LeFit aims to become the "Shell" of China's fitness industry.

10000 stores is the dream of many retail service companies and the aspiration of fitness brands.

Although it has only been established for eight years and is still in the exploratory stage of the sports and fitness field, Lekfit has recently announced its goal of achieving "100 cities and 10,000 stores" - planning to enter 100 cities in the next 5 years, open 10,000 offline stores, and incubate new business formats in emerging markets.

Lekfit has never been a traditional fitness company, but more like an internet company.

It does not operate directly-owned gyms, does not urge users to purchase memberships, does not charge high fees, and even the gym area is much smaller than well-known brands in Shanghai and Beijing such as Mega Fitness and Welsh, with most gyms being only 300 square meters.

Lekfit has more similarities with Shell Find House in terms of business model. Its core is to build a digital platform using the S2B2C model, connecting scenes (venues), users, coaches, and services through appointment systems, platform shopping guides, user evaluation systems, etc., to achieve digital transformation of the fitness industry.

It is surprising that such a "counter-intuitive" company has set the goal of "100 cities and 10,000 stores".

Looking at the entire retail service industry, there are only a few brands with thousands of stores in the Chinese market, most of which are still concentrated in the catering industry, such as Mikel, Luckin Coffee, and Hua Lai Shi. In the eyes of Lekfit, Shell Find House and Hema Fresh are also their learning objects.

Official data shows that Lekfit has opened 1,300 stores in 23 cities nationwide, including over 1,100 Lekfit gyms, 160 FEELINGME private training studios, as well as sub-brands with more specific positioning such as YOGAPOD, Lightning Panda Fitness, and FitTribe.

It took Lekfit nearly six years to go from 0 to 1,000 stores, but they have given themselves only five years to go from 1,000 to 10,000 stores, which is undoubtedly a huge challenge.

Lekfit's hope of achieving its goals lies in its brand matrix and thousands of "partners" (store franchisees). It is understood that since June 2018, Lekfit has signed contracts with 661 partners, providing support in terms of site selection and construction, customer acquisition, and digital tools.

In mid-July, Keep, which is also in the fitness track, has already been listed on the Hong Kong Stock Exchange. Its stock price opened high and fell on the second trading day, and its market value has fallen below the valuation of the last round of financing before listing. The market clearly lacks confidence in its business model and profitability.

How will Lekfit restore market confidence in fitness companies? And how will they achieve the goal of "100 cities and 10,000 stores"?

With these questions in mind, All-Weather Technology conducted an interview with Xia Dong, co-founder and co-CEO of Lekfit.

The following is the main content of the interview:

Q: Why did Lekfit propose the goal of "100 cities and 10,000 stores"?

Xia Dong: In the second half of 2019, Lekfit set the goal of opening a thousand stores when the number of stores was around 300. When we achieved the goal of a thousand stores by mid-2022, we started to plan for the next goal. "百城万店" was proposed not to follow the trend, but to answer two questions: 1) Can China's service industry produce a company with thousands of stores? 2) Can we apply the concept of industrial internet to the fitness industry and build a comprehensive online and offline network?

Q: Is there a planned distribution pattern for "百城万店"?

A: Xia Dong: We have only established our presence in 23 cities, and our market share in these cities is still small, leaving ample room for growth. Additionally, we will expand our product categories and create a brand matrix to achieve the goal of having thousands of stores through the combination of cities and categories.

Q: What are the differences in difficulty between opening stores in major cities and emerging markets?

A: Xia Dong: The main difference lies in the penetration rate, that is, how many stores can be opened in different markets.

We have a standardized site selection system, and our level of digitization is quite good. This system can determine whether a city or a specific location is suitable for opening a store.

Q: Does this mean that as long as there are no operational issues, store partners can profit by following the site selection system of Leke?

A: Xia Dong: Currently, our success rate in site selection is definitely above 90%, but it is not solely based on data analysis. Leke's store network planning is based on the logic of McDonald's, and in addition to the support of data systems, we also conduct on-site evaluations.

Q: How does Leke ensure an adequate and diverse supply of coaches and courses when transitioning from thousands of stores to tens of thousands of stores?

A: Xia Dong: This is a challenge for all companies, including Leke.

Firstly, we mainly recruit coaches from the market. I believe that as long as we make efforts in recruitment, there are enough coaches in the market to meet the development needs of Leke.

Secondly, we provide coach training from scratch. Leke has its own research and training institute to cultivate coaches.

Q: How does Leke maintain a stable and sustainable supply?

A: Xia Dong: In 2019, Leke proposed the "New Decade for Coaches" plan, which allows coaches to have long-term development on the platform. Currently, there are six career paths available: trainer, coach manager, course developer, gym partner, internet celebrity IP, and multi-skilled coach.

Q: In the current environment, people still prefer platforms with high traffic and fast monetization. Will Leke face pressure?

A: Xia Dong: That is only a small portion of people's way of making money. The majority of coaches still earn their income by teaching classes in fitness centers. Of course, Leke can also provide diversified development opportunities for coaches and help them plan their career growth.

Q: Now both Keep and Fiture provide courses and coaches. What are the differences between Leke and these platforms?

A: Xia Dong: We mainly focus on offline business. Personally, I believe that in the next 5-8 years, the mainstream of China's fitness industry will be offline business, not online courses. There is a much greater possibility for cultivating fitness habits among the large number of fitness beginners in China through offline stores rather than online platforms.

Q: Why is it more likely to cultivate fitness habits offline?

A: Xia Dong: It's not that it's impossible to cultivate fitness habits at home. If the possibility of cultivating habits at home is 1%, then the possibility of cultivating habits in offline stores is 10%. More people develop fitness habits by training at home after going to the gym.

What Leke is doing today may be the most in line with the habits of the Chinese people. We provide a 300-square-meter gym that is closest to home, with the lowest threshold and the most convenient to use.

One day, when Leke's offline stores reach 5,000, there will be more people developing fitness habits offline, and the ecosystem of home fitness may also emerge.

Q: What is the current scale of Leke's business?

Xia Dong: This year, we can achieve a GMV of around several billion yuan, and the revenue mainly comes from offline stores.

Q: What is the market share?

Xia Dong: There has never been a company in China's fitness industry with more than 1,000 stores. In the past, the number of large clubs was basically around 100, but the individual store size was larger. There has also been almost no nationwide brand.

According to the data from San Ti Yun Dong, there are about 50,000 fitness clubs in the entire market, and Leke accounts for about 2% of the market.

Q: Leke rarely mentions user numbers and user satisfaction, which are more consumer-oriented indicators, but focuses more on store count, store efficiency, and store operational efficiency. Does this mean that you are a company targeting venture capitalists?

Xia Dong: Absolutely not. Because it is a partner conference, we talk more about operational data.

On the user side, on average, each user visits the store 7-8 times per month, far exceeding the industry average. In addition, about 20% of users use their membership cards across multiple stores, such as exercising during business trips, near their homes, or near their workplaces. These users have higher quality than those who do not exercise across multiple stores. Leke's user retention rate and repurchase rate are also much higher than the industry average.

In the past, the fitness industry mainly sold long-term membership cards, and trainers were very aggressive in sales, and it was common for them to disappear. Fitness centers made money from "users not coming" to the gym, while Leke aims to make money from "users coming to the gym."

Q: Leke says that the mid-end system is relatively complex, but at the same time, the technology is not very profound. So where is the difficulty in this matter?

Xia Dong: There is definitely no difficulty in terms of technology. The difficulty lies in going deep into the front line and abstracting offline elements for digital processing. Secondly, after digitization, it involves changing habits, which requires trainers, partners, and users to adapt.

Q: Leke was founded in 2015 and caught up with the boom of the sharing economy, which is also a form of the sharing economy to some extent. However, shared economy models such as bicycles and power banks are now declining. What do you think is the reason behind this? Will Leke follow the same path?

Xia Dong: It is true that we were influenced by the sharing economy when we started Leke. At that time, Uber and Airbnb were both multi-billion-dollar companies, and we thought this model could also change the sports field, so we wanted to do this.

But if we discuss whether the sharing economy can succeed in China, it's a huge topic. The definition of the sharing economy is also subjective, and it's very complicated. I prefer to interpret what Leke is doing from the perspective of the industrial internet, which is to transform complex services with the help of the internet. This logic is absolutely valid.

Q: Leke is in the consumer retail track. How do you view the development prospects of this industry this year?

A: Xia Dong: This year, the overall economy is in a state of recovery, and I believe the industry will continue to improve.

First, the fitness market in China will continue to grow in the next decade. Whether it's Liu Genghong's popularity, Bilibili, Village BA, or Village Super, we can see that people are paying more and more attention to fitness. Second, we have our own perception that the average number of users per store in Leke has increased significantly compared to the end of last year.

In fact, Leke has recovered quite well in the first half of the year, and we need to be patient with the recovery process.