China’s economic slowdown has cascaded in to almost every aspect of daily life in the country. With consumers tightening their belts, even wellness has taken a hit.
As the country faces slower economic growth this year, many franchises and boutique gyms face an uncertain future in a sector that was already bruised by the lockdowns during the Covid-19 pandemic. Now, gymgoers in China are opting for flexible passes and short-term memberships amid a slowdown in the economy and a loss of trust in some brands.
Shanghai-based fitness coach Jay Dengle said he has noticed a shift in customers’ spending habits away from long-term memberships. He has also seen an uptick in customers using third-party platforms like ClassPass, which allows users to pop into a variety of studios without being a full-time member.
“A lot of people are just not spending like they used to,” said Dengle, co-founder of exeQute, a class-based fitness centre located in downtown Shanghai. “Before our most popular membership was a three-month membership. This month, we sold only one three-month membership, with the most popular being flexible credits on smaller packages.”
It comes as economic data released this week showed the world’s second largest economy growth momentum had weakened, while retail data came in well below expectations.
Still, China’s fitness market is expected to continue growing as consumers are paying increasing attention to health and fitness. New fitness models are emerging all the time, including group class boutique studios and private teaching studios. The fitness industry is expected to cross 100 billion yuan in 2026 (US$13.8 billion), compared with 70.6 billion in 2021, according to Statista.
Apps like ClassPass also offer competitive sales for price-conscious consumers, making the price per class even cheaper for users than going directly to the retailer.
“I thought customers were price-sensitive, but now I have realised that they are just not spending,” said Dengle, who believes the wave of shutdowns of prominent fitness franchises in China during the Covid-19 pandemic has weakened trust between consumers and fitness centres.
Tera Wellness, once a dominant player, shut down its operations in Beijing, Shanghai and Guangzhou in May 2023 after declaring bankruptcy. At the time, several aggrieved trainers took to social media, claiming the company had failed to pay wages and rent, while customers were left fuming as their membership fees were not refunded.
Other franchises like SpaceCycle and Physical also shut down several branches across China in the past year, causing an uproar among consumers who had to forfeit their deposits.
Raphael Coelho, the managing partner at X-Sigma Partners, an accelerator focused on scaling up retail brands in fitness, pet care, and food and drink, said consumers in China are looking for community-oriented gyms.
“We saw this trend globally, of people wanting to go to boutique fitness studios,” said Coelho, and while China is going through a slower economic transition, only niche concepts with strong business strategy can survive.
“There may be a lot of reasons why a concept fails,” he said. “You can’t just blame it on the economy. “It may be the business model, or the structure may have always had a problem to begin with.”
A slow market means only the best businesses will thrive and grow, he added.
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One of the rare successes in China’s wellness industry is MYBarre, which opened its first gym in Shanghai in 2016.
MYBarre gym is popular with women, as it incorporates ballet, full body workout, sculpting, toning, strengthening and flexibility.
Siri Nordhejm, co-founder of MYBarre, says they were lucky to make it through the pandemic, mainly because most of her customers were Shanghai residents and not foreigners, who left the city in droves during the pandemic.
Consumers are more price-conscious and looking for the best value for money, Nordhejm said. The shift in attitude forced Nordhejm and her business partners to rethink the way they offered memberships to customers.
“We don’t lock people in the system which, I think, is definitely the way to make consumers feel happy,” said Nordhejm. They can try it for the experience and do not have to opt for any long-term contracts, she added.
“If you really have a great product, a great experience, I don’t think people mind actually spending the money,” she said.
