Hitting the target omni-channel weight - fresh challenges ahead for the health and wellbeing sector in the Vaccine Economy

By Stuart Lauchlan

May 11, 2021

Audio version

9 min reading

One of the inadvertent beneficiaries of the COVID pandemic has been the health and wellbeing sector, at least to a degree. While real world gyms may have been forced to close their doors, digital ‘at home’ exercise and fitness alternatives have seen a rapid uptake in adoption, while the whole topic of the importance of physical and mental wellbeing has been brought home to everyone.

But will this shift last into the emerging Vaccine Economy? Last week’s global study from Qualtrics into post-pandemic behavior patterns found a return to in-person exercise classes to be high on the agenda for a lot of people.  Of course, that doesn’t mean that the digital transformation efforts of so many brands will go to waste. It does however mean that we can add health and wellbeing companies to the list of those in search of an elusive omni-channel balance in their business models.

One company that’s been leading the charge here, well before COVID struck is WW, the brand formerly known as WeightWatchers. At diginomica, we’ve tracked WW’s digital transformation efforts across the years, noting some successes - and a few problems - on the way. But the firm is now at the stage where CEO Mindy Grossman can confidently boast of running “the world's leading weight loss and wellness digital subscription platform”.

While once WW was heavily weighted towards meetings and supportive gatherings in physical spaces, now there’s a mix of online and offline activity, with the emphasis clearly firmly on the former over the past year. The firm is now pitched as “a personalized technology experience company” that is, according to Goldman, more needed than ever:  

The stresses of the past year are taking the toll on health. The American Psychological Association's latest Stress in America poll found that since the pandemic started, 42% of participants reported a weight gain on average of 29 pounds with 10% having gained over 50 pounds. As the world re-opens, WW will be there to help people, all people, reset themselves and get back on a path to live their best, healthiest lives.

Digital subscribers currently make up 85% of WW’s member base. A clear objective now is to enhance the digital experience with new iterations and offerings to keep growth and retention levels high. These include, for example, a new mid-tier vertical package, Digital 360, which combines the platform of myWW+ with a one-to-many coaching and content experience, targeted to attract first time millennial customers.

Goldman says that WW is “agnostic” when it comes to how customers want to tap into its services, but suggests that digital membership is likely to see the fastest growth rates even once economies around the world open up. That said, there will be a need to cater for those who crave meeting up in the flesh, she adds:

It is clear that many members are craving in-person community and are eager to return to workshops as the environment evolves. In fact, for the last two weeks, our US in-person weekly workshop attendance surpassed our virtual workshop participation, the first time in over a year.

Now into the second year of the pandemic, consumers certainly continue to feel the pressures of the current environment. But with increasing vaccine availability, consumers are now experiencing renewed hope and optimism. While the exact timing of everyone's 'next normal' isn't crystal clear and will certainly vary greatly by geographic market and by individual, there is a building eagerness for re-connection and an increased focus on health and wellness.

On your bike

One firm that was having the proverbial ‘good war’ was home exercise tech firm Peloton, although its recent handling of health and safety problems hasn’t done it any favors. That said, its most recent quarterly membership growth figures came in at 135% year-on-year, ending March on 891,000 digital subscribers in total.

How CEO and co-founder John Foley pitches the firm is as a “home connected fitness brand”, with digital as the on-ramp. The firm’s own data suggests that basic digital members will upgrade to connected fitness memberships at a significantly higher rate than in the past. The question now is whether, and for how long, customers will remain happy to have their workout equipment in the home rather than heading to a studio or a gym. Foley is inevitably bullish even with the treadmill bad PR of late:

It is the number one selling piece of fitness equipment in homes globally from a unit perspective and we believe treadmills remain safe and effective exercise machines for the home when operated as instructed. We know it is historically the most popular fitness option in the home that we have. We know that millions and millions of Americans use treadmills safely in homes today. So we remain incredibly bullish about the opportunity. In order to run at home, you need a treadmill; in order to cycle at home, you need an indoor stationary bike. We believe that they're going to be pillars for getting in shape at home.

But people are going to start to venture outside the home again and back into familiar territory, suggests Chris Rondeau, CEO at Planet Fitness:

Americans appeared cautiously optimistic early in the new year as COVID-19 vaccines began to slowly roll out to health care professionals, frontline workers and others. As the quarter progressed, national active case count started trending downward, states began to ease restrictions and the vaccine availability increased. At the same time, the momentum we experienced in January accelerated as Americans began to feel more comfortable returning to regular activities they enjoyed pre-pandemic, including going back to our stores. Even in the early stages of emerging from COVID, it's clear that health and wellness are essential.

The firm ended its most recent quarter with 14.1 million members, up from 13.5 million members at the end of 2020, so the trend towards increased healthy activity is upward, he adds:

The positive headline news of COVID-19 vaccine availability seems to have driven a seasonality shift in our membership trend as March membership growth in mature stores exceeded March 2019, reinforcing our belief that people are eager to get back to our gyms.  Americans are waking up to the fact that their overall wellness needs to be a top priority and we offer them a judgment-free fitness option at an incredible value. I am proud of how our franchisees, headquarters staff and club staff have rallied together to provide a clean, safe fitness experience for our existing and new members seeking a non-intimidating environment. 

Omni-levels

But that all-important omni-balance is going to matter and Planet Fitness will continue to adapt its offerings accordingly. In its case, the firm's customer demographics make a digital offering all the more essential, even without the pressures of the pandemic. Rondeau says this is an opportunity as well as a challenge:

Our members, these are casual first-timers. Forty percent of our members have never gone to a gym their entire life. That still holds true today. So they're still choosing bricks-and-mortar at the same rate they ever have, even post-COVID. These people don't even know where to start, so they're having to go find their workout app or find their nutrition app or find another app and know where to go and what's the right source or what's the right avenue to go to. So why not handhold them and just close that circle and just not make it à la carte. Let's just give it all to them, so they don't have the go find on their own and try to piece it all together, and really just make it easy and seamless for them, to hopefully guide them on their wellness journey, which will drive results. When they end up getting results, that too will drive stickiness longer term.

Nearly 50% of the total membership base now has the Planet Fitness app, which Rondeau sees as another channel to engage with, service and motivate members inside or outside of the firm’s gyms. Digital is also seen as a chance to upsell to bricks-and-mortar memberships, with, for example, 30% of the PF+ digital subscription going on to join a physical outlet. That’s the shape of things to come in the Vaccine Economy, he argues:

Today, consumers can download a wide variety of individual apps at all different prices for workouts, wellness, nutrition and mental health. Our goal is to provide a holistic offering, at an incredible value, with differentiated content, geared towards breaking down the barriers for casual first-time gym goers all in one app, along with the ability to visit our gyms….I believe that the future of the fitness industry is truly about bricks-with-clicks, the powerful combination of providing people with a high-quality in-person fitness experience, coupled with the ability to engage and service them outside our four walls with differentiated premium content wherever they are.

He concludes:

The role of fitness has never been clearer with nearly 80% of people hospitalized for COVID being overweight or obese according to the CDC and 90% of the deaths from COVID were in countries with the highest obesity rates according to the World Health Organization. People realize the value of fitness more than ever.

My take

I’m nobody’s idea of a gym bunny, least of all my own, but I do know that many people have see the re-opening of gyms as being as much a milestone indicator of the opening up of society as hairdressers and pubs. That said, the digital transformation acceleration that’s been seen in so many areas as a result of the pandemic lockdowns has clearly taken hold in the exercise space as well. Striking the right omni-channel balance is going to be a critical trick to pull off for everyone operating in this sector.