The founder and CEO of Alex Fitness talks to Kate Cracknell about European expansion, his new low-cost brand and a goal of one million members in Russia by 2023

What’s your background?
I’m 100 per cent a product of the fitness industry. Back in 1995, I studied at a university of physical education and finished up at a college of bodybuilding. In those days, the fitness industry was really only just developing in Russia, but after college I went on to work in a small gym. Then, after two years, I took a job at World Class, which at that time was the most well-known fitness brand in Russia.

I established myself as a trainer and presenter in Russia, and I managed a few clubs – by now under the Planet Fitness brand, after Planet Fitness and World Class split into two separate companies. But by 2005 I was looking for a new challenge. I was keen to venture out on my own.

So what did you do next?
I put together a business plan to open my own health club and went out to find some investors.

If I look back at my original plan now, I realise there were quite a lot of holes in it! But there were also a lot of good ideas, so when I didn’t get the funding first time around, I didn’t give up. At the fourth attempt, I got the backing I needed to open my club and found the perfect location.

That first club opened under the Olymp brand – a 2,000sq m, full-service premium club in St Petersburg, which we opened in November 2005. It’s still open and performing strongly now, 11 years on, and I remain very passionate about it because I’ve put a lot into it personally. From that first successful opening, we went on to open another four Olymp clubs in the space of a few years – all what we call ‘business premium’ standard.

Does Olymp remain your core focus?
We’re still opening Olymp clubs – we launched two last year to reach nine locations, and we plan to open one or two each year. In Russia, at least, there’s a need for clubs that act as a status symbol – places where you can spend your time in the company of the ‘right people’, in the right social circles – and Olymp meets that need.

However, when the economic crisis hit in 2008, sales fell in our luxury clubs and I was forced to re-evaluate our offering.

I visited lots of clubs in the US and Europe in the belief that I was looking for something special, something new we could offer in our premium clubs to make them even better – something people wouldn’t want to do without. But I was really disappointed. There was really nothing out there that I felt we could learn from. In fact, at that stage, a lot of the clubs in Russia were actually better than those I saw in the US.

However, there was one very important lesson from my global research. I realised the new idea wasn’t premium at all. Quite the opposite – it was about being low-cost. At the time, there were no operators in this segment in Russia and it was certainly the case that many people could no longer afford luxury, so I returned home and piloted a few inexpensive clubs. These clubs – which we launched under the Alex Fitness brand in 2009 – still focused on quality, but the price was anywhere between US$200 and US$400 a year, depending on the location.

Membership is now even cheaper – although not so low that we get too many members. If a club is too full, nobody gets a good experience, so we have very strict rules on pricing, number of members and how to manage peak times.

All of which makes it sound as though the pilot was a success?
It was – we now have 61 Alex Fitness sites either open or in development, all of which are owned by us except for one franchise in Russia. We also own one site in San Francisco, US, which opened in 2011.

The quality of the equipment and the training at Alex Fitness is just as good as at our premium clubs, so it’s a great offering for those who can’t afford premium memberships. Some of the clubs even have swimming pools, and one has an ice rink.

We’ve evolved the model over the years, incorporating new technologies and developing a deeper focus on member relations. We now have our own Alex Fitness University, for example. We don’t have a huge number of employees – there’s a small management team and a lot of freelance trainers – but our university is open to everyone who works for us. We expect them to keep their qualifications up to date, and we want to help them do this.

We’ve also launched a gamification project at both Alex Fitness and Olymp. It’s a four-week guided training programme in which the member gets everyday support, including meal plans and a training plan they can do at home or in the gym. It costs extra to take part – around US$50 – but the idea is to motivate people to change their lives, and there are prizes for those who achieve their goals. The overall winner is voted for by members.

We’ll definitely keep growing Alex Fitness, making our decisions regarding which brand goes where based on demographics – whether a status symbol club is required, or whether the area needs a more affordable club.

The other factor that will influence those decisions is the launch of our new brand, ALEXGYM.

Tell us about ALEXGYM
I believe there’s a lot of potential for this brand, which is now my main focus. This operation sits fully at the low-cost end of the scale, with no contract and a pay-per-visit model; in Russia, you pay membership for a year in advance, so to do no-contract we had to make it pay-as-you-go.

There’s no reception and self-employed trainers are the only staff, but we give some of them extra administrative duties to ensure the club keeps running smoothly.

So what are your plans going forward?
I want to get to one million members in Russia by 2023 – we currently have 325,000. I can’t tell you exactly how many new clubs that will mean, because it all depends which brand we put in each location: we base our calculations on approximately 2.5 members per square metre, and each brand has a different footprint. Alex Fitness clubs tend to measure around 1,500sq m, for example, while ALEXGYM is more like a 900sq m model.

So we’re not really thinking about number of sites. We’re thinking about number of members and therefore square metrage. We grew by 20 per cent in the last year – from 100,000sq m to 122,000sq m – and aim to grow 20 per cent a year going forward. We can finance this ourselves without any external investment.

Our focus will be on Moscow: we want our members to have access to many clubs across the city that all feel the same. Traffic is dreadful in Moscow, so you have to make sure members can easily get to a club wherever they are.

We’ll also keep investing in our existing clubs. I believe that the more a club brings in – the more successful it is – the more you need to invest in it to maintain its success.

You’ve mentioned a club in the US. Do you have other overseas expansion plans?
We do. I’d like to roll out Alex Fitness in the US, aiming for 20 clubs by 2023. We may also look at the possibility of a slightly higher-end offering for New York City.

We’re also aiming to open three to five clubs in Europe each year, outside of Russia. We don’t have any sites confirmed as yet, but we’re close to signing on three locations in Berlin, one in Vienna and one in Rome. I’d like to come to London too, and in fact we’re looking at all the big cities across Europe.

Quite possibly these clubs will operate under a new name, with a new model – I want to try a few things out. The facility will be a full-service club, with a gym area, CrossFit zone, group exercise studios and so on. But I want to look at different ways of packaging it: one monthly membership for all facilities; pay per visit; pay extra for group exercise. We may also try renting out the studio space to personal trainers.

The idea is to grow quickly, so once we’ve settled on our strategy, we’ll go fast. I’d like 50 clubs in Europe by 2023.

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Alexey Kovalev, the founder of Alex Fitness, talks about European expansion, his new low-cost brand, and a goal of one million health club members in Russia by 2023

Kate Cracknell, Journalist, Leisure Media Alexey Kovalev, The founder and CEO, Alex Fitness,Alex Fitness, Alexey Kovalev, Kate Cracknell, World Class, Planet Fitness, Olymp, Alexgym,