up for its memberships and packages.

The brand made the announcement on its Facebook page on 16 July which has since led to an influx of its Raffles Club patrons to its remaining Bugis and Novena branches. This has led to the shortage of towels and an overall decrease in the quality of the experience according to customers commenting on the Facebook post announcing the closure of the Raffles Club branch.

 

Since then, a petition has been created on Change.org to get the Singapore authorities to step in on the matter has also made it rounds on the web. It was first created following the shutdown of California Fitness’s main Orchard Road branch earlier this year.

It urged for action to be taken by Ministry of Trade and Industry in getting California Fitness Singapore to give pro-rated refunds to its victims subject to branch closures.

Meanwhile, just last week, JV Fitness, which operates the fitness chain made regional news when it shut down of its Hong Kong branch operations due to millions of dollars in debt with investigations ongoing on two staff members.

When contacted by Marketing, Seah Seng Choon, executive director, Consumers Association of Singapore (CASE), said:

“Consumers should take note that purchasing membership packages may be cheaper in the long run, but they will face the risk of losing their pre-payment in the event that the company closes down. Before signing any contract, consumers should read the terms and conditions carefully, and clarify the refund policy of the company. For example, they should verify if they would be able to get a refund of the non-utilised sessions in their package if anything goes wrong or if a particular outlet closes down,” Seah said.

He advised consumers to approach the club to request for cancellation and refund of their membership package on the account that the Raffles Place outlet has closed down. Those who face difficulty in resolving the issue may approach CASE for further assistance.

According to Nick Foley, president of the Southeast Asia and Pacific regions, Landor, the demise of the fitness brand was likely due to an increase in the opening of smaller, independent gyms.He said

Big is no longer beautiful when it comes to fitness and gyms.

He added that in the early days the company did capitalise on the fitness movement but consumer preferences for working has since evolved and gym’s need to keep up with these trends or face extinction.

“This is classic disruption. Evolve or exit,” he added.

Agreeing with Foley on the demise, despite the ongoing “get fit” movement which has gained significant traction in recently years, is Lawrence Chong, CEO of Consulus. He attributes the brand’s downfall to stiff competition.

“The get fit movement will continue but there are just too many gyms and it is time for the weak ones to close and consolidation. The capital required to run a programme-based gym business model is intense. So I expect the industry to either see merger or those that are not managed well to drop off,” Chong said.

Is this a warning to similar mega-gyms?

Foley added that every gym owner should be continually assessing what the latest trends are in the industry and continue to stay agile.

“Stand for something and never stay still is a useful mindset to have when future-proofing a brand’s success,” he said. He added a brand can be well known, but if it is not relevant to its core audience and it’s not distinguished from its competition then its sway with consumers will drop quickly.

“Being well known is one thing, all brands have to regularly review and transform their business model to make sure they have the resources to meet the growing challenges of competition. So being well-known is not insurance,” Chong added.

Street talk:

Marketing also spoke to several members of California Fitness’ Raffles Club members on their thoughts. Both customers that Marketing spoke to mentioned that they were not notified about the Raffles Club closure prior to the announcement on Facebook nor were they aware that the fitness brand was on the decline.

While they admitted they did not know their rights as consumers or the rules of regulations when it came to signing up for the memberships, the hard-selling involved usually ensures the gym memberships are usually done in a hurry.

According to some members, consultants have been telling their customers California Fitness’ management is currently in negotiation with its landlord to regain ownership of the Raffles branch.

Shoaib Ahmed, 28:

“I saw the notice asking members to go to their Bugis or Novena branches but to be honest one of the main reasons I signed on was the location so I would demand to be reimbursed the pro-rated lump sum I paid when joining.”

Carlo Reston, 31:

“It is definitely worrying to see two CF clubs close in a span of five months. I signed up for another two years, which starts in December this year but did not foresee this happening. I regularly visit the Bugis brand and for the first time there has been a shortage of towels due to the sudden surge of Raffles Club members. The last time I saw this happen was in February when the Orchard club closed so seeing more people in my gym is definitely bothering me.”

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