GROWTH TO COME FROM SMALLER TOWNS: GOLD'S GYM

For over a decade, superior fitness services in India have been synonymous with Gold’s Gym. Starting from one gym in Mumbai in 2002, Gold’s Gym has grown to over 145 centres currently. The brand has aggressive plans to add over 50 centres in the span of the next 2-3 years. After dominating the urban markets with a unique business model, the fitness chain is now working towards capturing remote places like Tier IV towns across India. The future is here, says Nikhil Kakkar, COO, Gold’s Gym. Excerpts from the conversation: 

How has the past year been for Gold’s Gym?

The previous year, 2019 has been overall good for us. We have opened 18-20 gyms despite the tough market conditions and we have consistently done well in the sense we were able to meet the same number like we have been doing for the past five years. Although we added only 8-9 cities to our expansion portfolio, we were able to meet our targets.

Gold’s Gym was probably the first gym that became a branded chain of gyms in India. How has the brand evolved to stay relevant to the millennials?

Like you rightly said, we were the first movers in the market which means the challenges were always there and equally, potentials were also there. Having said that, in India, fitness penetration is still very low when compared to international countries where at least 10-40% of the population goes to gyms; while in urban cities in India, even 1% of the population doesn’t go to a gym or involve in any kind of fitness activity. As we see, the scope of penetration is very large, which is also why so many players are entering the market.

How is the growth for Gold’s Gym in India?

Millennials, whether eating out or working out, want everything quick and we have designed a quick result programme (a combination of diet and functional training) only to meet the demands of such millennials. We are evolving as per customer needs and all our business models are designed to aid our growth. For instance, our model for urban markets is different, while the model for Tier II and III towns is different.

We have a very Indian model for Tier IV towns which is called the Gold’s Gym Active model designed especially for smaller cities. This model works extremely well for a town with population size of 2 lakhs and sub 2 lakhs. We want to have over 150 cities in the next two years and we are working towards this. Interestingly, there is immense scope to grow and the numbers are moving up. Growth is coming from Tier II, III, IV towns, considering our growth in urban markets is pretty exhausted at the moment.  

Do you think the model for Tier IV towns is sustainable in the long run?

The model has been designed in such fashion that it works in smaller towns. Well, what works in Delhi doesn’t work in Muradabad or Gorakhpur or for that matter what works in the US doesn’t work here. We had to design an Indian model for Tier IV towns. The paying capacity of these citizens has to be considered and in parallel, the investor also has to be profitable after two years. In order to achieve this, the capex has to be controlled and the investment has to go down.

Also, there won’t be the same number of members as in any metro city and we have to consider this. Another important aspect of this model has been that we are not charging exorbitant fees just because we are an international gym. If other local gyms are charging Rs 14,000-15,000 for an annual membership, we are also charging the same but offering international services at a lesser cost. As a result, there will be growth.

Has competition from other brands affected your growth in any way?

I personally think more entrants in the market are good for the overall industry. Now, there is more awareness among people and they don’t want to spend time in hospitals. Instead, they would rather go to gyms. Also, the market is so huge that even if we can get 2% of the country’s population to go to a gym, there will still be a market for all.

How are you keeping up with the changing idea of wellness and fitness in India, especially with internet penetration even in smaller towns?

It is the era of digital disruption irrespective of the sector. In retail, e-tailers are impacting retailers and now everything is available on the fingertips.  Gold’s Gym is also launching its own app in a bid to build community, share diet tips, and create an ecosystem.

What are your targets for 2020?

The target remains the same – we want to open over 50 centres in the next two years. However, the key challenge remains that most of the locations are sold out and what is next for us is that the growth has to come from smaller towns and we are working towards it.