CPG companies are faltering as they fail to meet consumers’ growing demand for healthier foods. Last week, Kraft Heinz, Campbell Soup and Nestlé all cited demand for healthier options as hindering growth in the past year.
This is a sign of a greater trend in the consumer market, not just for healthier foods but for goods and services that promise a healthier lifestyle. An emerging rank of new companies are moving swiftly to fill the void and grabbing market share that the traditional companies have left open.
Wellness today is not just a trend or a fad; it’s a way of life for more and more people. “Wellness is an approach to living life that is becoming as second nature as brushing teeth,” says Kelsey Groome, managing director at TRAUB, the global development group, and author along with associate Katie Guiheen, of a new Wellness Journey report. “Brands that will have the biggest impact are ones that will make it accessible to more people to live a balanced life in mind, body and soul.”
The report maps out eight major segments in the wellness market – fitness, meal programs, supplements and vitamins, eateries, juicing, spa, beauty and mediation – and identifies 100+ companies that are trailblazing in each of those segments.
Rather than calling the Wellness 100+ disruptive brands, I see them as competitors more in tune with the evolving needs of today’s consumers. Whereas traditional companies are struggling to adapt, these Wellness 100+ brands have grown out of an understanding that wellness is not the result of one or a range of products, but a lifestyle that needs a range of goods and services to support it.
“The 100+ brands on our wellness journey,” they write, “are indicative of a broader lifestyle movement to prioritize wellness for physical, internal and spiritual health. The proliferation of these concepts is set to continue as wellness shifts from a singular goal to a lifestyle habit.”
The market that these Wellness 100+ brands compete in represented a $3.7 trillion global wellness industry in 2015, according to data compiled by the Global Wellness Institute, which will release an updated report later this year. At that time, industry growth was predicted to exceed 17% through 2020.
I asked Groome and Guiheen to give me a guided tour along their wellness journey and call out the movers and shakers that are most relevant to retail. Here are the stops along our journey:
Build a product brand leading with services
The first movers in the wellness market have focused on physical health: fitness, beauty and spas. And many of these players combine health services in store with products to take home to support consumers’ wellness lifestyle.
Retailer Dry Bar leads with premium blow-dry and styling services in 70+ salons plus it offers branded products in each shop, online and with partners including Nordstrom, Bloomingdale’s, Sephora and Ulta, so customers can maintain their looks at home. And on its website, customers can view videos that give them professional blow-dry styling tips.
Heyday brings the same stripped down, simplified approach to beauty facials, offering a range of customized facial services including walk in or a monthly subscription plan. Heyday salons also offer a curated, multi-brand range of products for sale. Currently Heyday has 5 NYC locations, but it is a concept poised to grow nationally like Dry Bar.
NYC-based fitness fashion retailer Bandier sells women’s clothing, shoes and accessories so she can workout in style. And it also devotes space in its Flatiron location for her to attend workout classes in its Studio B. In so doing Bandier combines fitness and fashion in one location.
Sporting equipment brand Peloton takes a different approach, leading with its premium fitness bikes to support customers’fitness at home, and enhanced with streaming fitness classes from its NYC studio so the exerciser can virtually join an expert-directed class without actually being there. With 30+ showrooms nationwide, Peloton also sells apparel and accessories to take the Peloton lifestyle further.
Essential nutrients, rather than supplements
The traditional approach to nutrition is that it is something added to or supplemented with, as opposed to the radical idea that people choose foods based upon the nutritional value that is already in them. This maybe contribute to CPG’s missteps in the wellness market and Vitamin World’s failing.
“The new age of supplements and vitamins focuses on being all natural and in line with the transparency millennials are seeking,” Groome says. “Understanding what is going on in their body is key, and vitamins and supplements that can do that with a personalized approach are gaining market share.” She further points to studies that found 70% of millennials say they use herbal remedies and 68% have tried homeopathic cures.
Dirty Lemon Beverages is a brand taking an essential nutrient, rather than supplemental approach to consumers’ heath. It offers a range of drinks formulated to provide essential vitamins and nutrients targeting specific customers’ needs, such as energy, beauty/radiance, anti-aging, vitality and detox.
Gender-specific health solutions are the anchor for two new healthy brands. For women Ritual simplifies the multi-vitamin formula by providing the essential vitamins most women lack. And all ingredients are open-sourced which adds to transparency. Groome also notes that Ritual has raised nearly $15.5m to date from high-quality investors (Forerunner, NVP, Founders Fund, etc.) For him is Hims which takes a similar gender-specific approach to men’s health issues with natural remedies for men’s most pressing health concerns, hair loss and erectile dysfunction, plus male-centric skin care.
In vitamin supplements, custom packages of daily doses are rapidly replacing a shelf of bottles in mega-doses. Care/of fills that prescription with personalized daily vitamin packs based on a consumer’s initial screening of lifestyle and goals. This is another company gaining takers not just among consumers but from venture capitalists too, having raised $15m Series A in July 2017 from RRE and Goodwater Capital, which value the company at $35m.
Go to the mall and get healthy
“People must have a reason to go to the mall, then they will shop, but shopping can’t be the reason to go there,” says Ken Nisch, chairman of retail design from JGA. That is the answer to the retail apocalypse laying waste to so many regional malls.
Fitness centers provide one of those reasons to go to the mall for the wellness minded. “Fitness and wellness concepts will increasingly act as important anchors to malls,” says Groome, pointing to how well malls can meet demands for space, parking and other facilities that empty anchor-store shells can accommodate.
Equinox clubs and fitness classes is one of the leaders in appealing to the next generation’s fitness needs where and when they want them, like in Los Angeles’ Westfield Century City mall where it is an anchor. Equinox is also expanding into hospitality at the new NYC-Hudson Yards mall opening in 2019. Equinox Hotel Hudson Yards will include 60,000 square feet of indoor and outdoor club space and pools, as well as spa and hotel facilities.
Westfield Century City mall also hosts a wide variety of wellness-focused retail-cum-services tenants, including Forward, a new-age personalized doctor’s office, House of Polish for healthy manicure/pedicure nail services, and a multitude of healthy-food options serving organic, vegan, gluten-free snacks, juices and tonics, alongside more typical food court fare.
This is but a short list of the must-see stops on TRAUB’s comprehensive wellness journey covering eight major wellness “destinations” and including 100+ wellness brands. “Our compilation of brands is illustrative of how expansive and increasingly accessible this space has become,” Groome and Guiheen write.
In this report, they continue, “ We identified the brands that are defining a new era of retail as well as the values that are behind those brands: sustainability, experience, minimalism and wellness. As we journey into 2018, we reflect on the rise of wellness concepts that consumers have embraced as part of a collective modern mantra of living a healthy and balance life.” To which, I add, studying what these emerging wellness brands are doing to meet the needs of today’s, not yesterday’s customers might provide a valuable guide to retail’s journey to wellness and health as well.