Virgin Active plans flexible pricing and online offerings to combat work-from-home trends

 ·21 Jun 2022

Virgin Active says its clubs in South Africa are showing good traction on membership recovery following a lift in the restrictions around capacity, in line with lockdown regulations in February of 2022.

Since the relaxation of Coronavirus restrictions and the removal of capacity restraints in Q1 2022, Virgin Active South Africa said its sales have recovered to levels similar to 2019 levels with active members growing from 497,000 at the end of December 2021 to 557,000 in May.

Membership engagement and usage levels continue to improve and termination levels have fallen, comparing favourably to 2019 levels, said holding company Brait on Tuesday (21 June) in announcing financial results for the year ended March 2022.

Virgin, which represents 44% of Brait’s total assets, has undergone a significant year completing its restructuring plan and debt refinancings, raising R1.8 billion of new capital in the group. It said that a significant amount of work has been done over the last 24 months to preserve liquidity, restructure the business, and raise additional capital to provide a solid recovery and growth platform.

Earlier in June, Virgin Active South Africa appointed Jessica Spira as its new managing director effective from 1 October 2022.

“With Jessica as MD and a strong team, Virgin Active South Africa will be able to capitalise on the fast-growing health, wellness and fitness market, and will enable Virgin Active to deliver new and innovative experiences to the South African consumer,” said Dean Kowarski, group chief executive of Virgin Active globally.

“We are seeing an increased demand for community-based exercise and a move away from pandemic-era online fitness. Leadership in the gym industry has been dominated by males so the appointment of Jessica will bring a fresh perspective.”

Virgin Active also recently announced that it acquired the nutrition assets of The Real Foods Group including 204 Kauai stores for £28.6 million. This acquisition is undergoing regulatory approvals.

Looking ahead, the group said it will focus spend to ‘rejuvenate the estate’ and drive further membership engagement during the next few years.

With locations in the UK, Australia, Thailand, and Italy, Virgin pointed to strong growth in the membership base since the start of the calendar year across the key territories, from 754,000 active members at the end of December 2021 to 847,000 active members currently – with a significant reduction of the members on freeze.

The group said that while all gyms are now open, the business continues to be impacted by work-from-home trends.

Brait said that the carrying value for its investment in Virgin Active at the reporting date is R8.28 billion (FY21: R7.97 million) and comprises 44% of Brait’s total assets (FY21: 45%).

Virgin Active is targeting significant footprint expansion with state-of-the-art clubs in Italy & Asia Pacific. For South Africa, it said that while its clubs have a strong market position, they require facility, product, and digital investment.

Virgin said it will expand the predominantly bricks & mortar offering into digital, and will also invest in the member experience in certain geographies, especially in South Africa.

It will also implement a flexible pricing model, although details of this are yet to be released. In a statement on Monday, Discovery Bank announced several new features which are being rolled out to its clients – including changes for Vitality Travel and a pay-as-you-go gym option, with Virgin Active.

The group pointed to a ‘phased and iterative implementation of flexible membership models,” going forward.

To combat work-from-home trends, Virgin said it will design an online offering to compliment the in-club experience and extend its reach and engagement levels. It pointed to a ‘hybrid business’ model with home workouts combined with personalised group training sessions, health apps, delivery services, and virtual reality – all digitally supported.

Read: 3 big changes coming to Discovery Bank – including pay-as-you-go gym

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