INTERVIEW
month for a low-cost club. In Brazil they pay US$20, meaning gym membership is the equivalent of six times more expensive. So even budget clubs won’t hugely grow the market. “We may even need to increase
our price slightly – to around US$23 a month – for the new clubs we’re building, because equipment is now 60 per cent more expensive due to the exchange rate.”
Growing Smar tFit Nevertheless, if growth does come, it’s likely to be through low-cost expansion. So what is the SmartFit model? “It’s an experience,” says Corona. “The way we’ve approached the architecture, the lighting, the choice of software and equipment… it isn’t like a normal low-cost club. The idea is that, if low-cost competition arrives, they won’t actually be able to compete because ours feels like a high-end club – but charging only US$20 a month. “In fact, a lot of high-end gyms are
losing members to SmartFit, including BioRitmo. That’s OK though – I’m happy to have really great low-cost clubs so we don’t lose our BioRitmo members to other low-cost operators. “I actually don’t want people to be
able to see much difference between SmartFit and BioRitmo.” He continues: “There are instructors
on-hand at SmartFit in case members have any questions, but the whole club has been set up to be self-explanatory. There are three rows of equipment
– the front row is for weight loss, the second for endurance training and the back row for muscle building. Crossing these to effectively form a grid, lines of equipment run from the front to the back of the gym floor by body part: arms, back, legs, abs and so on. “So if you want to build muscle in your
arms, you immediately know exactly which piece of kit to go to. There’s then a video when you get there to
SmartFit clubs are designed to look high-end even though they are budget I don’t have any issue with challenging
my own business models and cannibalising myself. I believe that, if my business is hurting, it’s because I’m not giving members what they want
show you the exercises you can do on that piece of equipment.” There are now 176 SmartFit clubs in
Brazil, with another 20 planned by the end of the year, and it’s proving to be an appealing model across other South American countries too. “We’ve created 50/50 joint ventures
with local partners to expand into Mexico and Chile – SportCity in Mexico in 2012, and O2 in Chile at the end of 2013, which are both high-end operators that wanted a low-cost brand. We have 47 clubs in Mexico with another 17 to come this year, and four clubs in Chile with another in the pipeline. I’d also like to go into Peru, where I think we could open around 30 clubs.
LOCATION, LOCATION, LOCATION
“It’s hard finding good locations for clubs in the old cities of Brazil,” says Corona. “The way the buildings have been designed, you often have to split clubs across several floors, or you have to knock two buildings together – there aren’t many big spaces. “You also have to take traffic into
account when selecting club locations. Traffic is very bad in São Paolo – it
can take 20 minutes to drive 1km – which means your potential audience must live or work in a radius of just 1km from the potential new club. “In Rio it’s different again. There,
people walk to the club and go home again to shower, so we have smaller clubs dotted along the same street within a couple of blocks of each other – and no showers.”
38 Read Health Club Management online at
healthclubmanagement.co.uk/digital “Over time I think we can grow
SmartFit to 130–140 clubs in Mexico and to 300 in Brazil – so maybe a total of 450–500 across all markets – but that’s really just a guesstimate, because our competitive advantage is inevitably just temporary.”
Competing with yoursel f Corona concludes: “I’m now looking at the possibility of launching a microgym format. As Steve Jobs said, it’s not about the next thing you do but what you’ll do three steps down the line. I want to think about what formats I can create that will compete with my existing clubs. “I don’t have any issue with
challenging my own business models and cannibalising myself. I genuinely believe that, if my business is hurting, it’s simply because I’m not giving members what they want. “The future is uncertain, especially
with all the technology that’s coming our way, but it’s full of opportunities. I want to prepare and empower the young people in my organisation to be creative and come up with new ideas. My role is to step back and try not to disturb them – simply to help them make the changes once they’ve come up with the ideas – because they understand technology far better than I do.” ●
June 2015 © Cybertrek 2015
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