Closure of California Fitness Gym…Justified?

18 / Aug / 2016 by Navnita Kundu 0 comments

On 20th July, news broke out over California Fitness Gym’s (CFG) closure of outlets in Singapore and Hong Kong. Liquidators of JV Fitness, the company which owns and manages CFG, did not have adequate resources to continue the club’s operation. Buzz around social media was built due to speculations of CFG’s closure and impact on their existing customers. Taking into consideration that CFG was one of the leading giants within the fitness centre industry since its establishment in 1998, the gym’s sudden closure led to realisation that even the biggest of companies can fall.

Though CFG competitors attempted to snatch over CFG’s customers through marketing efforts, new sign-up responses were poor due to the fear a similar situation may happen in future. A good method to get an idea of how much a topic is resonating with the public is to take a deep dive into the conversations, mentions and levels of social discussion for each type of energy. Particularly for industries like fitness centres, this initial snapshot is an important gauge of how much buzz was created by netizens around the time of CFG’s closure.

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The buzz of the news started from 15th July 2016 where the rumours of shut down was observed. A peak was observed on 20th July 2016 with the official news of CFG’s closure, mainly taking place on social media platforms such as forums and microblogs. Hot topics included the reasons for the gym’s bankruptcy, shutdown and refunds on gym memberships.

 

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Mostly negative feedback was observed for CFG’s closure, with their members taking their rage and anguish towards social media platforms with regards to their rights for membership refund. Some members even took to filing lawsuits against CFG for their refund rights.

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The most striking observation that came into picture was, netizens only started criticising the services of CFG’s after the announcement of their closure.

So why criticisms pertaining to CFG’s services only did surfaced after their shutdown? Were JV Fitness aware of this prior to their announcement of CFG’s closure?

Closure of California Fitness Centre was the most talked about topic

Monitoring the overall levels of social discussion for CFG was a good way to get an idea of how much a topic is resonating with the public. Particularly for a gym like California Fitness Centre which generated a significant buzz in the period of 11th July 2016 – 25th July 2016.

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As per the graph above, the shut-down of the gym was the main focus of more than half of online conversations, yielding close to a significant buzz over a 15-day period where the highest buzz was observed within the last 60 days. News articles went viral about CFG’s failure to generate revenue along with the outlet closure sparked various sentiments in netizens.

One of the various reasons why CFG’s closure went viral was due to shutting down even when they had existing members whom had signed on for long memberships, with some of them reportedly incurring up to losses of thousands. The criticism of this act was the highlight along with the reasons of the shut down and impact.

While other fitness centers also suffered the aftermath of CFG’s closures, some competitors taking a jab at it by ensuring their existing customers that they were there to stay. Though the movement was less in comparison but the offers and buzz from competitors cannot be ignored.

The chart for share of topic shows the proper bifurcation of the topic as per the buzz. General Topic was the second highest discussed topic which covered the impact of California Gym’s closure, along with the articles that why it’s not right to go for paid memberships for a long time in fitness centers.

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Rise of the competitors? A smart step to grow business!

It is common for companies to take advantage of any dire situation that their competitors face. In this case, Fitness First and HomeTeam NS started offering various plans of memberships to the gym lovers. Anytime Fitness was also seen in the mentions but it was not active as the other rival centers.

HomeTeam NS were seen offering free access to the gym members who were affected by the sudden closure of California Fitness. This move by the rivals generated discussions among netizens on Microblogs and Forums.

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Activity by the rivals of California Gym Centre-

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Though it was risky, it was a smart move that was well received by netizens. Competitors managed to slowly to gain back the trust of existing and potential members.

Interest over time in Singapore for the brand-

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The search trend in the period of May-July was high in the period of July 13th 2016 – July 28th 2016 where the queries were mainly around California Fitness Gym and California Fitness Centre.

The queries witnessed a hike when the rumours of the shut down in Singapore started doing rounds. Highest trend was recorded when the official news of the shutdown was out. Negative experiences of the gym were also witnessed around the same time. After 21 July 2016, the buzz started dying down as there were no major searches around the gym.

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Was the closure of California Fitness centre was for good?

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 Between May and July 2016, the services offered by the California Fitness Centre were discussed by netizens across the social media. Surprisingly, there was no buzz before the news broke out about the closure. Netizens became active and started voicing about their experience with the gym. Positive experiences were nowhere to be seen, but the issues with cleanliness and equipment were at its peak.

However, many of those mentions were related to equipment and memberships offered by the gym. Early insights into such conversations gave an idea of which services were critical for companies belonging to the same industry. It also helped to give an insight for preparations to avoid the possibility of a crisis. Knowing which factors impact the perception of their products or services also allows customer service staff to target those issues and improve customer satisfaction.

Experiences with the gym was majorly negative where netizens complained that weight loss was ineffective and that the prices for membership packages were overly pricey. The gym was reported to have no clean towels, along with rusty exercise equipment. Though there was a fraction of positive experiences of people sharing about their favourite CFG activity and sessions, it was minimal.

As such, it was possible that JV fitness knew what coming due to the negativity surrounding the gym, being clearly aware of the pool of unhappy customers building.

Example of the non-availability of facilities in the gym centre-

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Conclusion

At present it is clear that California Fitness Centre created a buzz the media became aware of their closure. The volume of social conversations recorded in Singapore about CFG faced a high buzz in 15-days of the May – July 2016, taking place mainly on twitter and on forums.

As such, it is important to keep a close eye on the online conversations. New marketing campaigns can quickly change the landscape necessitating a re-evaluation of business strategy and messaging.

Possible reasons for the shutdown of the business:

  • The company did not have adequate resources to continue its operations
  • Property Division of the company lost money and stakeholders faced financial irregularities
  • Cash flow issues such as fixed rent, monthly salaries of the trainers, maintenance of the property and equipment
  • Company was under huge debt with limited cash flow
  • Limited service offerings by the company like over charged packages, no specialised trainers for all members
  • Cleanliness factor along with the equipment issues

Impact of the sudden closure:

  • Legal notices filed by enraged customers for refund of money
  • Lawsuits filed by members who have already paid for membership in advance
  • Negative conversations around the brand who was the oldest player in the fitness centre business leading to loss of trust in brand

The market was impacted heavily, with competitors generating campaigns to take advantage of the closure of California Fitness Gyms. Fitness centres like HomeTeam NS stepped up to offer free access to CFG’s members who were impacted by the sudden closure. Loss of trust in netizens were also witnessed, which will in turn affect other similar centres within the fitness industry market.

Tracking and comparing the conversation’s volume and location by keeping an eye on the buzz around specific topics can help fitness centres ensure that they will not be caught by a sudden change. Through understanding the customer’s sentiments and finding the right influencers to spread the word, they can exploit promising opportunities as they arise.

 

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