After a tough Covid period, South African gym operator eyes new revenue streams
South African entrepreneur Tumi Phake built a successful business, Zenzele Fitness, that sets up and manages in-house health clubs at the offices of large companies. Then Covid-19 hit. Gyms’ operations were restricted and many of Zenzele’s members started working from home. Phake had to rethink the business strategy to weather the storm.
Jeanette Clark talks to him about the last two years and how Zenzele Fitness turned into Zenzele Group with various new ventures, including a sports and athleisure clothing line, tech platform, health supplements business, and a bottled water brand.
How did Covid-19 impact your gym business?
The last two years were something else. Fortunately, some of our large corporate clients were paying for the service rather than us collecting memberships from the customers, which carried us through the worst periods. We had to change our business overnight, quickly digitising and going online; offering online group classes, supplying online trainers and on-demand individual classes using Microsoft Teams, videos on YouTube and our own social media channels.
We also created a product called Ekhaya Gym, a home gym set. The set starts with a plyo box, a padded box used in seated and other exercises. Clients can add other items such as resistance bands, kettlebells, skipping ropes and yoga mats. We also offered a work-out at home, with access to our trainers through digital platforms. Most of the corporate clients supported this initiative. We debated whether to offer the home gym set on a rental basis, but the reality of wear and tear just didn’t make it viable, so it is only available to purchase.
Despite this, our income and revenue were still impacted and we had to close some operations like our stand-alone gyms. However, we still have 22 gyms in operation across the country.
What new opportunities emerged?
The great thing about digitising our business is that now we are not only catering for the corporate individuals who come into the gym. Now we can reach an entire organisation, with thousands of employees across the world, which is very exciting.
We’ve organised the business into a group of companies. One venture we launched is Zenzele Tech. We’ve been working tirelessly to develop a fitness app that can support a hybrid model of work. Corporates still want to offer fitness and wellness to their employees, including those who only come in once or twice a week.
The app is going live in the next few months and we will consolidate all our digital services on there.
Will you be offering the services through the app on a subscription basis to the general public?
We will be launching our services on the app in two phases. Initially, we are only launching to the corporates so that it underpins our model of providing access to wellness for the entire employee contingent. In phase two we are looking at making it public.
What was the motivation behind launching Apara, a sports and athleisure clothing brand?
Over time, we got to know our customers; they utilise our gym facilities, they wear sports apparel, they take supplements and are probably also using some sort of fitness app.
Apara was always something I wanted to do, even before Covid-19; the pandemic just accelerated the strategy and the execution. We consulted externally with a creative team in Cape Town to help our thinking. We currently stock hoodies, yoga pants, sports bras and tracksuits.
We have already started looking at sneakers. The plan is to expand the range massively in 2023 as we see ourselves becoming the Nike of Africa.
The evolution of the Zenzele Group flows from the goal to create additional value so the customer increases their spending with us. We have planned even more subsidiaries: a health and wellness supplement business, called Zen Nutrition, and a bottled water company, Hydrate, focusing on servicing large corporates, gyms, schools, hotels and residential estates.
We have also launched an e-commerce platform because we see an opportunity to be a recognisable brand on the continent and even the world.
Where are the Apara products sourced from or manufactured?
We are working with various third party suppliers that produce the finished items. About 70% is locally supplied but we are also bringing in items from overseas. The suppliers use our design strategy and specifications and take care of the assembly.
Did you manage to find a manufacturer on the continent for the sneakers?
This has been challenging, no. We are currently talking to manufacturers in Turkey and China. With restrictions lifting a bit, we will visit these companies to see if we can finalise arrangements.
What does demand for Apara’s clothing look like?
The e-commerce has been growing nicely. We still need to invest a lot in our marketing but the brand has been well received. We can see engagement through our social media and digital analytics from the USA, UK and Africa.
Once we get to a full range, we will consider moving into the retail space with branded outlets and stock the items there as well as in our Zenzele gyms.
We are positioning Apara as an international brand from South Africa. We want to be able to open stores in New York, London, Kenya, Nigeria, Botswana – the scope is limitless.
What is your marketing approach for Apara?
Digital marketing is always going to be quite strong, even when we get to bricks and mortar. There are places where we may not even set up shop, but we can still ship there.
I believe an effective marketing strategy is to find brand ambassadors. We are currently strategising about the sort of ambassadors we want related to our brand.
Where does Zen Nutrition fit in?
Zen Nutrition is a range of multivitamins, fat burners, protein shakes, even vegan supplements. We have a South African third-party manufacturer that is producing the products for us. It will be available at our Zenzele gyms and also on the e-commerce platform from March 2022.
It is part of our retention strategy. In the gym business, the average lifespan of a customer utilising your facility is around 14 months. We want to keep the customer coming back for more. We want them to use our app and buy our supplements, tapping into the health-conscious trend that is currently very strong as this will lengthen that period beyond merely using the gym.