Hidden Opportunities Abound in Fast-Moving Health & Wellness Sector for Brands, Retailers, Manufacturers & Investors

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Hidden Opportunities Abound in Fast-Moving Health & Wellness Sector for Brands, Retailers, Manufacturers & Investors

AFI drinking yoghurtAlthough increased momentum in the health and wellness (H&W) movement is fuelling demand for innovative H&W products and services, growth opportunities are dispersed across nearly all consumer products categories and in varied consumer segments, according to the results of a consumer study by L.E.K. Consulting.

For brands, retailers, manufacturers and investors to capitalize on this trend, they must gain deeper insights into the buying patterns and motivations of the various consumer types most relevant for their business. For example, in the majority of sectors studied, H&W spend comes from individuals who do not identify themselves among the core group of H&W consumers. As a result, companies that focus only on the most avid H&W group may miss significant growth opportunities elsewhere.

“More than 70% of respondents, who consist of adults representing a cross-section of consumer groups, identified with H&W themes and/or purchased H&W-oriented products and services,” said Alex Evans, Managing Director in L.E.K.’s Retail and Consumer Products practice and leader of L.E.K.’s Health & Wellness service area. “To capitalize on overlooked or underserved segments of the H&W market, a one-size-fits all approach is neither feasible nor appropriate.”

Based on consumer behaviours and needs, L.E.K. segmented respondents into three groups including “core,” those who are serious fitness devotees, “adjacent,” individuals focused on becoming healthier through one primary dimension of H&W and “peripheral,” those interested in being healthy but only willing to take small steps toward achieving that goal.

“Understanding each targeted consumer group’s motivation is critical to delivering a winning product or service,” said Chris Randall, Managing Director in L.E.K.’s Retail and Consumer Products practice. “The most important H&W consumer segments for a business will vary across sectors but will also be dependent on a given brand’s or retailer’s value proposition within their sector.”

Highlights of the two-part L.E.K. Health & Wellness Consumer study findings include

Demographics and H&W Spend

  • a combined 81% of those in the core H&W group, deemed as “hardcore healthy” and “forever fit” are college graduates
  • 41% of the core group earn more than $75,000 annually
  • core H&W consumers comprise 21% of the H&W population and 44% of H&W spend
  • adjacent and peripheral H&W groups (outside the core) account for 47% and 32% of H&W consumers, respectively, and a combined 56% of H&W spend
  • spending categories covered in the study include active apparel & footwear, select food & beverage categories, gym & fitness centres, sporting goods and nutritional supplements


Six Key Themes
The study revealed six cross-sector themes that identify which businesses are best aligned for maximum growth:

  • capture more than the core: businesses that only focus on core consumer needs risk leaving substantial money on the table
  • don’t forget the proof points;  most non-core H&W consumers are primarily seeking improved personal appearance, products and services tied to clear claims are often positioned to win
  • clear unmet need for value: providing lower-cost H&W products and services is a largely untapped opportunity
  • don’t wait for the customer to come to you: beyond the core group, consumers farther down the chain indicate a need for convenience and broader distribution
  • win with the core through specialization: core H&W consumers represent 44% of H&W spend and are a highly selective group that favour highly specialized and often niche brands and products
  • let the core consumer define the winners: the buying habits of highly health-conscious consumers can serve as a bellwether for retailers and investors seeking products with the strongest growth potential.

“These broader themes apply to brands, retailers, manufacturers and investors across the H&W continuum,” said Evans. “Even the less-committed consumers represent a healthy share of the H&W subsegments and should not be ignored. Hidden opportunities exist in every segment.”

For additional insights from L.E.K.’s two-part Health & Wellness study, read “Hidden Opportunities in Health & Wellness Part One: The Many Faces of H&W Consumers” and “Part Two: Six Ways to Win With H&W Consumers.”