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The head of the National Fitness Community Elena Silina talks about the problems and hopes of the industry.

Elena Silina is one of the pioneers of the Russian fitness industry, one of those who stood at the origins of the Russian fitness industry. 32 years ago, she opened the first fitness club in her hometown. Later, Ms. Silina founded several more fitness centers around the country, and since 2009 she has headed the National Fitness Community, which is responsible, among other things, for the effectiveness of interaction between the industry and the state authorities.

The organization's members are 2,000 clubs from 80 regions of Russia, as well as various specialized federations and associations.

In the future, there will be a minimum of staff in the halls

— How have the crises of recent years changed the Russian fitness industry - first the pandemic, then the aggravation of the situation in Ukraine?

— According to our data, in two years the market has lost 40% of players or 5800 objects. This number includes all organizations related to fitness: sports and recreation complexes (FOC), multifunctional clubs, large and small studios, etc. Before the outbreak of the pandemic, more than 13,000 objects worked in the industry, now there are 7800 of them left.

If we compare the third quarter of 2022 with the same period in 2019, we recorded a drop in sales of club cards by an average of 7.6%. These are figures for 50 regions of Russia. The lion's share of the revenue of fitness clubs falls on additional services (personal training, massage, etc.). Compared to the third quarter of 2019, there is a drop of 12.4%. Before the pandemic, the market volume was estimated at 167 billion rubles, in 2022 it is about 140.4 billion rubles.

But there are other indicators that give hope: in particular, compared to the third quarter of 2021, revenue in the industry increased by 4.4% on average, although the figures are far from pre-pandemic. Perhaps, if not for the current political crisis, the industry could have made a breakthrough.

— What growth rates did the industry show before the pandemic?

— About 14% per year. But compared to the period before 2014, this is still a low indicator. Before the first wave of sanctions, the industry grew by an average of 20-25% per year. Large networks were actively developing — World Class, X-Fit, Alex Fitness, USSR, etc. — new facilities and club formats were appearing.

But, of course, all the problems have faded in comparison with the pandemic — no one thought that we would be out of work indoors for three months. At the same time, the entrepreneur had to pay rent, housing, and communal services, taxes, salaries to employees. Those who had a margin for profit had to spend it and many were forced to get into loans.

At the same time, I always say: there is no silver lining. The pandemic has set a trend for monitoring health and strengthening immunity. During the year following the results of the third quarter of 2022, attendance at fitness centers increased by 5.9%.

— Has the pandemic changed the range of fitness services?

— Yes, it gave a tremendous impetus to the development of the online. Because of the lockdown, clubs began to conduct open training through social networks — they tried to motivate customers to engage and prevent refunds for paid services.

As a result, online services were fixed in the program of fitness clubs. For example, about 10 million people are engaged in Worldclass online. Moreover, you can practice for an affordable price — about 200 rubles.

New formats of fitness centers have also begun to appear. X-Fit is currently promoting the concept of a fully automated club, where there are no employees, except instructors, who come to specific clients. Later it will be possible to refuse instructors — they will advise virtually.

Another vector of development set by the pandemic is the collaboration of the fitness industry with medicine. After the coronavirus, the consumer has changed a lot: we saw a huge gap in the indicators of physical readiness that the client had before and after the illness. There was a need for rehabilitation programs to return the client to the normal training process. So, Ben Vader College has already developed an educational course on medical fitness. Such specialization is widely used in the USA and Europe, but this direction was developed only during the pandemic.

It has greatly influenced our work and the development of the sharing economy. Now the consumer can choose one of 250-300 clubs in the applications, paying 1500 rubles. for a monthly subscription or even paying for training every minute, and next time come to another club. With such consumption of services, the client does not see the point of issuing a card.

— And how has the behavior of the fitness consumer changed in recent years?

— The generation of zoomers does not need communications — they can get any information with three clicks. They are more freedom-loving and autistic, and actively use social networks while being open to new technologies. Fitness clubs will have to adapt to the behavioral characteristics of the younger generation — I think that the concepts of halls with staff minimization will become more and more popular. Unfortunately, it is.

But the "classics of the genre" will not go anywhere in the near future. Generations X and Y also want to play sports. And they can't do without live communication — they need communication, professional advice, and tactile adjustments in the process of performing exercises.

"Only 20% of Russian manufacturers are on the equipment market"

— Sanctions have created problems in many areas of the economy. Has the fitness industry suffered a lot?

— Of course. Equipment suppliers are faced with problems in delivery and their overall survival. A simple example: logistics chains have doubled due to workarounds, and the cost of cargo delivery has increased. If earlier the equipment could be brought in two to three weeks, now the period stretches for three to four months. Due to the sanctions, many American and European manufacturing companies have left the Russian market. First of all, these are premium brands such as Life Fitness, Cybex, and Hammer.

Now fitness clubs need accessories because depreciation and maintenance of equipment have not been canceled. We used to get parts from the USA and Europe, but these markets have closed. Yes, Chinese manufacturers are available, but they cannot replace all the needs of the market. There is an option with parallel import, but the delivery of equipment under this scheme will be much more expensive and will hit the reputation of major brands of fitness clubs

There is another serious barrier: all brokers involved in the delivery of equipment now require 100% prepayment. That is, supplier companies immediately pay a large amount of money, then wait three to four months, and only then get a return. There is no serious gross turnover, this puts pressure on the market.

As for manufacturers, the ratio of foreign and Russian companies in the market is about 80 to 20%. This 80% includes high-tech equipment with an active digital interface, cardio equipment (treadmills, steppers, etc.), and it is vital for fitness clubs. Russian manufacturers (the same 20%) have never done anything but iron and strength simulators, even if they have reached a decent level in this area.

— That is, it will be difficult to quickly organize import substitution in the fitness industry?

— If we objectively assess the level of readiness of the fitness industry to replace foreign manufacturers with their own, then this is 2 out of 10. Now joint work with state authorities is required. Our sphere is very "twisted" from the point of view of legislation.

On average, to open the simplest production, it will take from 1 billion rubles. But do we have many businessmen who are ready to invest such money in a long-term project in the current conditions?

We asked different manufacturers the question of how long it takes to reach a decent level of mass import substitution — someone says five years, someone 10. Much will depend on the availability of high technologies. But I am sure that with the support of the state, everything can be done much faster and the production of sports equipment can be launched within two years or a year.

— What is needed for this?

— We have created a commission in the National Fitness Community to support suppliers of sports equipment and the development of domestic production. It consists of eight major suppliers. Before the sanctions were imposed, there were about 50 of them in Russia, and now there are 20% fewer, about 40.

In particular, Pavel Polovnikov, a representative of Arni, the creator of the first Russian—made treadmill, works in the commission. But so far it has not been put on stream.

Together with the members of the commission, we have written letters to the government and the Eurasian Economic Commission with a request to reduce customs duties on imported sports equipment from 5% to at least 2%. In addition, it is absolutely certain that suppliers, as well as representatives of the fitness business, need to reduce taxes and insurance payments by analogy with the IT industry. The state has provided them with a single preferential tariff — 7.6% instead of 30%, and we now pay only insurance premiums and taxes with a VAT of 43%. In fact, we give away almost half of the money, and another 30% of gross revenue goes to rent, plus utilities, wages, and consumables. All this is a big load.

But there is still reason for optimism. In October, equipment suppliers noted the warming of the market, sales increased by almost 20%.

— How much does it cost to open a fitness club now?

— Depends on the scale. Studio costs of 70 sq. m. m and a large multifunctional club of 10,000 sq. m. m are very different. The minimum investment to open a small simple fitness studio is 1 million rubles.

— Since 2022, Russians have had the opportunity to receive a tax deduction from sports expenses. How has this affected the market?

— This is a historic event. People have been told for a long time from TV screens and radios that they need to play sports, now the next step has been taken: the state returns money for this. The fitness industry can only welcome such a vector of development in the field of physical culture. For us, the introduction of a tax deduction is an excellent marketing tool.

So far, the number of customers using the new option is small, about 2-3%. But here you need to understand that hundreds of companies have left the market — people have lost their jobs and, as a result, the opportunity to issue a tax deduction through it.

Nevertheless, we are currently working on the next project in this area. We are promoting the idea of providing tax benefits and other preferences for companies that are engaged in the development of corporate sports: they pay employees for classes in fitness clubs and other sports sections.

— How has the industry been affected by the mobilization?

— On average, due to the mobilization, the industry lost a little more than 5% of employees. The national fitness community appealed to the chairman of the government Mikhail Mishustin with a request to postpone the representatives of the industry, but we did not wait for a response.

Source: www.vedomosti.ru/sport/others/articles/2022/12/05/953287-fitnes-industriya-adaptiruetsya-k-novoi-realnosti?utm_campaign=vedomosti_teaser_300x600&utm_content=2022%2F12%2F05%2F953287-fitnes