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Saving money with good deals is common sense but...

Wednesday, July 20, 2016

As investors, we know that businesses that take cash from customers and enjoy credit terms from their suppliers are in a very good place.

Get paid now but pay vendors much later? Wow! This is one reason why Walmart is a good business, right?

When we go to a supermarket, we don't get to leave the place with the stuff we want unless we pay for it. Of course, we can pay with a credit card to enjoy some shopping benefits but it is essentially a case of "no pay, no take".

When we see a very good deal on something that we consume often, we could buy a lot more to save money. Instead of buying one, we buy more. That makes many of us happy!

If the supermarket told you that you could buy more of a special deal item but you could only collect one now and the rest on a monthly basis in future, would you bite?




Would you?


Then, what about this?

I shared this on my FB wall 2 days ago.

It happened earlier this year.

I actually told the California Fitness salesman that I didn't mind paying on a monthly basis but a lump sum payment for a 3 years membership?

Sorry, not interested.

Saving money with good deals is common sense? I must be stupid not to take up the offer.

I was adamant.

I could tell that the salesman was disgusted.

AK was such a disgusting customer.

Disgusting and heng ah!

Remember, saving money with good deals is common sense but paying in advance and in full to get good deals is not as sensible.

California Fitness is not the first example and it won't be the last one either.

Related post:
1. 6 points in response to an expensive lesson.
2. Nobody cares more about our money...


Dennis Ng said...

Hi AK,
This is a good one! I catch no ball until the last few paragraphs....
Now I see.... 'California Fitness' ;-)

Kevin said...


Sudden closures of businesses especially those with clients who signed packages seems quite common these days, from bridal salon to spa and now a major gym operator.

It makes me wonder what are the real underlying reasons behind it and having saying that, the toothless CASE has been very silent on the California Fitness' sudden closure of business. :P

Siew Mun said...

If it is NTUC supermarket would you bite? :-)

AK71 said...

Hi Dennis,

I talk to myself a lot and many times I also catch no ball... -.-"

AK71 said...

Hi Kevin,

Money is hard to make. We should make it hard to lose.

Over the years, I have come to realise that common sense is not a very common trait. -.-"

AK71 said...

Hi Siew Mun,

I was afraid that someone might ask me that question!

NTUC Fairprice how to close down? Hoot ah!

Disclaimer: I am a shareholder and I might be bias. ;)

Kevin said...

Hi AK,

California Fitness has a branch at bugis junction towers. I wonder will NPI take a significant hit for Keppel REIT as the gym occupies quite a large NLA.

AK71 said...

All California Fitness gyms in Singapore will be closed with immediate effect.

In a media announcement shortly after midnight on Wednesday (Jul 20), Tim Reid and Theresa Ng of Ferrier Hodgson said they have been appointed as Provisional Liquidators of JV Fitness Pte Ltd, by the order of the High Court on Jul 19, 2016.

JV Fitness owns and operates the California Fitness centres located at Bugis, Raffles Place and Novena.

"JV Fitness does not have adequate liquid resources to continue its operations and therefore all outlets in Singapore will be closed from today until further notice.


AK71 said...

California Fitness gym members are doubtful about their chances of recouping any money after it was announced on Wednesday (Jul 20) that the franchise has been put into liquidation.

Ms Jodi Lee, who paid around S$3,000 for her three-year package which still has a year to run, said that she is intent on trying to get reimbursed.

“I might file a complaint with the small claims tribunal but I think it’s a pointless exercise,” said the 40-year-old marketing executive. “Liquidation makes it very difficult for members to claim any sort of compensation. I feel cheated because I signed a long-term membership contract, and that agreement has not been kept,” she added.

Fellow California Fitness member Muhammad Taufiq Rashid also wants some, if not all, of his money back. The 34-year-old doctor said: “I know it’s near impossible but one can only hope.”

Both Mr Taufiq and Ms Lee signed an online petition on entitled “Get California Fitness to refund its victims”, which had garnered over 1,400 signatures as of 1.30pm on Wednesday.


AK71 said...

Hi Kevin,

As a percentage of the portfolio's total NLA, it is probably not that significant. :)

anon said...

There is a reason why "pay in full now but enjoy the benefits over future years" is prevalent only in the lifestyle industry (gyms, facials, massage, hairdressing, pedicure-manicure etc). These are consumer-discretionary services operating in cut-throat competition and are thus very aggressive with their marketing efforts, very often with scant commitment towards maintaining standards & continuity.
Cashflow is either weak or negative against the constant need to slash prices for high human traffic, and high rental. The public should be mindful that what appears to be savings in such promotional prices, is totally deceptive (in fact, none at all) because they come with a very high degree of uncertainty.
There is also a reason why supermarts/hypermarts/convenience stores do not need such gimmicks because they are consumer-defensive and with their "Buy 3 at the price of 2" promotions, you are at least walking away with the goods in hand after payment.
I always reject promotional prices offered by lifestyle shops because it is literally "throwing money down the drain"!

AK71 said...

Hi jojo,

Always a voice of reason. Thanks for sharing your thoughts. ;)

SMK said...

hmmm how about buying a property right now in July 2016 and paying a lump sum (via loan with interest) and collecting the future rentals?

AK71 said...


If you get 100% of anything you purchase now and pay in installments, you don't risk not getting what you paid for in future. The property is there for you to see and touch. However, in the example you gave, whether future rentals are assured and in the quantum desired is harder to say. It is not so straightforward, your example.

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