FIBO Focus | May 15, 2020

FIBO USA • NOVEMBER 6-8, 2020 • MIAMI BEACH, FLORIDA

POWER MOVE Spirit Fitness is using its strength in home fitness to translate into success in the health club sector when the ‘new normal’ arrives.

MAY 15 2020 VOL. 2 NO. 7 WWW.FIBOUSA.COM

A REED EXHIBITIONS EVENT

FIBO FOCUS • May 15, 2020

FIBO USA FOCUS: SPIRIT FITNESS

ON THE

MOVE

WITH STRONG HOME SALES AMIDST COVID-19 CRISIS, SPIRIT FITNESS REMAINS POSITIONED TO HELP THE FITNESS BUSINESS REBOUND IN THE ‘NEW NORMAL.’

U

nprecedented times demand a unique and flexible business model – coupled with the ability to sense and fill a market’s rapidly changing demands – and fitness equipment supplier Spirit Fitness finds itself uniquely positioned to thrive in these challenging times.

In this case, the demand for inhome fitness products has spurred rapid growth and the financial stability to allow the company to continue to invest in all of its brands across a range of markets — home, health clubs and medical/rehabilitation.

This success will enable the parent company, Dyaco, which was founded in 1990 by current chairman and CEO Michael Lin and is publicly listed on the Taiwan Stock Exchange with a market cap of over $150 million, to Dyaco has grown through its own brands, including Spirit, as well as through partnerships with well-known names such as UFC, Johnny G and Philips.

2

FIBO FOCUS

www.fibousa.com

FIBO FOCUS • May 15, 2020

Spirit Fitness has been serving the global fitness markets since 1990 and today is positioned to thrive in a changing continue to focus on delivering the equipment to the home, commercial and medical sectors through its own brands, including Spirit, Sole and Xterra, along with its global partnerships and licensing agreements with UFC, Johnny G and Philips.

“Our home fitness equipment is the perfect solution for our customers to use and stay fit during this current health crisis,” says Christopher Hancock, Vice President–Global Marketing, Commercial. He also points out that Spirit has teamed with UFC athletes who are creating home workouts using its UFC fitness and Combat gear and then sharing them on social media.

“Our home division cannot keep up with demand,” Hancock continues. “Our factories are working flat out to supply product to our partners and customers around the world with everything from dumbbells to jump ropes to cross trainers and treadmills.”

This demand for its home fitness 3

FIBO FOCUS

products will eventually translate into similar success in the health club sector and Hancock is optimistic that time will come soon.

“We are confident the gym and public facility business will start to return to some level of normality over the coming months and are currently working with our customers on new opportunities during this difficult time in our industry,” he says, emphasizing that its Spirit Commercial line is designed to meet the needs of the clubs when they reopen.

“This demand places us in a unique position financially to invest in our commercial and medical divisions to ensure we are ready to serve our customers when the market starts to return to normal and the crisis starts to recede,” he adds.

The Target Market For the commercial market, Spirit Fitness offers a full line of fitness products — from Cardio to Strength to Functional Training and Studio

under its own Spirit and partnership Johnny G and UFC brands. One selling point is value in today’s highly price-sensitive market.

“The current environment has led buyers to seek even more value when purchasing new equipment for their facility,” Hancock points out. “We offer a highly personalized service with a designated account manager developing a collaborative partnership with our clients, including space design and finance and leasing plans.”

One of the challenges of working in three very different markets – home, club and medical – is the differing demands for product, marketing and service. Spirit Fitness spends equal time on each.

“The home market is currently experiencing a major uplift in demand by consumers as they find themselves needing to work out from home during the crisis,” Hancock says. That’s where its Spirit, Sole, Xterra and UFC brands meet the demands for everything from hand www.fibousa.com

FIBO FOCUS • May 15, 2020

In a post-COVID-19 world Spirit Fitness is committed to improving lives through a 360-degree solution approach to fitness and wellness. weights to yoga mats to full-size treadmills.

“We have been selling premium and light commercial product in the U.S. market under our Spirit brand for over 35 years through our retail and dealer network,” he says. “This positions us perfectly to bring our full Spirit commercial line to the U.S. market as well as launching the Johnny G studio bike and UFC Functional Training series.”

Its medical and rehabilitation line is targeted at a very different market, which is why Spirit’s parent company,

Dyaco, has also partnered with Philips to develop a range of products for the physical therapy customer.

With confidence that the home exercise sector will remain strong post-COVID-19 while people eventually do start to return to health clubs as they feel safe and the industry takes steps to assure that safety, Spirit foresees a strong rebound in business as the world adjusts to this “new normal.”

“The fitness industry was growing with new innovative concepts such as boutique gyms and indoor cycle

THE COVID-19 IMPACT

What has been the impact of COVID-19 on your business — both internally and with your partners? “The success of our home division during the COVID-19 pandemic has given us the financial security to support our global employees while helping prepare our commercial partners for their future planning when business starts to return. And we are very proud to have been able to retain all our employees around the globe during this crisis, which we believe is a major achievement.” — Christopher Hancock https://www.spiritcommercialfitness.com/ mail: b.brown@dyaco.com/ Phone: 760-501-1314 4

FIBO FOCUS

studios expanding rapidly, but this all changed when the health crisis hit the world and with most facilities being forced to close their doors,” says Hancock. “The world is starting to emerge from the current situation and while we will have to adjust to the new normal, the industry will recover to pre-crisis levels during 2021.”

When it does, Spirit will remain dedicated to improving lives through a 360-degree solution approach, with products and software applications that meet the needs of its customers throughout their lives — lives that often require adjusting and a tailoring workouts and lifestyles.

Part of that dedication to the market will be on display during its participation at FIBO USA in November in Miami Beach, FL. With a headquarters in Taipei, extensive manufacturing facilities in both Taiwan and China and operations in more than 90 countries through its subsidiaries and distribution partners, having a presence at the major U.S. fitness show is imperative.

“We urge everyone in the industry to come and visit FIBO USA and see all the new and exciting innovations in the fitness industry to ensure they are ahead of their competitors when the market emerges from the current health crisis,” Hancock says.

As the calendar heads towards to the fall and the excitement of FIBO USA, Spirit will continue to focus on delivering equipment to the home, commercial and medical sectors through its own brands and global partnerships and licensing agreements, according to Hancock.

“We are continuing to innovate with new technologies through connectivity and personalization of our product and look forward to sharing our news throughout 2021,” he adds. n www.fibousa.com

E T A D W NE

R E B O T C O 1– 4 2020 The leading international trade show for fitness, wellness & health Exhibition Centre Cologne, 1 – 4 October 2020 fibo.com

FIBO FOCUS • May 15, 2020

One-on-One With …

JENIFER MORRISON

T

here was a point in Jenifer Morrison’s life prior to her current position as Association Director of Personal Training and Wellness at the YMCA of Metropolitan Dallas when she realized her greatest successes in life

were achieved through being at the service of others. As a lifelong proponent of health and wellness, it was only natural to incorporate that foundation in all that she did. Upon starting her career, little did she know that her values aligned with the core values of the YMCA. Ultimately, her career progression ended at the mountaintop of fitness and faith.

6

FIBO FOCUS

What is your role and responsibilities at the Y? I serve as the Association Director of Personal Training and Wellness.

I support 19 locations to create a positive member experience through recruitment, continuing education, scheduling and events to maximize participation and revenue.

That sounds like a lot.

It is, however, my purpose and true role is to bring my drive for the enhancement, improvement and overall appeal to our locations.

What motivates you?

It is exciting when we find solutions to help members either reach goals, create new goals for those who have reached previous ones or help those that would otherwise be less involved.

I am motivated by my leader, Rebecca Lee, who inspires and challenges me, along with the YMCA Directors. If I can help our team execute their business, hold them to our organization’s standards and be nothing less than exceptional, that is what wakes me up in the morning.

What’s the favorite part of your job these days?

It never feels like a job. I leave work

www.fibousa.com

FIBO FOCUS • May 15, 2020

Jenifer Morrison says she leaves work every day feeling that she has made a difference in her community. every day knowing that I serve a greater purpose, which is to give back to our community.

How about the least favorite?

The pandemic we are currently facing. Closing our doors was difficult for our members and staff. If someone would have told me that in my career, I would be challenged with this, I would have laughed. Yet here we are.

What do you look for in hiring the 7

FIBO FOCUS

men and women who work with you?

Passion, drive, expertise and an aptitude for learning. It’s all about character.

Where did your passion for fitness come from?

Passion comes from experiencing something that becomes part of your heart. Mine started with dance. I studied through college and danced for the NBA San Antonio Spurs. As a stay-at-home mom, I joined a YMCA

to be a part of a community. This rapidly progressed to becoming a Group X Instructor and within a few years, leadership roles.

How else did your career take shape?

As my career developed, I worked for the YMCA, for-profit clubs, boutique studios and Les Mills™ South Central under CEO Robert Dyer, one of my greatest mentors. The knowledge and experience I gained through each lead to my current www.fibousa.com

FIBO FOCUS • May 15, 2020

position. I have come full circle. My heart never left the Y. I am home.

Do you have your own fitness routine? What does it consist of?

I wake up and work out. If I don’t, it won’t happen. When our facilities are open, I teach Cycle, Les Mills SH’BAM™, BODYJAM™, or BODYCOMBAT™.

So much of what we see in this business mentions a mind-body connection in a fitness regimen.

Do you subscribe to that, or some variation of that thinking?

When the mind is happy so is the body. The YMCA encompasses mind, body and spirit.

How do you incorporate that in your life?

Instead of reaching for my phone at the start of each day to look at social media or news updates, I take the first 20-30 minutes to watch a podcast, listen to an inspirational message or simply sit in silence.

I regret nothing and give myself the opportunity to experience everything.

How is working at a facility such as the YMCA differ from working at a private club?

Many private or for-profit clubs focus solely on fitness. The YMCA was founded in 1844 and now has more than 2700 locations worldwide.

Along with fitness we provide youth sports, community health programs such as Live Strong for cancer survivors, and Youth and Government for teens, just to name a few. Our

mission and the funds raised through our YMCA locations directly support our community.

How does that community involvement take shape these days?

Our focus has pivoted to what our community’s needs are during the pandemic. We are partnering with several outside organizations to deliver food, provide emergency childcare for essential workers, supply laptops to students in need, host blood drives, deliver groceries to our seniors and host diaper drives to parents.

Well, that’s way beyond what people think a Y does.

We are not a club, we are family.

How would you characterize the

THE COVID-19 IMPACT On a topical note, how has the COVID-19 pandemic impacted business at the Y and your interaction with your clients? Our Association has remained focused on staying the course for our members and our community. We have partnered with Les Mills™ to provide our members with Les Mills On-Demand virtual classes and emergency childcare sites with Les Mills™ Born to Move classes for kids at no cost. We launched a Virtual Resource page on our website to keep members engaged with several virtual options to choose from, including personal training, Group X Live Stream schedule, teen workouts and healthy mindset content.

What have you been doing during the pandemic to keep motivated in your job and to keep your staff involved? I rely on the little things. Sending handwritten notes to staff through oldfashioned snail mail or making phone calls instead of sending a text to check in. Our staff stays engaged with weekly updates, filming virtual content and serving in community programs. We are a strong and resilient team. We are the YMCA.

8

FIBO FOCUS

Morrison is working hard at retaining a personal touch during the COVID-19 pandemic — the YMCA way.

www.fibousa.com

FIBO FOCUS • May 15, 2020

state of the fitness business in the United States, both pre- and post-COVID-19?

Prior to COVID-19, the fitness industry was competing against each other for member acquisition and retention. It is no secret we have been massively affected by the pandemic and will have an abundance of restrictions, regulations and operational changes to adhere to.

What is your advice?

We should look at new ways to approach business models and trust that our current members will return and new members will join. COVID19 cannot eliminate a person’s need to achieve desired results through personal training or the emotional connection felt in group exercise classes.

What role do you see FIBO USA playing in the U.S. fitness business?

Connection. FIBO USA can help those working in the industry become more connected, regardless of the space we serve in — non-profit, for-profit, boutique, country club, equipment vendor, etc. We are all relevant and can learn from each other.

Based on your experience, what one piece of advice would you give to the typical club owner or trainer on how to be better – and make more money – in the fitness business (post-pandemic, of course)?

Virtual fitness will not cease and should continue as an ongoing stream of operations.

Morrison urges the fitness industry to look for new business models and trust that their current members will return, along with new members.

9

FIBO FOCUS

And how about your people?

How we treat members and staff during this time will determine the longevity of our business. Building relationships has never been more important. n

www.fibousa.com

FIBO FOCUS • May 15, 2020

GUEST COLUMN

LIFE AFTER THE CORONAVIRUS HOW THE FITNESS SECTOR MAY NEVER BE THE SAME AGAIN — AND WHY THIS MAY NOT BE ALL BAD NEWS

BY HERMAN RUTGERS

F

or some organizations, nearterm survival is the only agenda item. Others are peering through the fog of uncertainty, thinking about how to position themselves once the crisis has passed and things return to normal. The question is, “What will normal look like?” While no one can say how long the crisis will last, what we find on the other side will not look like the normal of recent years.”

These words were written 11 years ago, amid the last global financial crisis, by Ian Davis, managing partner of McKinsey. They ring true today, but if anything understate the reality the world is currently facing.

Exiting from lockdown will be more complicated than entering it was. The risk of resurgence will have to be continually managed, including increasing the capacity to care for critical patients if necessary.

Protecting lives depends on minimizing the risk of infection to the most vulnerable (the elderly, the immune compromised and those with serious 10

FIBO FOCUS

conditions) while keeping the health system functioning.

The challenges for the fitness sector of the economy are significant and here is a summary of key points to consider for the fitness sector post-Corona.

The Overall Business Environment 1. Many countries will be in a recession, resulting in a squeeze on consumer spending — more unemployed and less disposable income.

2. Business plans for 2020 and beyond will need to be revised and short- and long-term strategic reviews will take place.

3. Companies will be in crisis mode for the foreseeable future.

4. Fewer clubs/further consolidation — depending on the country, 10-15 percent fewer clubs is an uneducated guess. Chain operators may take this opportunity to weed out loss-making locations and not reopen those at all.

5. Obtaining financing will be more difficult and at higher cost. In spite of what they tell us, banks are very prudent.

6. Companies will focus less on growth per se, but will focus more on stabilizing their business, obtaining profitable growth, working with

Exiting from lockdown will be more complicated than entering it was.

The challenges for the fitness sector of the economy are significant.

FIBO FOCUS • May 15, 2020

11. Intermediaries are severely hit, with revenues dropping to zero and high expenses and low profits.

small operators closing their businesses offers opportunities to search for talent for the surviving clubs.

7. Companies will have to work with somewhat larger reserves for doubtful accounts/uncollectables.

Fitness Operations Situation

8. There will be more attention to costs — fixed versus variable relationship will be more critical.

1. Digital developments were already on the radar, but the lockdown has accelerated implementation with more live streaming and on-demand videos.

5. During the lockdown teams learned how to work together at a distance (and across departments and borders) and have engaged in agile working. As a result many may have become stronger.

more conservative balance sheets and improving cash flow.

9. Leadership — the great and good ones have already shown their capabilities in a storm (or not).

10. Brand image is important. Some operators have dealt with this situation very well and gained sympathy and brand loyalty, while others have lost it.

2. Wearables could be used as early warning for detection of coronavirus.

3. There is less pay-as-you-go and innovative membership packages will emerge.

4. There will be more layoffs, while

6. Many operators have used the downtime to provide their staff with online educational programs for upskilling and personal development.

7. Reopening will not take place on a national level, but will be organized by state, depending on the severity

Protecting lives depends on minimizing the risk of infection to the most vulnerable while keeping the system functioning.

11

FIBO FOCUS

www.fibousa.com

FIBO FOCUS • May 15, 2020

The future of our sector after the coronavirus pandemic is very difficult to predict today. For sure it will not be black or white.

3. Many consumers will have experienced home fitness for the first time during the lockdown and may like it and want to continue using online fitness.

4. Consumers may have developed the use of the apps from his/ her club and started to use more functionalities.

5. They will be more price sensitive.

6. May be more sensitive to engage in longer term contracts and study the small print more.

7. Might have developed a higher awareness for the health benefits of fitness.

of prevalence of COVID-19, and with state-by-state determined protocols.

8. Hygiene will take precedence.

Less physical contact, no handshaking, use of masks required, frequent cleaning of touch points of machines.

9. There will be more frequent cleaning and clubs will have to provide a supply of sanitizers, resulting in higher costs.

10. Physical distancing will be mandated, so clubs will need to rearrange machine layout and will have to manage reduced capacity in the early phase of reopening and entry controls.

The Fitness Consumer 1. The biggest question: Will the consumer have trust and confidence in going into a confined space to sweat and be close to other people in a group?

2. Will the consumer go back to his/ her “pre-corona” fitness routines?

12

FIBO FOCUS

8. Will appreciate the social aspects of the sector more.

9. Personalization will become more important.

Suppliers to the Fitness Sector

what segment of the fitness sector.

One thing is for sure — it will not be business as usual. n This article is excerpted from a series of articles on the EuropeActive COVID-19 webpage and is based on recently published material from Deloitte, McKinsey, The Economist and various talks with leading international CEOs from the fitness sector.

Herman Rutgers is owner of Global GrOwth Partners, EuropeActive and a FIBO Ambassador. His earlier publications on the topic include (see www.europeactive.eu/covid19): March 20, 2020; “The Corona Virus: How it impacts fitness operators’ short term and some thoughts to restart stronger!” (available in Dutch, English, Spanish, Italian and French) April 8, 2020; “Corona crisis and its impact on the health & fitness operators” © Herman Rutgers, April, 2020

1. Digital service providers are thriving.

2. Online education is in higher demand.

3. Home fitness equipment and accessories are doing very well.

4. Commercial equipment suppliers may have a tough 2020.

5. Hygiene products are in high demand and short supply.

The future of our sector after the coronavirus pandemic is very difficult to predict today. For sure it will not be black or white, but what tone of grey it will be will depend in which part of the country you are and in

www.fibousa.com

FIBO FOCUS • May 15, 2020

LETTER FROM FIBO USA

FIBO USA OFFERING FREE FITPASS COMPLIMENTARY REGISTRATION IS PART OF THE SHOW’S EFFORT TO SUPPORT OUR FITNESS PROFESSIONALS DURING THE COVID-19 PANDEMIC. The FIBO USA Team is here for you in these unprecedented times.

Realizing that these are challenging days, weeks and months for the fitness industry – with clubs closing their doors, stay-at-home mandates limiting person-to-person contact and online classes replacing traditional exercise routines – FIBO USA is making a significant effort to support the individuals who have made this business so successful.

Knowing the financial and personal strain many of our attendees have faced in light of the COVID19 pandemic, we want to express our concern for all of the industry professionals and to be a part of the solution as the fitness business gradually reopens.

It is important for all of us to stay united and support each other during this challenging time.

Because of this, we will be providing complimentary FITPass tickets to our industry professionals for FIBO USA, which will take place November 6-8, 2020, at the Miami Beach Convention Center.

13

FIBO FOCUS

“This is our way to give back as we rebuild and regroup together as an industry,” Randy Field, Portfolio GVP of Reed Exhibitions, the organizers of FIBO USA, says.

“The FITPass empowers our fitness professionals to propel their professional and personal wellness. We want to do our part by making this training and experience accessible to everyone in this challenging time when we believe the industry needs it most.”

partners and staff. We are truly all in this together and we look forward to bringing the fitness community together once again at FIBO USA. Bob McFarland FIBO USA Event Vice President rmcfarland@reedexpo.com Phone: 203-807-0356

There will be more than 60 FITPass sessions at FIBO USA this year and the majority of these sessions will be accredited by NASM, AFAA, ACE and NSCA. Our priority is to provide a safe environment for everyone attending FIBO USA, while continuing to provide the best experience. This is our way of giving back to the men and women who make our industry – and FIBO USA – so unique and so successful.

So thank you to all of our exhibitors, attendees, ambassadors, presenters,

www.fibousa.com