Host:
Welcome to Insight Exchange, presented by L.E.K. Consulting, a global strategy consultancy that helps business leaders seize competitive advantage and amplify growth. Insight Exchange is our forum dedicated to the free, open, and unbiased exchange of the insights and ideas that are driving business into the future. We exchange insights with the brightest minds of the day, the most daring innovators, and the doers who are right now rebuilding the world around us.
Alison Schilling:
Welcome everyone. Thanks for joining us. My name is Alison Schilling and I'm a managing director in L.E.K.'s Health & Wellness practice. In this episode, we'll discuss the evolving landscape of health and wellness and share how different consumer archetypes perceive and engage with their wellbeing. As part of our research, we surveyed 1800 consumers across ages, genders, and income levels to understand their behaviors related to exercise, beauty, personal care, nutrition, mindfulness, and more. The results allowed us to find seven distinct archetypes of health and wellness consumers. Each offering a unique lens into attitudes, preferences, and spending patterns. These archetypes provide companies in the health and wellness industry a structured framework to understand their customer base, uncovering the motivations behind consumers' health and wellness involvement, key engagement factors and areas they'd seek to explore further. To provide more insights on these seven segments, let's welcome our experts and my fellow managing directors, Alex, Geoff and Maria. Would each of you like to take a moment to introduce yourselves?
Alex Evans:
Yes. Thank you, Alison. Hi, this is Alex Evans. I'm a managing director and head of L.E.K.'s Los Angeles office. I lead L.E.K.'s Health & Wellness practice in the Americas, and specialize in advising clients within the nutritional supplement category as well as across the healthy living economy more broadly.
Geoff McQueen:
And I'm Geoff McQueen, a managing director in L.E.K.'s Los Angeles office. I work across the health and wellness ecosystem with a focus on fitness and recovery.
Maria Steingoltz:
Hi, everyone. I'm Maria Steingoltz. I'm a managing director and head of L.E.K.'s Chicago office. I specialize in beauty and personal care, and food and beverage within the broader health and wellness universe.
Alison Schilling:
Great. Thank you all for being with us today. I'm excited to chat more about health and wellness with you all. So first, Alex, I think everyone wants to know why did we actually launch a health and wellness survey? Why is this study particularly relevant in the current landscape of health and wellness?
Alex Evans:
Great question, Alison. We've surveyed the health and wellness consumer in the past, but so much has changed in the landscape over the past few years that we wanted a fresh look at the consumer of 20,24 and beyond. Historically, health and wellness could be defined by eating healthy and working out. However, that view is outdated, and the spectrum of health and wellness today is so much broader. It could include more holistic approaches, mental health, a focus on sleep, limiting alcohol, maintaining a skincare routine, sexual wellness, and others.
The goal of this study was to really evaluate the health and wellness consumer of today from all angles, including exercise and fitness, beauty and personal care, nutrition and supplements, to newer, more holistic avenues, such as mindfulness, instead of the one-size-fits-all approach of the past. We really saw a gap in the marketplace. There are studies out there on specific health and wellness disciplines like fitness or beauty, but the big picture on understanding health and wellness consumers as a whole doesn't really exist. We wanted to dive deeper into what consumers really care about within the broader lens of health and wellness and identify potential implications for companies serving the space.
Alison Schilling:
Thanks, Alex. I agree. Health and wellness is something we have to look at differently than we used to. This became really clear to me when we saw each of the seven different consumer archetypes identified in our consumer survey. They're all quite different. I bet that across the four of us, we hit at least a few of the different archetypes. I suspect I spend less time at the gym than you probably do Geoff, but probably more time on my skincare routine. Just a hypothesis. But Maria, can you walk us through these archetypes, who they are and what each one looks like?
Maria Steingoltz:
Sure thing, Alison? Well, the first consumer archetype is the traditionalist. These folks stick to the tried and true health and wellness approaches. Typically, they might be an older demographic, but they value conventional methods. They dedicate a lot of time to exercise and diet. Geoff, I think that might be you. That sounds familiar. The second archetype that we have as a health enthusiast. And these are folks that deeply integrate health and wellness into their identity. They engage extensively across fitness, mental wellbeing and diverse wellness domains. That to me sounds like an Alex.
I was deciding is Alex a health enthusiast or a third archetype, which is the trend spotter. And these are typically energetic, younger folks who always are riding the wave of health and wellness trends. They're usually new to the fitness scene, but super active and they really put a lot of emphasis on how they look with their overall wellbeing. I thought this one might be Alex, because he's definitely always energetic when it comes to fitness and always spots the latest trends, but he's not new to the scene. So I guess that's how he ended up in the health enthusiast instead. The fourth one is the holistic contents. So these are folks who really prioritize a balanced wellness approach. They think about healthy eating, they think about supplements and they think about skincare, and all of these are really vital elements within their comprehensive health strategy. Alison, I think you were right.
Skincare is a big part of this one, so I bet I'd put you within the holistic content. We've got three more to go, and the next one is the one that I personally identify with, and this is the average Joe or average Jane. These are consumers who adopt a varied health and wellness approach. They engage moderately in workouts without an intense health focus. They prioritize skin and beauty and they're less inclined towards stringent dietary habits or weight loss. The sixth archetype is the aspirational struggler. Now, these are folks that wish they had the greater health discipline and really focus a lot on weight loss whenever they do exercise sporadically, but really they've got minimal interest in anything else. Nothing alternative, like what Alex was mentioning at the beginning. And the last is the wellness apathetics. And these guys and gals are really ones who have minimal investment in health-related activities.
They really don't engage a lot in exercise. They don't really think about their weight or weight monitoring. They don't really have much interest in exploring many other facets of health such as nutrition or beauty and personal care. They're apathetic. I think that's okay. You've got to know what's important to you and maybe health and wellness just isn't it for them.
Alison Schilling:
Thanks, Maria. I think you're right. I think I am a holistic content. As you were talking about it, it definitely described me. Well, so now we know who these consumers are, but what trends do they follow? For example, Alex, digital remains a hot topic across many industries, and I suspect health and wellness is no different. How have consumers even post-COVID, when we were doing workouts at home and the like, how have consumers now been incorporating digital components into their wellness routine?
Alex Evans:
Alison, consumers have been incorporating a variety of digital solutions into their health and wellness routine, including nutrition and weight loss, fitness tracking and activity, exercise-related apps. We've seen a trend even of health and wellness product companies incorporating a digital app into their broader offer for a more holistic consumer proposition. For example, a number of sports nutrition brands have introduced companion fitness apps with nutrition advice, workouts, and coaching. This is something we hadn't seen before. Overall, we estimate this is about a $2 billion to $3 billion market in the US today, but it's growing pretty rapidly, maybe 10% or 15% a year. And we see examples of this all over the marketplace. For example, Peloton. It's seen its global subscription count surpassed 3 million in 2023. And it's really taken an intentional strategy of rebranding from a spinning treadmill, hardware-centric brand into a broader app-based, connected fitness brand to really address this trend.
Alison Schilling:
That's a really interesting point about Peloton and their shift in strategy over the last few years, Alex. I actually use my Peloton app for classes much more than I use the bike itself. It's a great platform that I enjoy to use more holistically. So Geoff, as we think about different health and wellness consumer archetypes, what does this mean for digital fitness brands? How do we think about digital fitness in the context of the archetypes that we've identified? What can they do to best position themselves to match these different consumer needs?
Geoff McQueen:
Yeah, absolutely. Thanks, Alison. And I think Peloton is actually an interesting example in this regard. As part of that shift, it's delivering a great experience, is not just about the hardware. It can be done in a digital app ecosystem and what really draws consumers in is the convenience, the flexibility, the personalization, and the fact that these wellness apps are typically cost-effective options. Some wellness apps can even link to users' healthcare professionals to provide them with advice from the comfort of their own homes. It's quite convenient and in today's time-starved world, it has an incredible value proposition to consumers. Health enthusiasts and trend-spotters are the archetypes that favor digital fitness content the most. As we looked in our survey, we found that about 75% of health enthusiasts and 65% of trend-spotters had purchased digital fitness and wellness content in the last 12 months, which was a much higher share than the other archetypes that we examined.
Health enthusiasts are willing to try a piece of all the available fitness offerings. They could be going to a spinning class one day, doing at-home Pilates or yoga online at home the next day. Trend-spotters, they want to participate in whatever is popular at the moment, especially if the marketing caters to either one, highlight an immersive or enjoyable experience. Or two, emphasize tangible physical results like weight loss or toning. A trend-spotter, for example, could enroll in Peloton subscriptions with their friends or purchase the famous Instagram Wall Pilates Challenge program after seeing ads on social media. If you're looking to understand potential uptake of these digital wellness apps across your customer base, knowing which health and wellness consumer segments your customer [inaudible 00:11:39] is comprised of is critical, as it leads to different implications for product strategy, design, and other factors.
Alison Schilling:
Thanks, Geoff. That's really interesting. It makes sense that trend-spotters and health enthusiasts overindex in digital as a convenient, ever-evolving and changing source of fitness content. As we talked about health and wellness, fitness is clearly important, but we know that health and wellness consumers don't only care about fitness. Among other things, they care about beauty and nutrition. One interesting intersection of those two topics is ingestible beauty, or using things that you ingest or put in your body to benefit the way that you look on the outside. Maria, can you talk to us a bit more about this trend? What are consumers looking to purchase and what are the desired benefits when we're talking about ingestible beauty?
Maria Steingoltz:
Well, we're really looking at a surge in the use of ingestible beauty products. We learned from our survey that nearly 25% of consumers have participated in the category in the last 12 months, and most of the time they're looking at products like collagen powders or adaptogens when they are ingesting a beauty product.
Millennials are at the forefront, no surprise, of this trend. And about 31% of millennials have consumed an ingestible beauty product in the last 12 months. And women are in fact two times as likely as men to have purchased these products. When we think about the archetypes that I was illuminating earlier, we're talking about holistic contents. They are really the most interested segment of ingestible beauty products, and that's really because of their comprehensive approach to health and wellness. They think about, as a reminder, supplement use, they think about healthy eating, and they care about skin and beauty care, much more than other counterparts and other archetypes do.
Importantly, ingestible beauty is just one portion of overall beauty spend, which is in itself a big category for consumers. In fact, when we think about monthly spend on skincare products among all health and wellness consumer segments, we're talking about almost a quarter of their total health and wellness spend. That is a lot of dollars that are being flown, and flow into the skincare segment.
Alison Schilling:
Thanks, Maria. It sounds like ingestible beauty and skincare are all part of what we like to call the self-care routine among consumers. And I feel like we keep hearing more and more about self-care, especially as part of this evolving view of health and wellness. Geoff, what are some other areas consumers are prioritizing as part of their health and wellness routine? Maybe in areas we'd consider less traditional?
Geoff McQueen:
Well, Alison, we're seeing consumers, particularly younger consumers, expand their definition of healthy living and wellness. It's no longer just about fitness and nutrition. Consumers are looking to optimize their recovery, sleep habits, and mental wellness, to improve performance and overall wellness. One area trend-spotters and health enthusiasts are ahead of the broader consumer in particular is recovery and health optimization services, like cryotherapy, cold plunge, red light therapy, IV drip therapy, and others. We've seen the mainstream emergence of new standalone concepts focus solely on these services as well as existing fitness companies that have invested in this space to expand their offering to include these services on top of traditional fitness.
However, it's still pretty early days for these types of services. In order to drive growth and achieve broader scale, the go-to-market, whether it's pricing, marketing, how it's communicated to the different segments will really need to be tailored to these different customer archetypes, whether it's holistic contents, trend-spotters, average Joes and Janes, in order to really capture that next wave of customers.
Alison Schilling:
Thanks, Geoff. That's a great perspective. Clearly, the concept of health and wellness is evolving and consumers have different perspectives and priorities. Knowing this, Alex, what can brands and retailers do? How do we take this and make it into something in a way that it can help them win?
Alex Evans:
Great question, Alison. We really have to think about this by market segment. Just building on the points Geoff made, thinking about gyms and studios and fitness equipment manufacturers, the rise in fitness apps and digital fitness solutions is changing the game, requiring them to adapt and maybe revamping their setups to better cater to these app users. However, it's key for these stakeholders to understand their customer bases.
Take a gym chain, for example. If the majority of its clientele falls into the traditionalist category, then making a major investment in dedicated spaces or equipment that syncs seamlessly with the latest fitness apps may not be the top priority for them. Let's consider implications for VMS brands and retailers and ingestible beauty brands to cater to the more progressive consumer archetypes like health enthusiasts or trend-spotters or even holistic contents. Brands might employ marketing campaigns that encompass the broader definition of health and wellness, such as emotional and mental wellness, skin, hair, nail health, improve sleep, as well as other holistic features, not just a point solution. Interestingly, we've actually seen a rise in multiple benefit claims across brands in the nutritional supplement category, which we think is indicative of this trend. These brands also may consider engaging these communities through social media and collaborating with wellness influencers for really a more impactful reach.
Alison Schilling:
Thanks, Alex. It's clearly critical to know who your consumer is and what's important to them. It's no longer one size fits all. Maria, before we wrap up here, can you give maybe a couple more example scenarios of how a brand or retailer could use this consumer archetype research to inform how they think about their strategy?
Maria Steingoltz:
Sure Alison, happy to. A few examples for me. One could be a company like Orangetheory Fitness. And they survey their members regularly, they understand who they are, and they find that their members are heavily concentrated in holistic content consumers. So once they have that understanding, they can then start to think about an offer of ingestible beauty products in addition to group fitness classes. That might be a way to capitalize on the broader interests of their consumer base. Another example could be a VMS brand, and they determine that a large portion of their customers are health enthusiasts that also use at-home wellness apps.
Well, now this brand may want to consider a direct-to-consumer approach that takes advantage of their consumer's preference for convenience. A final example could be a company offering products focused on mindfulness and meditation. Maybe this is an app of some kind. Maybe they're targeting the trend-spotter type of clientele. Well, considering trend-spotters are always looking for the new thing and what's popular, this brand might be thinking about a collaboration or a partnership with an up-and-coming skincare or beauty brand. Again, there's lots of options for many different companies and how to apply the archetypes, and those are just a few examples.
Alison Schilling:
That's great, Maria. Thank you. Sharing some of those examples I think really brings to life how you can think about both the trends in the market as well as who your consumers are and what's important to them, as you think about your strategic priorities. Through all of this, it appears that there's ample opportunity to explore these changing viewpoints in the health and wellness sector.
We're so excited to be able to share this research with all of you, [inaudible 00:19:34] with all of our clients. Hopefully, it's helpful as you think about how to look at consumers and what's happening in the market and how best to reach them. For those of you who are listening and interested in learning more, trust me, there is more. Please reach out and we're happy to provide more detailed discussions one on one, and share L.E.K.'s extensive experience, providing strategic support to leading consumer brands and retailers. Thinking through how we can use, again, these archetypes and what's important to each one of them, to really individually understand and think through strategy and how to meet our consumers where they are.
Host:
Thank you, our listeners, for joining us today at the Insight Exchange, presented by L.E.K. Consulting. Links to resources mentioned in this podcast can be found in the show notes. Please subscribe or follow for future episodes wherever you listen to your podcasts. Also, we encourage you to submit your suggestions for future insights online at LEK.com.
