Yoga-fitness chain Pure hopes to bulk up in China

Home-grown health and fitness chain expands aggressively with new locations across Asia, its own clothing brand and an organic food business

PUBLISHED : Friday, 16 May, 2014, 10:48am
UPDATED : Monday, 19 May, 2014, 7:17pm

The yoga studios at Pure typically smell like a mix of coconut oil, kale and other healthy ingredients, but members may have noticed a little less wheatgrass and a bit more paint and plaster in the past few weeks.

The home-grown health and fitness chain has kicked an aggressive expansion plan into high gear, opening a steady stream of new locations and renovating existing ones, as well as embarking on new lines of business.

Now that we’re in the market, I’d prefer the rents to be high … it’s a barrier to entry

In autumn, Pure added a second yoga studio in Central and made its first entry into the mainland, via Shanghai.

There are two openings planned in Hong Kong this year and two in Shanghai by the middle of next year, and then there is Pure's new Nood Food range and a new yoga apparel line.

The man masterminding this rapid expansion is chief executive Colin Grant - a former tennis player who represented Hong Kong in the Davis Cup - who co-founded Pure in 2002 with Bruce Rockowitz, chief executive of global sourcing giant Li & Fung.

"We have connections to Li & Fung. That's not a disadvantage," he said of the prospects for Pure's in-house clothing line. "We've been selling [other brands of] apparel for 12 years. Members were asking for it … the risk if we didn't do it [was that] we would be basically building someone else's brand, then they would get big, they would stop selling to us and open their own store."

Pure Apparel will soon be rolling out new styles and colours every week.

"It's very fast, but we have 13 studio locations and we're doing e-commerce in about two months," Grant said.

The clothes will be sold on Tmall and via its own website platform with two versions - one for the mainland and one the rest of the world. That doesn't mean he's going to do away with all third-party brands though. "From a risk point of view it makes sense to have [a private in-house label] in your portfolio with all the other brands," Grant said.

Bloomberg consumer analyst Thomas Jastrzab said for Pure Apparel to succeed on the mainland, the company would have to work hard on building brand equity - avoiding the pitfalls of domestic sportswear apparel players like Li Ning and Anta.

"Consumers want high quality and differentiated products, particularly when they are paying a premium price," Jastrzab said.

"Companies that sell generic products with limited brand equity run the risk of becoming dependent on discounting to clear unpopular products."

Grant said the company was "still learning" in a tough industry, but his vision for Pure Apparel is ambitious.

"The clothing line has the potential to be 10 times bigger than everything else," he said. "Standalone stores next year. Maybe Vancouver, maybe London."

Grant, who can usually be spotted in the lounge of Pure's newest location at Asia Standard Tower in Central, said he would like the eventual breakdown of the rest of the business to be 40 per cent yoga, 40 per cent fitness and 20 per cent food.

The Asia Standard Tower yoga studio is the 13th he has opened, along with seven gyms.

While other companies beat Pure's Nood Food to the punch in offering juice detoxes, Grant said his juices were conveniently grab and go, unlike those of competitors that customers had to pre-order a day or more in advance.

"I'm hugely confident that there is a big gap in the market," he said. "We've got an 8,000 square foot kitchen in Chai Wan, which delivers twice a day to our studios. A third of the people who come in right now [and buy from Nood Food] are not members."

The HK$65 price tag for a smoothie might make customers wince, but Grant insists that it is good value for money once you account for the organic ingredients, many of them imported.

As Pure expands further on the mainland, where severe pollution and regular food scares are a constant reminder of health concerns, organic is likely to be a key word for consumers. According to the China-Britain Business Council, sales of organic food are expected to grow by more than 20 per cent a year until 2020, buoyed by the growing middle class.

Another study, by market research firm Mintel, found that 80 per cent of urban mainlanders believe organic food and drink products "are worth paying for" and that the consumer will pay as much as 90 per cent more than for non-organic equivalents.

Each day, 10,000 people pass through Pure's doors in Hong Kong, Singapore, Taipei, New York and Shanghai, where it set up its first mainland gym in the city's iAPM mall in October.

"Hopefully by the middle of next year, we'll have two new locations. We're looking at Pudong and Nanjing Road West," he said.

Meanwhile in its home market, a new fitness-yoga hybrid studio at Repulse Bay is due to open in August. It will be 15,000 sq ft of dance classes, personal training, yoga and boot camp classes on the beach.

That will be followed by a six-storey gym in Lan Kwai Fong in October with something none of the other locations has: five-metre, floor-to-ceiling windows and a swimming pool.

Grant said the company had always avoided paying "exorbitant" ground-floor rents and that finding the right location and a supportive landlord was one of its biggest challenges.

"We work with good landlords that don't just see us as a tenant but as a partner who can add value to the building," he said.

"We're not interested in people who say, 'We're not too concerned with what you do, but as long as you're willing to pay this rent, that's all that matters.' When we invest US$2 million to US$3 million in a yoga studio, we need a landlord who wants us as a long-term and anchor tenant. We've never - touch wood - closed a location."

There is an upside to the high rents now - keeping competitors at bay. "From a business point of view, now that we're in the market, I'd prefer the rents to be high, only because it's a barrier to entry," he said.

Grant said Pure might file for a stock market listing in 2017.

"It's definitely an Asia-Pacific brand in the short term," he said. "I don't need us to be the biggest. I want us to be the best."