Boutique and Bespoke: the present and future of the wellness industry?

Yoga isn’t just yoga anymore; it’s hot yoga, aerial yoga and yin yoga. There’s even face yoga, laughter yoga and circus yoga, whatever they are!  Likewise, pilates can come in a dizzying array of shapes and forms. Even barre, which itself started as a cross between ballet and yoga, now has its own variations.

Just as the varieties are growing, so too is the industry itself. There are more than 26,000 yoga businesses in the US alone, and the number of adults practicing the discipline rose by nearly 100% between 2002 and 2012. In the UK, the pilates and yoga studio industry is worth an estimated £812m, supporting more than 4,000 business and employing nearly 16,000 people.

I remember when the yoga class seemed like an afterthought of the timetable planners at the local gym, but it is now as ubiquitous as spinning.

Driven by consumer demand, choice is the new maxim across the wellness industry, and while there is a feeling that we are getting to saturation point, there is clearly still some space to grow.

The consistent high growth of the wellness industry has made it an attractive prospect for investors, notably in the private equity community. In 2013, private equity firm Catterton (now L Catterton) acquired CorePower Yoga, a Denver-based studio chain with over 80 studios in 12 states, and targeting an opening rate of 25 to 30 locations per year. More recently, in 2015, the firm invested in Pure Barre, a chain of barre studios across the US, with plans to continue expanding the group around the US.

CorePower Yoga, acquired by L Catterton in 2013

Moreover, these changes are affecting the industry as a whole, not just gyms and studios. The new focus on ‘wellness’ transcends yoga and pilates; consumer demand for services which contribute to their wellbeing extends to nutrition, supplements, clothing and beyond.

Fit-not-thin and strong-not-skinny aren’t just increasingly common Instagram tags – they’re ways of life, expressions of a new kind of consumer in this space concerned with ‘wellness’, not just with being thin. As Simon Hill-Norton, CEO of successful activewear brand Sweaty Betty, said to me, ‘diets are out; being fit and strong for life is in.’

I spoke to Christine Day, ex-CEO of Lululemon and Chief Executive of Luvo, a nutritious food company, who noted that there is ever more acceptance of a holistic idea of wellness practice which encompasses more than just exercise. At the elite level,more athletes are hiring personal chefs and teams are bringing in nutrition experts to design menus’, and this is filtering down to the general population as well. As Christine says,there is a growing consumer awareness of the mind body connection that starts with what we eat.’ In fact, Christine states thatinvesting in nutritious food, daily exercise and meditation will become the basic essentials for a healthy life’.  Companies like Luvo are finding success because consumers see ‘wellness’ as something which extends to all aspects of life. Yoga and a focus on healthier eating are expressions of a single, deeper trend.

‘Investing in nutritious food, daily exercise and meditation will become the basic essentials for a healthy life.’ – Christine Day, CEO, Luvo

And these businesses are finding great success – the global dietary supplement market is projected to hit US$278bn by 2024. This aspect of the industry also has attracted investment from private equity firms – Grenade, the sports nutrition brand, was recently sold to Lion Capital for £72m only six years after its founding, and it now retails in more than 100 countries.

Luvo design their food to have a full serving of protein, whole grains and produce

Similarly, the activewear space is booming with companies like Sweaty Betty and Lululemon leading the way. I spoke to Simon Hill-Norton, about the success of these brands, and he noted that ‘the breakthrough that Sweaty Betty made was to match fashion and wearability with performance – so the garments perform at the highest level but look so beautiful that they can be worn outside the studio.’ Consumers want to feel good, and they view looking good as an essential part of the process.

‘The breakthrough that Sweaty Betty made was to match fashion and wearability with performance – so the garments perform at the highest level but look so beautiful that they can be worn outside the studio.– Simon Hill-Norton, CEO and Founder, Sweaty Betty 

The shift towards boutique, or studio-based fitness practice is not of course limited to yoga and pilates. Studios are able to offer the specialist classes that people are clamouring for at a quality that justifies their price, with lower overheads than larger gyms. In fact, the boutique sector leads the industry in terms of growth. Of the 54 million Americans who claimed membership of a health club in 2014, 42% were members of boutique studios. In the UK,  Gymbox, which offers 15 different kinds of yoga and pilates classes, had 28% revenue growth in 2016 and plans to open three new sites in the coming year.

More broadly for the sector, larger asset-heavy companies, especially those serving the mid-market are having to adapt their normal models and offerings to meet this new wellness trend, and this is exactly what they’re doing. David Lloyd now offers barre, pilates, spinning and yoga classes next to its more traditional fare. Though it is difficult to match the level of specialisation achieved by smaller studios, larger gyms have their own benefits, namely ease and standardised provision of service across space and time that many consumers are looking for.

They do face stiff competition at the lower price point, with companies like The Gym Group, who reported revenue growth of 22.6% in 2016, growing rapidly. PureGym, the CCMP-backed chain, has begun to expand their range of offerings, introducing barre and yoga classes at many of their sites. From top to bottom, the fitness market is quickly reacting to fit their offerings around new consumer demand.

Kettlebells and yoga have been called ‘the perfect union’

With such an extensive array of classes and practices on offer, consumers aren’t just looking for quality, they’re looking for flexibility. Why pay for a gym subscription when what you really want is to sweat it out at Barry’s Bootcamp class on Monday, chant off the stress of week at Triyoga on a Friday and challenge yourself with a Crossfit session on the weekend.

Boomcycle now sells rides rather than a subscription (although for the hardcore spinners there is an unlimited option) which have to be cashed in by a certain date. Similarly, Barry’s Bootcamp and Barrecore primarily sell their services by the class, and their classes are run on the hour, every hour, until the evening. They attract the highest quality instructors, they’re convenient and they offer a timetable that can be adapted to the individual’s needs.

Ultimately however, it is clear this trend isn’t a fad; wellness is here to stay. Yoga, pilates, barre, and the dense ecosystem of businesses that wellness supports are proving to be highly successful. Consumer demand will continue to shift and change as new practices and models spring up but if there’s one thing the industry has proved in recent years, it’s an ability to adapt.

@TheMBSGroup | The MBS Group