Business Model

With first-rate machines and equipment, dance classes, Zumba, martial arts, and instructors available to students, Body Engineering can deliver higher quality service than academies in smaller communities, which are typically low-priced and low-quality. The number of gyms in the network is very important to create the bulky effect, to capture and to maintain customers because in general people attend gyms near their homes and/or work. By meeting this demand, the company is able to generate value for its customers. The Body Engineering structures its processes to be automated centralizing administrative activities and interacting with customers remotely, which enables the attendance of a large number of students in a standardized and lower-cost way. The High-Value model Low Cost, is already consolidated in mature markets and is gaining increasing relevance in Brazil, but still with great growth potential

Competitive Advantages

Value Service Model: The company operates in the Value Service model, which has as characteristic the Low-Cost price, associated with a wide range of services, such as collective dance classes, Zumba fitdance, and martial arts. The gyms are equipped with state-of-the-art equipment, located in a strategic point and present competitive price, which ensures greater competition compared to the network academies of the Low-Cost segment. According to the company, this model is constantly evolving. Then, as the market changes, new opportunities appear and the company is able to introduce new activities within the academies. The format of the units differs from their main competitors. In the case of Engenharia do Corpo, the gyms operate 24 hours a day. In addition, the units contain dance rooms, fights, and other services are offered. The average area is also equal to or greater than 1,200 m². By increasing the space, training time and number of activities, the company can avoid the academies from being overcrowded, as it occurs in the cases of academies with less structure. This fact contributes to improve the customer experience, and increasing loyalty, fundamental in this sector. It is still possible to realize an improvement in this aspect. As the company manages to bring good customer experiences, the indicator is expected to continue to fall. Compared to some global players, with the proper proportions, Brazilian companies still have space to evolve Investments in technology generate greater customer retention: Through the company’s internal database, it is possible to promote the monitoring of student attendance in academies. For example: if a student would train a little when he enters the gym, one of the teachers of the unit receives a notification signaling his arrival in order to perform a personalized service. Better efficiency in opening units: according to the company, even with an average large area, the company spends less on
capex/unit than the competition. This is possible due to better use of space, such as dance and fight rooms, which generate little capex. In addition, Engenharia do Corpo manages to cut some expenses in the type of material and products used in the construction of gyms, where the economy does not affect the performance and quality of the units.

Perspectives

As vaccination progresses, the withdrawal of restrictive measures and pandemic control, the academies sector should present an extremely positive scenery mainly for three reasons:

1. 
   I) Sub-penetrated market: as shown in the Sector Overview section, the academies market in Brazil is still very sub-penetrated, especially when compared to more developed countries.
2. 
   II) Market consolidation: in addition to being sub-penetrated, the Brazilian market is highly fragmented, being dominated by smaller academies, which usually offer a lower quality service and with higher prices than low cost academies, besides being the ones that suffered the most from the pandemic. Thus, students who will return to classes with the end of the pandemic should see academies with a better cost-benefit, which tends to accelerate the natural consolidation of the low cost academies market.

III) Greater concern for health: especially with the pandemic, a large part of the population realized the importance of being physically active and caring about health. Through studies proving the slightest impact of Covid-19 on healthy people who exercise regularly, people are taking care of themselves more and more. A perception that should increase the flow of new entrants into the academies.