We were given just two hours to close down our businesses,” says Morten Hellevang, describing the day in 2020, when the Norwegian government placed the country in COVID-19 lockdown.
“A very long three months later, the fitness sector was the last industry to reopen,” he says, suggesting the lockdown provided gym operators with plenty of time to plan their return to business.
What Hellevang and his team did during lockdown has seen the company weather the COVID-19 storm well across all its trading markets – Norway, Finland, Switzerland, Austria and Germany.
“When we were forced to close, we quickly concluded that – as a nationwide chain – we wouldn’t get a lot of sympathy from our members,” says Hellevang. “Therefore, we decided that during the period of closure we wouldn’t charge customers anything – that we would carry the loss entirely.
COVID-19 LOSSES
“It was a decision that ended up costing us NOK40m (US$4.3m, €3.8m, £3.4m) in revenue during the three months we were closed – a significant loss for us.
“However, it was a strategic decision. We identified that the most important thing for us was to have as many members as possible when we were allowed to reopen.
“Instead of trying to keep a little money coming in from members – or charging and converting them to some form of digital memberships – we decided to take the loss and keep members happy.”
The decision to not charge for memberships was accompanied by a drive to keep the membership – and the wider Norwegian public – engaged with the brand throughout lockdown. “We furloughed most of our staff, but kept on some of the roles we considered central,” Hellevang says, adding that among those roles were marketing ones. “We felt marketing would be a key factor in the process to plan for reopening.”
“Our strategy was to be very active across social media, pushing the message that ‘we’re still here’.
“That was supported by offering everyone, not just members, free exercise programmes.
“We also used the lockdown to refurbish and expand a couple of our clubs – so we promoted the gym development work we were doing on social media.”
While activating itself on social media to keep the brand in people’s minds, one thing EVO didn’t do was spend a lot of time communicating directly with members. This too, was a strategic decision.
“We were very active on Facebook, Instagram and other platforms – but only sent our members one direct email or text message during the entire period,” Hellevang reveals. “And that was to tell them, at the beginning of lockdown, that we were freezing memberships.
“The reason for this was that every time we sent an email out, we would lose a couple of hundred members. I think it’s because when you send out a direct message, you’re reminding people of something they are paying for – and something they might want to cut.
“When you speak to customer service or marketing people they normally say it’s important to communicate with your members directly – especially during a period like we’ve just had,” Hellevang explains.
“Well, we decided not to do that, because there is a real cost for doing it – and that cost should not be underestimated.”
SUCCESSFUL APPROACH
Keeping its marketing department operational throughout lockdown also helped EVO map out its plans and be ‘reopen-ready’.
“At the point of reopening, we had all our ‘return to gym’ campaigns ready to go,” Hellevang says. “Advertising space was booked and social media was all set – all we had to do was push the button and everything began rolling.”
Hellevang says this allowed the company to bounce back quicker than many other operators.
“Thanks to our approach, we had a couple of tremendously good weeks – in terms of sales – after reopening,” he says.
“Overall, across the Norwegian fitness market, the average loss of members due to lockdown has been around 13 per cent. For us, the figure is roughly 7 per cent.
“So while we too have lost members – according to the figures we have – we’ve lost less than most of the other operators. So I think the lockdown strategy we chose to follow has been very successful.
“Visits to gyms across our estate are now (at the time of the interview, three weeks after reopening) at 70 per cent of the number of visits compared to last year, which is a great start.
“What’s more, while I can’t give out the exact numbers, I can say that we’re currently at an all-time high in terms of our membership base – so we didn’t just get back the 7 per cent we lost during the three months, we’ve already managed to bring in more than that.”
GOVERNMENT HELP
While EVO’s individual strategy for dealing with the lockdown has been at the heart of its successful reopening, Hellevang also credits the central government’s handling of the crisis.
Norway was among the first countries to lock down businesses and it did so long before the cases of confirmed coronavirus infections had reached alarming levels. In fact, the first confirmed death was reported on the same day that lockdown was initiated.
At the time of going to press (February 2021), the entire total deaths attributed to COVID-19 in the country during the pandemic stood at less than 600. This signals that the ‘curve’ was quickly brought under control during the two waves, preventing even longer lockdowns.
As well as commending the government for saving lives, Hellevang praises the economic measures it introduced to help businesses. “If you were among the businesses forced to close, you got a good subsidy from the government for the entire period that you had to keep your doors shut,” Hellevang says.
“The compensation was calculated and based on the revenue shortfall you experienced. So, if you had a 90 per cent shortfall, you would get 90 per cent of your unavoidable fixed costs paid by the government. ‘Unavoidable fixed costs’ is obviously not a recognised financial term, so there were some initial debates over what actually would be covered, but in the end, it turned out to be a very good solution and it was put in place very quickly.
“There’s no doubt that this government intervention saved the businesses of fitness operators in Norway. So I think that was a very generous solution that they came up with.”
UNUSUAL WORKFORCE
Business is now returning to normal and EVO has brought back all its employees. And speaking of workforces, EVO’s is a rather unusual one.
For a chain that has a presence in five countries, the company has a remarkably small HQ team – just 13 employees. Adding to that, it has no frontline fitness staff working the gym floor.
The EVO clubs are open from 5.00am to midnight each day and are, in theory, unmanned. Rather than have regular staff and gym managers, EVO manages the gyms using its own, bespoke IT system called Credlock. The system enables automated membership contract and payment management, as well as the control of club access.
Each gym will always have people wearing EVO uniforms, however. Across its Norwegian portfolio alone, 180 personal trainers work the gym floor every day. “When you go into an EVO club, you wouldn’t know that the people there aren’t employees,” Hellevang says. “The way we’ve set it up is that we have a consultancy agreement with the PTs. They pay a small amount of rent every month for getting access to the clubs and our members. In return, we set their price-level based on their education and experience.
“While they can’t set their own price, they do get to keep 100 per cent of what they make.
“They also do a lot of things for us – including inductions. For example, we offer a 14-day free trial, which includes one free PT session, so they give that for free. While they don’t clean the clubs – that is done by a professional company – they do help us maintain the gym floor and equipment.
“We also schedule their presence to ensure we have people in the clubs between 9am and 9pm every day. We’re very flexible with the PTs too – they are free to work at other gyms if they want.
“It’s proven to be an extremely attractive model, partly because the PTs get to keep everything, instead of giving away 30-40 per cent of their turnover.”
The flexible, non-staff model is another element which helped EVO get its clubs ready to open, once the government signalled the green light for gyms to emerge from lockdown.
“We opened every club at the same time and with full opening hours,” Hellevang says. “On the day we were allowed to reopen, we threw open our doors at 5.00am until midnight – and have done since, every day of the week.”
“We’ve adopted all the new COVID-19 measures, such as routines for cleaning and disinfection. The social distancing rules are that, for intensive training (such as cardio work and indoor cycling), members need to keep two metres apart. For less intensive workouts – such as strength training – they need to keep a distance of one metre. The PTs are helping with the implementation of it all. They had been out of business for three months so they were very eager to return!”.
INTERNATIONAL GROWTH
As well as its 44 locations in Norway, EVO Fitness has 26 franchised gyms in Finland. The Finnish sites are owned by health club operator Fressi, which also owns and operates 16 full-service clubs in the country.
The Finnish EVO gyms, while operating exactly like their counterparts in Norway – including the centralised Credlock system – are branded as a Fressi sub-brand, called Fressi 24.
For the rest of Europe, EVO has signed a licensing agreement with Holmes Place, which has resulted in the EVO brand being rolled out across German-speaking countries.
There are currently 11 EVO sites in Switzerland, six in Germany and two in Austria and the agreement has allowed Holmes Place to build on the existing EVO model with its “own vision and philosophy” for the clubs.
“It’s not a clear-cut franchise arrangement with Holmes Place, it’s more of a cooperation,” says Hellevang. “They have developed the EVO concept to be slightly different from what we have in Norway. It’s still called EVO, but they have a slightly different logo and slightly different colour schedule. So unlike with Fressi 24, Holmes Place isn’t positioning its EVO offer as a sub-brand, but rather as a standalone business.”
FUTURE PLANS
EVO is looking to expand its foothold in the Norwegian health and fitness market with a strong development plan. There are still significant growth opportunities, as Norway’s market penetration for gyms currently hovers well below the 20 per cent mark.
“We opened four clubs in 2020 and have five signed for opening in 2021,” Hellevang reveals.
“We intend to follow our new opening schedule – agreed before lockdown.
“While the pandemic has been disruptive, we see this period also as an opportunity, as the retail sector is struggling, so we will be able to gain access to better locations than we had a year ago.
“We still have capital to expand – partly thanks to the government’s COVID-19 support, as it meant we didn’t lose too much cash.
“The pre-sales for our 2020 openings were pretty good too, so the market is still there. People still want to train at gyms.
“We’re planning five to six openings a year, but we could easily double that if we are able to find the locations. In the longer term, I think we could easily have 70 EVO clubs in Norway.”
